Millennials and Gen-z are today’s true luxury consumers. They seek extravagance, fun and new creativity, and their purchase behaviors are slowly, but relentlessly, disrupting the most consolidated luxury industry patterns.
The inexorable march of time naturally induces changes of every kind. Some are drastic, such as these of COVID-19, some are ephemeral, and others are more gradual. In this state of continuous metamorphosis coexist all fields of socioeconomic life, among which the luxury sector, which is indeed experiencing a radical transformation. A redefinition of its market concerning the share of the goods by generation.
Major role in this transformation hold Millennials and their successors, or Gen-z, who are emerging with different set of values, less loyalty and increased demands, unsettling the luxury field. According to a 2018 study produced by two leading forces in luxury circles, Boston Consulting Group (BCG) and Altagamma, millennials (born from 1978-1922) may represent only about 32% of spending in the personal luxury market, but by 2025 they are expected to make up 50% of the total market. Gen-Z, on the other hand, is estimated to drive up to 8% of true-luxury spend by the end of 2020, from a beginning 4% representation of the luxury market in 2018. Covering more than 12,000 respondents in ten powerful countries, with an oversampling of consumers in the United States and China, the study shows an urgent need to decode their purchasing motivation.
So, how can companies attract these new generations of customers?
First and foremost, with technological advancements improving exponentially and penetrating everyday life, the new target groups seek the brands’ constant follow up. From offering online purchasing services to launching projects on social media, the brands need to always adjust and use all resources available. Of course, luxury should not become “common”, nor a product for everyone. Thus, comes the great challenge of balancing exclusivity with the use of ways of mass communication. A combination that must be executed with delicate care so to cater the customers’ demands but also preserve the status. What is more, a potent reason for the increase of the needs is the shift from inherited wealth to self-made money, including some entrepreneurs as young as eighteen. With a plethora of information offered and the access to the internet, new generations become world citizens being exposed to news and ideas from all over the world. This means, they get inspired and instigated to create from early stages. Taking this into consideration, they expect from a luxury brand to be on the same mindset and inspire them likewise.
In the same line of reasoning, another potent change regards the importance of brand stability. For previous generations, luxury brands could safely expect high sales as long as they could make consumers believe that their quality, specialized skills, and heritage was superior to the rest. Bluntly put, those times are over. Now, quality is expected, and consumers know that the latest technology of today will become soon outdated. They care less about brand loyalty and are much more open to new concepts. In this light, only the most hardworking and astir succeed at continuously impressing this hard to please audience.
A brand’s work, however, is not completed with a meticulously examined product or service offering. Even if the luxury industry is often tied in with terms like excessive consumerism, disposable income, and guilty pleasures, Millennials and Generation Z consumers are expecting luxury brands to be aligned with the trend towards ethical and sustainable luxury. The younger affluent generations are indeed more conscious of the environmental and social impact of their purchase decisions and are more likely to buy from a brand that resonates with their own personal values. High-end brands that want to retain their status in the luxury market need to evolve to keep up with this growing trend towards ethical, sustainable, and philanthropic luxury retail. A prominent example would be the diamonds luxury brand Tiffany which operates in an industry that has been accused for bringing conflicts to communities in Africa. To shift this perception, the high-end brand was one of the first big players in the jewellery business to be supplied with metals and diamonds from responsible mining companies.
In a world where complexity is increasing day by day, true multitaskers are mainly the ones to board on the train to success. In the luxury field, this train is not only fast for some to notice but also of limited capacity. There is simply not enough space for those unable to keep up with the ruthless and demanding new generations. Therefore, opportunities will always arise, but will only be noticed by the ones who constantly keep their ears and eyes open.