MILAN — The Millennial is not a singular and distinct consumer, according to Armando Branchini, vice president of Fondazione Altagamma, emphasizing the category’s “different sensibilities, expectations and shopping behavior.”
The fifth edition of the “Altagamma Consumer and Retail Insight” was held in Milan on Tuesday, based on the True Luxury Global Consumer Insight by The Boston Consulting Group and the sixth Altagamma Retail Evolution study with Exane BNP Paribas, focused on identifying spending habits and platforms in the luxury range. Not surprisingly, online commerce emerged as a priority as did full integration between off- and online channels.
“The physical retail is quickly becoming a concept of the past and must be integrated in the digital one,” emphasized Luca Solca, managing director of global luxury goods at Exane BNP Paribas. “The development of e-commerce is the first priority for companies, also in China where luxury brands are testing different channels.” He urged firms to “clean up” their wholesale distribution to maintain sustainability and exclusivity. “The Internet is like a big magnifying lens,” said Solca. “You can see [mistakes and issues] if distribution is not controlled.” He contended there was more pressure on watches and eyewear as they are more skewed toward wholesale.
“Isolated physical retail makes no sense, today,” he added. “China is the leading country in digital distribution in all categories. Department stores, malls and multibrands will evolve as curators, selecting brand and products for specific customers. We expect many that have a regional profile will eventually close.”
Solca predicted that wise luxury brands will work to build monobrand web site traffic and sales. “Where will full-price digital retail go when all brands will be ready to go online?” he asked the audience, citing Net-a-porter as an example. Yoox Net-a-porter chief executive officer Federico Marchetti “is a wonderful first mover, I would have sold to Richemont, too,” said Solca, referring to Compagnie Financière Richemont launching a voluntary tender offer on all ordinary shares of the Yoox Net-a-porter Group revealed in January.
Thirty percent of luxury spending in the world, or 900 billion euros, is in the hands of 18 million elite consumers, said Altagamma. The Chinese and the Millennials are the main drivers of growth and are estimated by 2024 to contribute to a total of 1.26 trillion euros — especially the wealthy shoppers in emerging countries and the young people living in big international cities in the world.
“The importance of casual luxury continues to grow compared with formal luxury,” said Nicola Pianon, senior partner and managing director of BCG, led by the “forever young” trend of the more mature generations. He noted that social media becomes the first source of information for consumers.
Angela Wang, partner and managing director of BCG in Beijing, underscored the relevance of the choice of the right e-commerce channels in China. The True-Luxury Global Consumer Insight analyzed more than 12,000 consumers in 10 main luxury markets with an average annual spend of around 37,000 euros.
Branchini said the Megacitiers, the young consumers living in the cities, are globalized and more attentive to sustainability and they are more sophisticated Millennials compared with the Classpirational, who are more attentive to their image at work, and with the Rich Upstarter, the new rich in the emerging countries. Other data say the staple values of quality of materials and product exclusivity remain key, but there are new values dear to the Millennials and to the Chinese, who are more sensitive to “extravagance and fun, as well as cool and sexy.” Also, Millennials are loyal, but they prefer collaborations between traditional luxury and streetwear brands and they like to mix and match.
Pianon said 50 percent of the market will be made up by Millennials by 2024, and 40 percent of the market will be made up by the Chinese by 2024.
Gianluca Brozzetti, ceo of jewelry firm Buccellati, which is now owned by the Gansu Gangtai Group, was cautious about following the trend. “Sometimes Millennials are not that affluent, and we have to go for fun and extravagance, yes, but only to a certain extent in our sector,” he noted. That said, Buccellati has been successful with a line of black gold bracelets that Brozzetti admitted were “extravagant.” The company is gearing up for the opening of its biggest store in the world, located at the China World mall in Beijing, where artisans will be seen at work. Brozzetti said that 50 percent of Buccellati’s customers are Americans, and, reflecting the relevance of both that market and China, the upcoming ad campaign to be presented this week during Milan Fashion Week is fronted by Carolyn Murphy and Chinese actress Zhang Ziyi, photographed by Peter Lindberg.