From $300 bucket hats to $900 trainers and $700 T-shirts, the high-flying luxury sector is fretting over the appetite among financially stretched Gen Z consumers for such "aspirational" purchases.
Executives are troubled in particular by a hit to young Chinese shoppers, not only because mainland China has been a major driver of the industry's growth in recent years, but also because high end consumers in the world's second-largest economy are a decade younger than the global average of 38.
Young adults around the world have been "a very strong factor of luxury growth over the past decade", said Gregory Boutte, chief client and digital officer at Gucci-owner Kering.
Data this week showed China's economy slowed unexpectedly, prompting a central bank rate cut, while macroeconomic trends are disproportionately affecting the extra funds that those born between 1996 and 2012 might use to enter the world of luxury.
Whereas in North America and Europe, inflation and a rising cost-of-living are hitting discretionary incomes of young consumers especially hard, China's problem is different.
"In the US, inflation is a huge issue, the major focus of a lot of luxury companies ... In China, it's the youth unemployment rate that's alarming right now," Kenneth Chow, principal at consultancy Oliver Wyman said.
Government data for July registers the unemployment rate of China's urban population aged 16 to 24 at a record 19.9 per cent, exacerbated by the impact of Covid-19 lockdowns and a crackdown on big tech firms that traditionally hired droves of graduates.
"This might be the first time that a lot of young adults (in China) are facing (such an) economic impact, so it will be a testing ground on how these consumers are going to spend on luxury items going forward," Chow said.
"If a recession happens, then I will 100 per cent buy less or maybe even stop buying altogether," said US-based luxury lifestyle and travel TikToker Jeffrey Huang, 28, who shares his Louis Vuitton shopping trips and hauls with his 150,000 followers.
A recent Oliver Wyman study showed that some luxury brands are significantly lowering their sales expectations for the Chinese market in response to current conditions, with 80 per cent of executives questioned not expecting a "V-shaped" recovery this year. Oliver Wyman declined to name the brands it surveyed.
Nevertheless, earnings last month from firms including LVMH and Kering painted a picture of resilience in the face of economic headwinds, with luxury players riding a wave of post-Covid spending by their wealthiest clients.
And big brands have signalled their intention to grow top end sales of $10,000 handbags and $5,000 coats rather than focus on attracting new entrants onto the bottom rung of the ladder.
Chanel, Louis Vuitton and Dior have raised prices on high-margin leather goods several times over the past year, with Chanel planning stores dedicated to VIP consumers.
"As the prices are rising, I'm becoming more and more cautious because I feel like I did do a good amount of spending in the last year," said Sara Yogi, a 26-year-old San Francisco, California resident, adding that she may hold off buying a $2,900 Prada bag and one costing $3,200 from Bottega Veneta which are both on her wish list.
This shift to focus on core luxury consumers also encompasses a cohort of wealthy Gen Z consumers less likely to be affected by inflation or unemployment.
But the concern is over would-be buyers who were meant to help Gen Z account for a fifth of all spending in the luxury goods sector globally by 2025.
And brands such as Burberry have already noted weakness in sales of trainers and slides, products Gen Z and millennial consumers have traditionally used as their entree into the world of luxury brands.
One way for luxury players to continue to attract Gen Z consumers may be to offer aspirational options at entry-level price points that can be worn often, said Yi Kejie, a 26-year-old marketing content manager.
Luxury branded mobile phone cases, earrings, hair clips and perfumes are all popular among her Gen Z peers in China, Ms Yi said. "These are items with the lowest threshold for (them) to have that logo, that icon," she added.
Some luxury labels, including Balenciaga and Dior, are embracing the metaverse to seed interest with teenagers and young adults, offering affordable ways for them to kit out their virtual identities on gaming platforms such as Roblox.
Virtual trainers from brands like Gucci have already proved wildly popular, with a price point of $17.99.
Whether in the real or virtual world, entry-level products call for high levels of creative investment.
"There is this young crowd of consumers that are entering into the market that requires a lot of creativity at more affordable price points," said Bain partner Claudia D'Arpizio, adding that not all brands are equipped for this.
However, there is good news for brands.
If they do find the right offering of entry-level products, or if the economic situation of Gen Z consumers improves, the desire for luxury products remains undimmed.
"Young people in China are enthusiastic about luxury products," Ms Yi said.
"Lockdowns, or the temporary unemployment rate won't change their long-term preferences."
SECRET%20INVASION
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
COMPANY PROFILE
Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
Her most famous song
Aghadan Alqak (Would I Ever Find You Again)?
Would I ever find you again
You, the heaven of my love, my yearning and madness;
You, the kiss to my soul, my cheer and
sadness?
Would your lights ever break the night of my eyes again?
Would I ever find you again?
This world is volume and you're the notion,
This world is night and you're the lifetime,
This world is eyes and you're the vision,
This world is sky and you're the moon time,
Have mercy on the heart that belongs to you.
Lyrics: Al Hadi Adam; Composer: Mohammed Abdel Wahab
More from Neighbourhood Watch:
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
What is the definition of an SME?
SMEs in the UAE are defined by the number of employees, annual turnover and sector. For example, a “small company” in the services industry has six to 50 employees with a turnover of more than Dh2 million up to Dh20m, while in the manufacturing industry the requirements are 10 to 100 employees with a turnover of more than Dh3m up to Dh50m, according to Dubai SME, an agency of the Department of Economic Development.
A “medium-sized company” can either have staff of 51 to 200 employees or 101 to 250 employees, and a turnover less than or equal to Dh200m or Dh250m, again depending on whether the business is in the trading, manufacturing or services sectors.
The%20specs%3A%202024%20Mercedes%20E200
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The Buckingham Murders
Starring: Kareena Kapoor Khan, Ash Tandon, Prabhleen Sandhu
Director: Hansal Mehta
Rating: 4 / 5
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What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Brief scores:
Barcelona 3
Pique 38', Messi 51 (pen), Suarez 82'
Rayo Vallecano 1
De Tomas Gomez 24'
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
If you go
The flights Etihad (www.etihad.com) and Spice Jet (www.spicejet.com) fly direct from Abu Dhabi and Dubai to Pune respectively from Dh1,000 return including taxes. Pune airport is 90 minutes away by road.
The hotels A stay at Atmantan Wellness Resort (www.atmantan.com) costs from Rs24,000 (Dh1,235) per night, including taxes, consultations, meals and a treatment package.
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
Elvis
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Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
The specs
Engine: 2.0-litre 4-cylturbo
Transmission: seven-speed DSG automatic
Power: 242bhp
Torque: 370Nm
Price: Dh136,814
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
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RESULT
Norway 1 Spain 1
Norway: King (90 4')
Spain: Niguez (47')
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
UAE currency: the story behind the money in your pockets
How tumultuous protests grew
- A fuel tax protest by French drivers appealed to wider anti-government sentiment
- Unlike previous French demonstrations there was no trade union or organised movement involved
- Demonstrators responded to online petitions and flooded squares to block traffic
- At its height there were almost 300,000 on the streets in support
- Named after the high visibility jackets that drivers must keep in cars
- Clashes soon turned violent as thousands fought with police at cordons
- An estimated two dozen people lost eyes and many others were admitted to hospital
