It’s no secret that the commerce landscape is shifting and Millennials are shopping differently than their parents. With the opportunity to rent clothes, handbags and accessories for every occasion, today’s shoppers might be less inclined to invest in luxury items.
Marshal Cohen, chief industry analyst of the market research company The NPD Group, explains, “Millennials are interested in high fashion but not willing to pay those high prices. So discount sites, secondhand sites, and stores, as well as auction sites, do well for the luxe Millennial.”
But what about luxury brands who aren’t willing to enter the rental market and want to engage with Millennials without discounting their offerings? In order to succeed with younger generations, luxury brands need to think strategically about what they’re up against. Here are a few suggestions for how luxury brands can remain competitive with the rise of rental services democratizing high fashion.
If you’re a luxury brand fearful you’re no longer resonating with newer, younger audiences, it might be time to enlist an unlikely partner to come to your aid. Department stores such as Target and H&M, which sell trendy, budget apparel, are known for partnering with luxury brands. The lines sell out quickly as customers are thrilled to get, say, an Alexander Wang tag for an H&M price. H&M benefits because they can excite their customers and Alexander Wang gets in front of a new audience who might one day become brand-loyal once their earning power increases.
Bespoke or Limited-Edition Items
One thing luxury brands will always have on rentals is customization. Whether you create a limited-edition item or provide customers the option to customize a product in size, style or color, this is an opportunity for luxury brands to do something truly unique.
“Customization is a really important thing now, really having that ownership and connection to what [consumers] want. When people say they like my shoes, they’re really complimenting my personal taste, and that’s ultimately much more satisfying,” said Jodie Fox, cofounder of women’s custom shoe brand Shoes of Prey. Think about how, within your current product offerings, you can create something customizable or even commemorative that a customer simply can’t get through renting.
Many shoppers see rental services as a solution to fast fashion; an industry notorious for unsafe conditions for workers as well as harmful environmental implications. If the reason for fast fashion is to purchase an on-trend item that likely won’t be in style next season, renting that item is efficient in that you can return it once it’s no longer in style — without supporting controversial fast-fashion brands.
Where luxury brands stand to hold their ground is by driving awareness around any environmentally or ethically aware processes or products. Some examples of this include Tiffany confirming conflict-free diamonds or L’Oréal pledging to cut carbon dioxide emissions by 50 percent. Younger generations expect these types of commitments from companies — and you can bet they’ll be doing their research before giving their dollars — so it’s best not only to incorporate social responsibility into your brand, but also to make it known.
Also demonstrating how a product can be worn or used many different ways can shift a customer’s attitude from, “I can’t afford it,” to, “I will get enough use out of this to justify the price.”
Partner With High-End Rental Sites
In a seemingly counterintuitive play, some luxury retailers are partnering with rental services to bring their customers a varied, thorough shopping experience. Rent the Runway now has a location in Neiman Marcus’ San Francisco store, where customers can try on dresses to rent while pairing them with high-end shoes and accessories curated by the department store.
Another partnership is between high-end luxury rental site Armarium — think Airbnb for closets — and designer magazine and shopping app, Net-a-porter. Of the partnership, Armarium cofounder and chief executive officer Trisha Gregory said, “This is a smart way to complement [a customer’s] existing wardrobe and the pieces she will buy for the season.” Both partnerships allow shoppers to pair seasonal pieces they wouldn’t necessarily spend money on with luxury staples.
If you’re a luxury brand trying to stay relevant with Millennials (and Generation Z assuming they follow suit with renting), it might pay to introduce your brand to these younger consumers through a rental partnership to gain their awareness and brand affinity early.
Experiences Are Key
It’s not news that Millennials are choosing to spend their money on experiences over things, which could mean trouble for luxury brands. Lubov Azria, former lead designer at BCBG Max Azria, believes this could actually be a positive, saying, “when you’re traveling, that is the reason why you buy clothes. So I think that stimulates the shopping.” Showing how your brand enhances experiences is an excellent way to market to this generation of travelers and adventurers.
Consider a social media campaign based on user-generated content in which you share aspirational photos of customers wearing your clothes, driving your car or using your product while on a vacation or at a unique event.
Customer Loyalty (Still) Trumps All
No matter what lengths you’re going to create unique products and strategic partnerships, it won’t matter if customers can’t shop the way they want and receive the product they ordered in the time and place it’s expected. Especially when shopping for luxury items, customers expect the highest levels of service — and you need to deliver. Since you’ve already invested in exciting products, you need to make sure you have backend operations in place to ensure a consistent customer experience. Knowing where your inventory is at all times, across all channels, is imperative to making sure customers have what they want, when they want it.
The landscape may be shifting, but luxury brands should embrace the change. Learning what’s important to Millennials and how to market and sell to them more effectively will distinguish brands that remain successful and those that become obsolete.
Thomas Marks is vice president of marketing at Stitch Labs.
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