That’s at least what RBC Capital Markets found in a recent survey of 500 U.S. Millennials between the ages of 18 and 35. On a whole, that cohort surpassed Baby Boomers in 2016 as the largest generation and hit an estimated $200 billion in spending power, thus officially becoming of utmost interest to consumer-driven businesses.
Although RBC tends to focus on European brands, analysts Rogerio Fujimori and Brian Tunick carried out the survey for the third consecutive year because the U.S. is still “the largest wealth pool” and American shoppers are the second-largest “cluster” of shoppers for European brands, making up 20 percent of global sales. Chinese shoppers are first, accounting for 38 percent of sales, while Europeans make up 18 percent.
“Luxury brands are saying that the Millennial segment continues to influence the entire luxury consumer base, with a greater appetite for newness and fashion content,” the analysts said.
While those companies maintain the brands that are most interesting to U.S. Millennial shoppers, such as Gucci and Louis Vuitton, as well as Burberry, Chanel and Marc Jacobs, RBC found that these luxury shoppers are still more interested in spending on something like dinner out, travel or a spa treatment, than on anything a brand has to offer.
Of those surveyed 64 percent agreed that they “prefer” spending in this way, when given the choice between spending on luxury accessories, apparel or jewelry. Only 12 percent of those surveyed said they would rather spend on one of those items, which is in line with RBC’s previous findings.
“This spending shift away from goods represents an ongoing headwind and a market share game for European luxury brands, which may require higher reinvestment than in the past — personal luxury goods were the fastest-growing category in luxury and most brands were doing relatively well prior to 2015,” the RBC analysts wrote. “It is a different story now with a great competition for share of wallet of wealthy consumers from experiences, especially for Millennial consumers. Several brands have recently mentioned that the cost of growth is rising.”
But this isn’t to say Millennials will not be spending — they have every intention of doing so. Many even plan to spend more, according to RBC.
Apparel is where 23 percent of surveyed shoppers are planning to spend more, compared with just 17 percent of shoppers who planned to do so last year. Eighteen percent also plan to spend more this year on shoes, an increase over about 14 percent in 2017.
Where Millennials choose to shop for luxury goods, especially clothing and shoes, is consistent with a recent pattern: more online, less in stores — especially department stores.
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