LONDON — Millennials are on track to become the dominant workforce by 2020 and currently represent $2.5 trillion in spending power. As a result, brands are racing to adapt their strategies and answer to their needs.
According to the latest report by Positive Luxury, the London-based platform that promotes brands with strong ethical and environmental standards, the new luxury consumers are increasingly aware of social and environmental issues such as animal welfare and labor practices, leading to a fundamental shift toward “mindful luxury” and away from the conspicuous consumption of the past.
The report, which was created in partnership with Euromonitor International and the neuroinformatics company Emotiv, highlights positive living as “one of the most influential megatrends to watch for 2018,” suggesting that the luxury industry needs to prioritize sustainability and define a higher purpose in order to engage with the Millennials in an authentic way.
“Emotion is king — we’re seeing the huge power of emotional influence everywhere from politics to retail, and it will only continue to dominate,” said Diana Verde Nieto, cofounder and chief executive officer of Positive Luxury.
These changes are being driven by the rise of digital and social media, as well as the new environmental shifts and pressures. Through social media, brands can create large communities of followers and potential customers provided they stand for a significant cause or movement that customers relate to.
“Mobilizing large numbers of people who resonate with the same social cause” is the most effective marketing initiative as emotional appeal becomes more important, according to the report.
“We saw an example of this in action when Dior’s ‘We Should All Be Feminists’ T-shirt sold out in a matter of days — because it enabled people to express their commitment to gender equality,” Verde Nieto said of Maria Grazia Chiuri’s debut collection for Dior that spurred a feminist debate.
Younger consumers are also likely to boycott a brand if its ethical values are not aligned with theirs: Forty percent of the customers polled have stopped using a brand if it acts irresponsibly, particularly when it comes to issues such as animal cruelty, tax avoidance, unsustainable sourcing or irresponsible marketing.
Social media has also given added value to user-generated-content and peer-to-peer reviews with 51 percent of Americans trusting user-generated-content more than product information on a brand’s web site or news articles.
When it comes to sustainability, which is slowly entering the mainstream, brands need to look at a more “inclusive agenda” related to diversity, gender equality, philanthropy and animal welfare, as well as reducing their environmental footprint, to be acceptable by Millennials, 70 percent of whom are willing to spend more on brands that champion causes they care about, according to the research.
“The word ‘sustainability’ has been overused to the point of becoming meaningless, but sustainability as a concept is more relevant than ever before, with issues of animal welfare, ocean plastic, diversity and waste pollution taking center stage in society,” added Verde Nieto. “Perhaps the most important takeaway is that corporate social responsibility can no longer be skin deep. A brand’s ability to spark an emotional connection with consumers, especially around the social and environmental factors that are increasingly important to them, will be imperative to successful growth.”
As emotional and ethical values become more important in the brand-consumer relationship, new technologies that can measure a customer’s emotional response are being brought to the forefront.
For instance, voice-activated technology is being developed to make communication more effective and also to allow brands to gain immediate insights into the perception of their customers just by the tone of their voice.
Emotional analytics is also focusing on analyzing the full spectrum of emotions expressed digitally — from custom animated characters created on the iPhone X to a consumer’s voice when using Amazon’s Alexa — to add a new dimension to data analytics.
“Tracking those emotions and quantifying the return on investment has been near impossible until now. Emotions influence our choices and yet the ability to analyze emotion has been largely missing in the digital world. But not for long,” said Verde Nieto, explaining that this new field is a result of the advancement of machine learning and will allow brands to anticipate the needs of the customer.