Millennials, or Generation Y, refer to all people born between 1980 and 2000. It is a generation that is often considered to represent future consumers, and therefore is a central topic of discussion for all brands. The luxury goods industry is no exception, it is far from having escaped the trend. In 2018, Millennials accounted for 40 % of global personal luxury goods consumers, and represented 31% of luxury goods sales value. They will contribute to 130% of the luxury market’s growth between 2018 and 2025*. In this sense, the industry must quickly develop its strategy and go digital in order to welcome its future customers to the best of their ability.
*Bain & Company, Luxury goods worldwide market study Fall-Winter 2018
Unlike other generations, Millennials bring along their fair share of new demands and beliefs that shift away from the luxury market’s historical consumers. This shift makes brands take a strategic turn, which is not always as obvious as we would think. How can these Millennials be reached? Do young consumers represent a risk for the brand and its image?
The luxury goods industry’s challenges, faced with the expectations of the Millennial generation
Luxury, a lifestyle and raison d’être above all else
No matter the prestige, if Millennials cannot relate to the brand, they will not visit its stores. For them, the brand’s image, history and overall world has to match their beliefs. If a luxury brand reflects their values and lifestyle, they are even willing to cut back on their spending in other areas in order to buy luxury goods.
Miu Miu is a great example, they have very successfully told their own story through the stories of others. The Italian luxury brand has shown short films directed by women at Venice Film festivals. This action highlights the art of film-making and the feminist cause, which are both part of Miu Miu’s values. It leads the brand to stand out from its competition and draw convinced Millennials.
Another key element that is taken into account in this example is the experience and emotional value created. For Generation Y, liking a brand is not enough anymore. They want more, they want to live an outstanding experience. Something so unique they will remember it for a very long time. Sustainability is also an important factor in the eyes of young consumers. In a world where sustainable development becomes essential, Millennials want to actively take part in improving their ecological impact, and their purchases reflect that. A luxury brand has to be environmentally responsible. In fact, 4 young women out of 10 see it as a key factor in purchasing decisions, even if the product is more expensive. That is why Kenzo chose to shine a light on certain young directors and their works, which all revolve around the earth and its vulnerability.
Luxury brands, demystified
Tradition and savoir-faire have long been two cornerstones that have set luxury brands apart. However, these two elements are not as relevant in the eyes of Millennials. What really matters to them are the history and values told through their one-of-a-kind luxury items. They give a lot of time and thought to their clothes and accessories, which must reflect a particular image. An image they choose to embody. Luxury brands are consequently brought to change their ways. Confronted with these young consumers, they cannot shut themselves away in their usual quiet and hushed atmosphere only reserved to an elite. This highly statutory and distinguished world doesn’t match modern-day visions.
Millennials have always lived in an open and hyperconnected world. They easily travel abroad, easily communicate with the whole world. They have a broader and, above all, a more cosmopolitan vision. In that sense, they want to change things in order to converge towards progress. They want a luxury market that is more open to the world, that is less excluding and that shares their vision. Luxury brands need to be more fun, more interactive and closer to their customers. The stakes are high, and the evolution of luxury brands is inevitable. Two issues need to be addressed:
- On the one hand, luxury brands must open-up to the rest of the world, and especially to popular culture, without being knocked off their pedestal.
- On the other hand, they should not forget their traditional customers, who still account for a large part of their clientele. These customers are fond of the brand’s historical image.
How can luxury brands manage to draw Millennials while maintaining their historical customers?
Luxury brands, making the right move
One of the main solutions found by luxury brands to face these new challenges is to create products designed for Millennials. Luxury items that are more open to the world, more open to popular culture and that send a strong message. Several luxury brands have been very successful in creating products for Generation Y. The Italian brand Moschino, for instance, boosted its sales thanks to a new art director who has been able to head in the same direction as Millennials. He was inspired by the popular culture icons that kept young consumers’ company throughout their childhood and teenage years. In these unique collections, he staged Barbie, the Looney tunes and McDonalds, amongst others.
Gucci stands out as well with 55 % of its sales generated by Millennials.* They have hit the jackpot with their offbeat collections that could have come straight out of the 70s or 80s, which young people love. This success is driven by Marco Bizzarri and his retro-inspired digital communication.
Besides creating new products, luxury brands also work on their advertising and communication with the public. In this field as well, they extensively use the Millennials’ language and codes. From the face of the brand to its setting, everything is carefully thought out, down to the smallest details, to be part of the world in which young luxury consumers live. You may recall the Chanel advertisement featuring Cara Delvingne wearing chic sportswear and skateboarding, or Jaden Smith in a Louis Vuitton skirt. Some luxury brands have also gotten closer to the rap world, standard-bearer of pop culture, with Drake for Louis Vuitton or A$AP Rocky for Dior.
Luxury brands have to set their sights on Millennials considering they will represent the bulk of their customers in the years to come. But it implies meeting their expectations which are completely different – and even diametrically opposed – to the historical codes of the luxury goods market. Displaying more openness, offering out-of-the-ordinary experiences, highlighting values rather than savoir-faire, embracing pop culture, … Millennials are a demanding generation. And on top of all this, luxury brands must also be part of young consumers’ favorite scenery, the digital landscape, and embrace new technologies such as digital gift cards.