Last year, millennial consumers were responsible for 85% of luxury market growth. But how are these luxury brands persuading this new generation of consumer to part with their hard earned cash?
According to the Financial Times, millennials are “the world’s most powerful consumers”.
But with university debts, rising house prices, and low job prospects how on earth are millenials and the young folks of generation Z affording to buy products from luxury brands such as Gucci and Louis Vuitton?
In most cases, millennials are typically anyone who is born between between 1980 and 1995 whilst generation Z-ers are born after 1995.
This new generation of consumers are more likely to invest in luxury products than older generations for a few reasons:
- They are often still living with their parents due to house prices being so unaffordable.
- They have a different set of values to their parents. For instance, Veronica Wang specifies that these consumers are less motivated to save, giving them more disposable income, whilst a ‘living in the moment’ ethos has led to spending habits that produces a sense of immediate gratification.
- The increased use and availability of credit and finance plans has also enabled more users to fulfil their consumption needs right there and then.
But with millennials and gen-Z consumers accounting for 50% of Gucci’s profits last year, how are these luxury brands targeting such valuable audiences?
What Millennial and Gen-Z Consumers Look for in a Luxury Brand
Luxury marketers are having to become increasingly innovative in order to capture the attention of millennial and gen-z consumers.
Gone are the days of brand loyalty, following celebrity trends, and mindless consuming. The internet and social media has transformed our everyday spending habits, making these new-age audiences far more brand savvy.
1. Ethical Business Practices
Experience, human emotion, and the ethics associated with a brand are now important factors to millennial and gen-z consumers.
Brands who demonstrate strong ethical and sustainable practices tend to be more attractive to such consumers.
In 2015, Nielsen published a report which confirmed that 73% of millennials are willing to spend more on a product if it comes from a sustainable brand.
Various luxury brands have recently used this as a unique selling point to attract valuable millennial and gen-z consumers.
For instance, the luxury watch brand, Baume et Mercier, which launched this year, produces ‘up-cycled timepieces’ that are manufactured from ethical and sustainable materials such as, cork, cotton, and recycled aluminium.
Luxury fashion and cosmetics brands are also making an effort to become more environmentally conscious and animal friendly.
Therefore, if luxury brands wish to attract this highly engaged audience, it is crucial that they stand for more than just profit.
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2. Social Media- Inspiring and Storytelling
20.5% of millennials cited social media as their main source for luxury fashion trends, so it is no surprise that brands such as Gucci, Chanel, and Alexander McQueen are investing a significant amount of time and money into their social media platforms.
Luxury brands are utilising social media platforms such as Instagram, to tell a story whilst attaching certain emotions and experiences to their business. This is achieved by creating inspiring and engaging posts, tweets, and Instagram stories, to attract audiences, rather than solely producing product driven content.
Millennial and gen-z consumers pay close attention to the particular lifestyle or aesthetic a brand promotes. Therefore, consuming a product can be seen to reflect a certain set of norms and values established by the brand.
Brands such as Levis, Gucci, and Supreme, have almost turned into subcultures, as their branding reflects certain identities and ideologies which consumers want to become apart of.
If you would like to find out more about the power of Instagram check out our previous article: Why Instagram is the Key to Success for Luxury Brands.
Personal expression through consumption is nothing new, however consumers are now looking for products which are unique to them.
In the US, a whopping three quarters of millennials claimed that they would pay extra for a personalised product or service.
For example, Louis Vuitton now provides a monogramming and hot stamping service for their bags, purses, and wallets. Here customers can make items unique to them by adding their initials and coloured stripes to Vuitton products.
Therefore, millennial and gen-z consumers are likely to gravitate towards a brand if they are selling a product or experience which is unique, special, or personalised.
This is achieved not only through products, but also by marketing strategies which are tailored to the consumer. This concept was utilised by Burberry in 2016 when consumers could personalise a Burberry scarf via an app which was then broadcast on the famous curved screen in Piccadilly Circus.
So in theory, if your brand can create an unforgettable experience or a product which allows personal expression then millennials and gen-z consumers won’t be able to resist!
In order to maintain profits, luxury brands are having to do so much more than sell exclusive products to the uber rich. Millenial and gen-z consumers are now more valuable than ever and luxury brands can’t afford to exclude this highly engaged audience.
Luxury brands such as Gucci, Hourglass, and Louis Vuitton are thriving. This is largely due to specialised marketing strategies which target millennial and gen-z consumers.
Creating ethical and sustainable business practices, utilising social media to inspire and engage, and personalised products, all help attract this new generation of consumer. However, it will be interesting to see the new marketing and branding strategies these luxury brands create in order to keep these evolving audiences interested.
Give our team a call today and discover the best ways you can engage highly valuable audiences!