Recent data from the US Census Bureau reveals a notable increase in the number of young adults in the United States choosing to live with their parents. According to Morgan Stanley analysts, nearly 48% of young Americans aged 18 to 29 have taken this living arrangement, a figure not observed since the Great Depression. This trend, which peaked at 49.5% in 2020 during the COVID-19 pandemic, has notable implications for the luxury retail sector.
Several factors contribute to this trend. The soaring cost of rent, pursuing higher education, and delaying marriage are among the key drivers keeping young adults in their family homes. A December 5 survey by PropertyManagement.com, involving approximately 1,200 online participants in the US, found that 51% of young adults cited saving money as a motivation for living with their parents, while 39% mentioned an inability to afford rent.
This trend is not unique to the United States. Similar patterns are observed in the United Kingdom, where around 42% of young adults resided with their parents in 2021, according to data from the Office for National Statistics and Morgan Stanley research.
The financial relief from avoiding daily expenses like rent and groceries is driving a notable increase in disposable income, primarily benefiting the luxury retail industry. A team of Morgan Stanley analysts, led by Edouard Aubin, notes that while multiple factors, including social media, contribute to the shift of younger consumers towards luxury goods, this trend is fundamentally positive for the industry.
In the UK, the luxury Swiss watch market experienced a 31% year-over-year increase in imports in the first half of 2022, with the average cost of these watches amounting to £6,000 (approximately $7,400). This growth coincided with a decline in sales of midrange watches, priced below £2,500 (about $3,100), as reported by The Guardian.
Luxury brands are also witnessing increased demand in the UK. Burberry reported an 11% year-over-year sales increase in the quarter ending in September, and LVMH, the parent company of brands such as Dior, Tiffany, Moët Hennessy, and Louis Vuitton, recorded a 19% year-over-year rise in revenue for the third quarter of 2022, largely due to robust demand from Europe, the United States, and Japan.
While the luxury retail sector in the US and China has shown resilience during the ongoing COVID-19 pandemic, there remains a concern about economic headwinds, such as a looming recession, potentially affecting middle-class consumers. This trend of young adults living with their parents is, however, creating new opportunities for luxury retailers to engage with a younger demographic.
Your go-to for supply chain report news updates: The Supply Chain Report. For international trade tools, see ADAMftd.com.
#YoungAdults #LuxuryRetail #USCensus #MorganStanley #LuxuryBrands #SwissWatches #Burberry #LVMH #Dior #Tiffany #LouisVuitton #MoetHennessy #RetailTrends #EconomicImpact #YouthLivingTrends #LuxuryMarketGrowth #LuxuryConsumption #UKRetail #WatchMarket #HigherEducation #CostOfLiving #Savings #DisposableIncome #YoungConsumers #GenerationZ #MillennialSpending #AffordabilityChallenges #RetailForecast #PandemicEffects #ResilientRetail #EconomicRecovery
