Millennial luxury consumers – Owning the biggest brand names is no longer cracking it for today’s customer. How often does this happen to you – you buy the latest luxury product and chances are, somebody in your group already has a similar pair. This is thanks to the fraction of people who actively spend on luxury goods. However, we are no longer just a fraction of that customer base. With globalization and more disposable income, our wants are touching new horizons, too.
Although, can we really say that we have enough disposable income? What many of us have been oblivious to all this while is a category commonly referred to as ‘HENRY – High Earners, Not Rich Yet.’ In simpler terms, it refers to a generation who makes a steady cash flow but has very little accumulated wealth; as opposed to the baby boomers who had great saving habits. Regardless, millennials are outspending baby boomers today, making the former the largest generation to spend on the luxury sector.
This change in outlay indicates the changing dynamics of the luxury customer today. Who is the primary luxury customer? How are they spending their money? How is the industry reaching out to them?
These questions lead us to what is commonly known as Millennial Luxe today. This new term has now become the future of luxury brands. Millennials include anybody born between early 80’s (during the dawn of mobile phones) to early 2000’s (infant stage of the Internet).
How are Millennials changing the face of luxury retail? To begin with, ‘ownership’ is no longer a primary priority. Millennial shoppers have changed the luxury category from being ‘exclusive’ to ‘unique’, and ‘experience’ has now taken over ‘owning’. The luxury pyramid has more licensed, co-branded and bridged products in comparison to couture and custom-made pieces. This new definition of luxury has made the smartest minds realize that today’s shopper does not feel the need to splurge on something just because they have the means to. Instead, they are looking for more valuable things, such as originality.
Brands have started to blur the lines between luxury items and experiences. The emphasis on experiential purchases is much higher today, because shopping for luxury is, in every way, an experience.
How are luxury brands approaching the millennial shopper? The first step that luxury brands have started taking towards luring the millennial customer is being present where most of them are for the better part of the day – Internet. It is no surprise that luxury brands have started taking to digital in order to tap into a market which is more tech-loving, diverse and much younger. Luxury brands have been in a habit of serving those with heavy pockets and accumulated savings. Hence, this paradigm shift to e-commerce has come a long way, and with many ups and downs.
Helen Brocklebank, CEO of luxury retail group Walpole, explains why brands have previously been wary of digital: “Two of the basic pillars of luxury brands, until now, have been selective distribution and managed scarcity. The online world has always threatened to challenge both these pillars. It’s not that these are impossible in the online world, but the challenge is clear and present.” In this constant rat race, luxury brands that fail to adapt to this tech-driven business have a lot to risk along with losing their competitive advantage in the market.
Nonetheless, a luxury brand entering the digital space is a gradual process. They make this shift very carefully, doing the best they can to maintain their traditional image on the web as well.
How can luxury brands win over today’s shopper? Even if the purchase happens at the store, not having an online presence can make a brand unnoticeable in the eyes of the shopper. For luxury brands to succeed and maintain their grip on the market, brands have to draw their attention to digital channels as well, and integrate the two, making the experience seamless from start to finish. A very good example of this very practice is Burberry. From sunglasses to its famous trench coats, Burberry does not discriminate in its online offerings, providing the customer with the same levels of comfort,familiarity and experience, as they would have had in-store.
Another great way to grab the millennial shopper’s attention is by offering high-end and relevant content. Millennials seek authentic stories. A brand’s values, philosophy and heritage have become important for young and affluent customers before they buy into a brand. Chanel’s Inside Chanel is one such example of sharing the brand’s story and other valuable information with consumers and reaching out to them flawlessly.
Social consciousness and building integrity is now important to the young shopper. It is no longer just about materialism. The new phase of luxury consumption has also led to the emergence of new product categories such as organic foods, farm-to-table foods, conscious travel and the likes.
With technology such as Artificial Intelligence (AI), Augmented Reality (AR) and videos, brands are now being able to create luxury experiences more efficiently online, keeping their consumers happy without compromising in any way. For instance, Prada has introduced a ‘personal concierge’ to its Chinese website in the form of a chat box, that tracks a real time shopping experience.
Now, would you be equally cautious before you buy luxury online? Think about it. Luxury is a state of mind, not a brand or a price point. Millennials still want luxury, but luxury that is consistent, and in line with their personal values.