Buoyed by the pandemic, the $1.6 trillion luxury market is having a moment—and Gen Z and millennial buyers are pushing sales numbers to record highs.
That’s according to a new report from Sotheby’s, the New York-based auction house. It reported $7.9 billion in total sales in 2023, just below its all-time-high of $8 billion from the year prior. That’s a huge uptick—over 40%—from before the pandemic. And a new wave of young buyers is what’s made the difference.
“I’m sure people in their 30s and 40s collectively represent the majority of buyers at Sotheby’s,” said Sotheby’s American Head of Watches Geoff Hess in an interview with Fortune. “We’re seeing a lot of digital and online transactions, much more than ever before. That lends itself very well to a younger generation.”
Even as the broader economy has wavered, the luxury goods sector has soared, driven in part by big pandemic gains for the world’s wealthiest. And growing interest from a young class of buyers points to good things ahead for the niche luxury market.
Sotheby’s reported a record number of Gen Z buyers aged 20 and under in 2023, 35% higher than in 2022. That fits into the bigger picture of luxury consumers trending younger: Gen X are overtaking Baby Boomers as the most active bidders in Sotheby’s $1 million+ market for the first time since Sotheby’s started recording data in 2018. The number of total bidders in Sotheby’s auctions for 2023, 11% higher than in 2022, set a new record.
Hess said that the pandemic pushed prices in the watch market, one of Sotheby’s largest sectors, to new highs. Record bids were driven by speculation and social media—but that wasn’t necessarily a good thing.
“We saw this big run-up during Covid. And all of that froth was in large part driven by buyers buying for speculative reasons … it was not atypical to see a watch that was worth $50,000 suddenly selling for $100,000,” said Hess. “However, with the recent pullback in prices, the real collector … who might have felt priced out during Covid … came back into the fold.”
Those collectors, the lifelong luxury buyers who drive Sotheby’s business, are younger than ever before. That’s true not just for watches, but across the entire luxury sector.
“Last year, 30% of all [watch] lots were purchased by those in their 30s and under. So there’s no question that buyers in that age class … are spending considerable sums of money on watches,” said Hess.
Hess said that while Asia has emerged as a key growth sector for the luxury goods market in recent years, American buyers were the primary driver of this year’s strong demand. Sotheby’s reported a record number of American buyers in 2023. Middle Eastern participants, another key emerging class of bidders, spent more than ever before.
The internet has been transformational for the watch market—and one of the key reasons why younger buyers are quickly becoming the ones leading the charge.
“Eight years ago, nobody was looking at watches on Instagram. Now, it’s the most prevalent place to see a watch,” said Hess. “It’s the most important part of watch advertising—social media. And that’s going to appeal to somebody in their 20s, 30s or 40s. Not somebody in their 70s.”
Sotheby’s predicted a rising number of “mega-collections”—individual collections worth $500 million or more—to grow in 2024 and beyond. Many of the world’s largest art collections are owned by elderly collectors born before World War II. That could mean a big boom for the art and luxury markets’ topline sales numbers in the years to come.
“We keep close track of the most significant collections globally, and many will come to auction in the next few years,” said Sotheby’s chairman Maria-Claudia Jiménez in a 2023 report.
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