Driven by young consumers and increasing casualisation, the luxury industry is going through a paradigm shift. In the new luxury, niche streetwear pieces are as coveted as iconic it-bags.
The millennial push
Millennials and Gen Z are pushing the luxury industry in a new direction. According to Bain, young consumers’ interest in high-end streetwear helped the luxury goods industry to 5 percent growth in 2017, to €263 billion ($309 billion). The company found that sales of luxury T-shirts rose 25% last year, while down jackets and sneakers grew 15% and 10%, respectively. In 2018, luxury streetwear’s “standout growth” continued, making casual products a key draw for new customers, and contributing to 6-8% growth to reach up to €281 billion.
Key luxury streetwear pieces include the Balenciaga Triple S sneaker and pieces from the Burberry x Gosha Rubinskiy and Louis Vuitton x Supreme collaborations. But while luxury is coming down to street level, streetwear brands are becoming elevated to luxury status. According to leading streetwear site High Snobiety, readers believe that Yeezy, Stone Island, Off-White and Nike count as luxury brands, alongside Balenciaga, Gucci, Louis Vuitton, Calvin Klein and Prada.
While much of the buzz about streetwear has focused on Western brands and markets, China is becoming a major force in luxury streetwear. A new report by OFashion and Nielsen found that between 2015 and 2017, streetwear consumption in China was 3.7 times higher than in the rest of the world, increasing 62% year on year. The growing appetite for luxury streetwear has been fed by hit shows such as The Rap of China, featuring high-profile star Kris Wu in an array of cult streetwear brands. Leading Chinese celebrities including Yang Mi and Lu Han have also popularised the look, making a major shift in how young Chinese consumers express their style – and their affluence.
Outside China, A$AP Rocky, Rihanna, Kanye West and the Kardashian-Jenner sisters, along with global streetstyle stars, have created even more hype around streetwear, while high-profile product launches and events have made streetwear the talk of the fashion industry. “Streetwear is a macro-trend in all geographies” said Federica Levato, a partner at Bain & Company.
Many luxury streetwear pieces borrow from the bold graphics, simple athletic shapes and eye-catching logos of hyped brands. Fashion sales-tracking company Edited reports that sales of logo’d T-shirts have increased 411% since 2014.
Part of the appeal of streetwear is its rare, sought-after products, released in small numbers or in limited locations. A new product release, or “drop”, can create queues of hundreds or even thousands of streetwear enthusiasts. The associated hype also generates much discussion and excitement on social media platforms and streetwear forums.
Inventing new marketing strategies
Drop culture is finding its way into more luxury brands, as they take a new approach to exclusivity. Moncler recently announced that it would be releasing monthly drops in collaboration with a wide range of hip designers, from Craig Green and Simone Rocha to Hiroshi Fujiwara and Pierpaolo Piccioli.
Burberry’s new creative director Riccardo Tisci’s has announced that drops will be key to its new sales strategy, releasing a drop of streetwear-inspired items immediately after its menswear show, which fans could buy for 24 hours only via social media platforms such as Instagram, WeChat and Line. Meanwhile, Louis Vuitton created a pop-up store for the launch of Virgil Abloh’s first collection, and new Celine creative director Hedi Slimane has announced a series of product drops, starting with new handbag designs.
Perhaps the greatest benefactor of hype culture is iconic streetwear brand Supreme, notorious for the long queues outside its stores every time there’s a drop. Famed for its simple red-box logo and limited-edition collaborations with luxury brands as diverse as Louis Vuitton and Rimowa, the brand’s ethos is built on rarity, Founder James Jebbia has commented that his strategy is, ‘if we can sell 600 pairs, I make 400 pairs’’. Supreme was recently valued at a billion dollars, thanks to investment from venture capitalists Carlyle Group.
Fuelled by increasing hype, the luxe streetwear trend is now maturing, with more products and retailers able to satisfy hypebeasts’ demands. Whether the trend continues remains to be seen, as many high-profile fads die down quickly. What is sure however, is that young luxury consumers’ appetite for casual and expressive clothing is here to stay.