New York–The high-earners of the millennial generation will have a big impact on the fine jewelry market this year, according to YouGov’s Affluent Perspective Global Study.
The study is based on insights from 5,196 affluent respondents across 12 countries.
In the United States, respondents were divided into three categories: the base affluent ($150,000 to $199,000 in household income), middle affluent ($200,000 to $349,000) and upper affluent ($350,000 and over).
Overall, the study found that fine jewelry purchases are expected to decrease 11 percent to $14.4 billion this year, while watch purchases are predicted to decrease by more than 3 percent to a market value of $6.7 billion in 2016.
While spending on jewelry and watches is expected to drop, affluent millennials are expected to really step up their spending this year.
According to the study, the generation’s purchasing of fine jewelry could increase by as much as 22 percent in 2016, while spending on watches could rise by 10 percent.
Affluent members of Generation X also are expected to increase their spending in fine jewelry by nearly 7 percent, while watch spending will be nearly flat.
Overall, YouGov has forecasted about a 1 percent reduction in luxury spending this year among all affluent groups, with the exceptions being millennials and America’s 400,000 wealthiest households, whose spending is expected to increase by 8 percent and 10 percent, respectively.
“It’s important not to lose sight of the fact that this year, Boomers and Gen X together will spend 4.5 times more than the millennials across the nine categories we monitor,” said Cara David, managing partner at YouGov. “Marketers should be careful not to sacrifice one for the other.”
In 2016, discretionary spending across the nine categories that YouGov monitors in its study is expected to reach $277 billion, which is a $2 billion decrease from 2015. Only two of those categories will see an increase this year–travel (up 10 percent) and fine dining (up 5 percent).
The remaining seven, which includes fine jewelry, all are expected to see decreases. Spending on apparel, accessories, handbags, home items, and fine jewelry and watches will see a cumulative 11 percent decrease in spending, from $132 billion in 2015 to $117 billion this year.
“It’s important not to lose sight of the fact that this year, Boomers and Gen X together will spend 4.5 times more than the millennials across the nine categories we monitor. Marketers should be careful not to sacrifice one for the other.”–Cara David, YouGov
YouGov also found that people are being introduced to the luxury market at earlier ages. The study shows that 90 percent of affluent millennials have already been introduced to luxury by the age of 37. Only 72 percent of those in Gen X, 61 percent of baby boomers and 55 percent of “matures” had their first experiences by this age.
For most millennials, this introduction into the luxury market came as a result of its being gifted to them, with the early adoption among the generation mostly as a result of their parents serving as the catalyst.
Millennials also cited price as the number one indicator of luxury, David noted.
“For luxury brands and luxury brand managers, this means that there is a need to help them evolve from a relatively immature consumer to one that will come to appreciate the true value of luxury including the artistry and craftsmanship of the product or experience itself,” she said.