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The luxury sector is facing an emerging audience with very different expectations. By 2025, Millennial and Gen-Z consumers will represent nearly half the audience for luxury goods. These generations aren’t going to find the luxury industry’s traditional business model to be very appealing.
Many of them will be net natives, who take digital access to brands for granted, and they absolutely expect everything to be available to them online. But they also have different values and expectations, which often clash with the ones luxury brands currently encapsulate.
Millennials and generations that follow them have lived through very different times compared to baby boomers. This has shaped the values and expectations of the younger generation, meaning they respond very differently.
The generation that birthed the hipster has a greater interest in authenticity compared to older consumers. They tend to value community, something that doesn’t always sit easily with luxury values such as exclusivity and aspiration. And they increasingly demand transparency from brands.
As luxury brands seek to make the consumer feel good about themselves, it’s particularly important that they align themselves with the values of this new generation of consumers in order to meet that need.
Consumers that think it’s important to live a sustainable lifestyle need to have that expectation met. If established brands don’t meet these expectations, there’s a danger new market entrants will exploit this opportunity.
Consumers value experiences
Luxury goods makers face a significant challenge in getting through to a new young audience that value experiences over and above ownership. Younger consumers tend to value experiences such as sharing time together, transparency or realness, and also values such as learning something or doing good.
Cycle clothing and accessories brand, Rapha has found a way to create that experience and reflect emerging consumer values such as community, learning, and getting closer to others via a shared experience.
The brand has its own cycling club where like-minded cycle enthusiasts can meet, it arranges branded holidays and is expanding its network of cycling clubs where members can get free coffee and buy luxury merino jumpers.
Luxury brands can certainly go beyond mere product sales to cater to these more socially-minded consumer interests. It’s also valuable for them to do, both to build a lasting connection but also to provide something different compared to just buying an item on-line. Offering an experience that consumers value has the potential to be a key differentiator for luxury brands.
That may be particularly true as society continues to experience various changes predicted to happen over the next few decades. A dwindling population and increased automation is likely to mean consumer see less person-to-person brand interaction in their daily lives.
Cashiers and in-store staff, and the rise of online shopping means that the consumer of the future may see interaction with a brand representative as a rare occurrence. This is something luxury brands can offer, whether it’s by staff making the experience memorable or just offering service and assistance in-store or via concierge services.
Consumers are changing
Millennials don’t exist in their own bubble: although this generation holds a unique set of consumer values, some of these have also filtered through to older generations. We’re increasingly interested in sustainability and responsible consumption as a society, not just according to our particular demographic. So luxury brands need to adapt not just to serve the next set of customers, but also their current ones.
Younger generations also tend to have expectations about how fashion and other types of brands are active on social issues. It’s well known that younger generations are far more open minded about topics such as gender identity, and it’s not uncommon for industries such as fashion to lead the way in these areas.
Some brands have already experimented with non-traditional depictions of gender. One Shanghai-based fashion start-up used a 72-year-old man to model female clothing and a young Jaden Smith headlines Louis Vuitton womenswear.
Brands are both following and leading social trends in this arena. The fashion industry has always been at the cutting edge of social matters, rapidly adapting what we wear to reflect often-controversial changes in society.
But the extent to which consumers have changed goes beyond adapting products to meet evolved social expectations. The industry also needs to review its entire approach to connecting with customers, examining its own practices, and finding new ways to market what it does.
Millennials are often unfairly disparaged for having overly high expectations. In reality, there’s no reason not to expect brands to deliver on expectations – particularly when they are charging luxury brand prices.
The luxury industry is well placed to meet the needs to demanding customers. After all, this industry has built itself on the excellence of its customer experience. Brands that are accustomed to delivering amazing experiences should be able to take what they know and cater to the next generation of consumers.