We hear over and over that Millennials see luxury as “more than a price tag,” and that they “value experience over things.” While it may be true that Millennials are killing everything from bar soap to golf, our many conversations with this segment tell us it is exactly their love of experiences and “the story” that translates to a positive future for luxury. According to projections by Bain and Company, Millennials and Gen Z will account for 45 percent of personal luxury goods purchases by 2025.
While many Millennials seem to place a high value on Instagramming themselves from exotic locations (or, let’s be real, at a particularly well-lit brunch), they still love their classic Chanel bags. They just might not be buying them for themselves (thanks, Mom, Dad) or maybe they’ve discovered Tradesy. In other words, their consumption of luxury may be showing up in nontraditional ways.
What is clear is that today’s young people want brands with integrity, craftsmanship, strong reputations and specific, creative points of view. For most Millennials, goods aren’t replaced by experiences — they both feed into a person’s overall identity.
The most sophisticated Millennial consumers today mindfully self-curate. As Lauren, a 33-year-old venture capitalist at E.ventures in San Francisco puts it, “I was trained by my Grammy to be a shopping ninja; early boot camp included canvassing fashion glossies, trips to Theodore, Fred Segal and Maxfield (rule – touch everything!) and full support to take risk when defining my personal style, utilizing sales people at various retail locations to uncover treasures.”
These shoppers aren’t looking for broadly accepted status symbols to fit into the crowd, they’re looking for a way to express their individuality. They don’t want to mirror a luxury brand’s values — they want the brand to reflect their values.
This is illustrated in the failure of brands occupying what I call the “mushy middle,” brands who have been selling a uniform lifestyle for years, instead of a dynamic creative statement. As the culture and the way people express their place in that culture are evolving, they are staying safe and getting lost as a result.
With change comes risk — a tricky proposition in the luxury world as it exists today where many of the leading brands now have to answer to shareholders instead of enjoying the creative autonomy they once enjoyed. Some luxury brands — Gucci comes to mind — have managed to navigate this by trusting in their own heritage and talent, balancing independent moves that drive the culture (instead of just following trends) while maintaining a strong and storied brand identity, as we’ve seen from designer Alessandro Michele’s joyful interpretations.
Yet in today’s lightning-fast business environment, success can’t begin and end with product design alone. Everything has to be creative and dynamic. Distribution channels. Merchandising. Brand communications. That is where disruption is occurring that can threaten businesses if they don’t adapt to the changing ways people are discovering, shopping and sharing information about what they love. As Courtney, a 27-year-old MBA student tells us, “I will sometimes see a social influencer wearing a bag or piece of clothing that I love and then check the tags on Instagram to see who makes it and where I can buy it.” There is a “gamification” factor at work here that is irresistible to this audience.
To be successful in this arena, brands should understand that Millennials simply don’t access or engage with luxury in exactly the same way previous generations did. This generation was raised on e-commerce — which means they’re deal-hunting pros. They want to experience luxury, but they’re frequently unwilling to pay full price for it, preferring to spend hours hunting down bargains on consignment sites or stalking items for months before making a purchase.
Alicia, 30 and a CWH Membership Manager at SoHo House in New York, noted that she prioritizes “luxury by buying classic pieces that transcend each season. It allows me to avoid buying trendy items that get thrown out and I can spend the rest of my shopping money on fun designer items on Farfetch or vintage pieces from The Real Real. By keeping an eye on items I know will be eventually discounted, on sites like Barneys or Saks, I’m able to righteously fight for the designer items I want. Being smart is part of being fashionable.”
While many luxury retailers are resistant to heavy discounting and may dismiss deal hunters, they should be getting creative and working to meet Millennial consumers where they are. This means they have to think outside the store and the traditional e-commerce channels to engage with them.
Unlike so many disposable consumer goods, the craftsmanship, the feel and the function of luxury items can make them an “experience” in and of themselves. Even more importantly this is a generation that values creativity very highly. This is where high-end brands have an advantage with identity — and experience-driven Millennials.
Part of the challenge is knowing where and how to listen to where the Millennial may already be “virtually” consuming luxury brands. They may feel they are a Chanel loyalist even if they are buying the handbag on Vestiaire Collective. That step is an important first move toward buying it firsthand. They may feel they are fans of Céline even if they’re just buying the knockoff jacket at Zara for now. They’ll get there. They want to. Take the time to talk to them, find out how they are virtually consuming you, whether it’s subscribing to your YouTube channel or simply by talking to them once in a while. In these ways, you’ll know where to meet them and provide them with ways into your brand.
By taking the time to better understand these nuances, brands can begin to reframe the gloomy narrative that the younger generation has given up on luxury, and start forging long-lasting relationships with their next, most important consumer segment.
Malinda Sanna is founder and chief executive officer of Spark Ideas.
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