New Report Highlights ‘Quiet Luxury’ Demand as Secondhand Trends Emerge
A new report from Square and Afterpay shows growing demand for “quiet luxury,” but waning interest in secondhand shopping.
The sister payment companies’ 2023 State of Retail Report, released Tuesday, noted a doubling in the number of “designer merchants” on the Afterpay app from the first quarter of 2021 to the first quarter of this year. One factor fueling the segment’s growth, the report said, has been “quiet luxury,” which it attributed to the return to the office and “a desire for sophisticated staple items.”
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Square’s data showed dress shirts sales up 19 percent in the year ended March 31. Oversized blazers and dress sneakers grew 44 percent and 40 percent, respectively, over the same period. In the 12 months ending March 31, Gen Z accounted for 16 percent of luxury spend, up from 13 percent two years ago. Millennials’ share, meanwhile, fell from 56 percent to 45 percent. Gen X and boomers represented 31 percent and 8 percent, respectively, of luxury spending.
The report, which parsed purchase data from millions of shoppers and hundreds of thousands of retail sellers, revealed mixed signals on sustainable shopping. This year, secondhand stores sales fell below their 2021 and 2022 peaks, Square data showed. Afterpay, however, saw revenue for products marked as sustainable, ethical, natural and clean continue to register year-over-year increases through the first quarter of this year. Gen Zers and millennials made up the majority of sustainable product sales, accounting for 69 percent of spend share in the first quarter.
The report advised retailers to “evolve” into multi-hyphenate businesses that expand beyond their core offerings, noting that in the restaurant industry, an average of 20 percent of revenue comes from products and services. Retailers can similarly make up for lost sales and better retain customers by finding other revenue streams, it suggested. The hiring of baristas, servers and bartenders at retail locations, the report noted, has outpaced overall hiring growth by 8x. Spending on spas, cultural and recreational activities and entertainment all saw greater growth than retail last year, it added.
The Square-Afterpay report also highlighted the growing importance of mobile. In the year ended March 31, two in three Afterpay online transactions from millennials and Gen Zers were made on a mobile device. Over that same time period, Square logged more than 84 million messages between sellers and buyers through Square Messages, it added.
The payment firms reported continued strength in buy now, pay later (BNPL) sales, with revenue increasing year-over-year and growth up across all ages. Though Gen Zers and millennials remained the primary demographics adopting BNPL, Afterpay saw sales from Gen Xers and boomers grow 16 percent and 12 percent, respectively, in the year ending this March.
The report also shined light on wage trends. The nationwide average wage for a retailer worker was $11.89 per hour in the first quarter of 2023, according to Square’s data, up 22 percent from four years ago for a 5 percent compounded annual growth rate. Though the most recent data from Square shows this growth “moderating,” the report said, “business owners should evaluate wages regularly to ensure they are competitive with the market.”
Average staff size and average hours worked have both grown compared to before the pandemic. From 2019 to 2023, average staff size climbed 11.4 percent from 3.8 workers per location to 4.3 workers, Square data indicated. The number of hours worked per month by an average employee grew 8.6 percent from 74 hours to 80 hours.
