As WWD China predicted at the beginning of the year for the luxury consumer market in 2021, the younger generation will continue to incubate consumer hotspots. Whether it is the tide play economy or the virtual luxury boom caused by the meta-universe and NFTs, the younger generation of consumers are the main promoters behind these consumption hotspots, and they are also the most important luxury consumption force.
According to data reports from major analyst firms, both Gen Z and millennials have become the most important incremental drivers in the luxury consumer market. Compared with other generations of consumers, they have very different consumer behavior habits – from wanting luxury brands and retailers to provide more flexible payment options, to whether brands have taken practical action on sustainable development issues, to whether there is a strong enough brand personality and whether there is enough penetration in the e-commerce field, these traits are profoundly changing the rules of the game in the luxury consumer market, and brands are beginning to let go of some of the rules and stereotypes they have stuck to in the past and actively embrace the younger generation.
According to the latest research report from the Boston Consulting Group, the younger generation of consumers is expected to account for more than 60% of the global luxury consumer market by 2025. Sarah Willersdorf, head of luxury globals in Boston, told WWD that these young people show a more thoughtful and demanding side when buying luxury goods than other generations of consumers.
By 2025, younger generations of consumers are expected to account for more than 60% of the global luxury consumer market
"We're trying to distinguish these Gen Z, Gen Y, and slightly older millennials because the needs and behaviors of younger millennials tend to be closer to Gen Z. These younger generations are true digital-age natives who are more diverse and socially conscious than previous generations and will boycott brands that offend their beliefs. At the same time, they wanted brands to have more personalized store services and campaigns, and to value their own community culture," says Sarah Willersdorf.
However, from an engagement perspective, what sets these young consumers apart is not as simple as calling them "digital natives" or simply pointing to the internet or games. "Instead, what has changed is an increase in creativity and cultural literacy, driven by the use of digital and social platforms." As a result, all aspects of consumer life have reached new heights, which reflect higher expectations for brands and products. ”
So what do luxury brands need to do to better engage these younger consumers, retain them and increase the number of times they repeat purchases to cultivate a long-term stable customer value?
Sarah Willersdorf believes that first of all, luxury brands still need to emphasize the traditional characteristics of luxury goods, such as excellent quality, unique design and elegant narrative, but also need to support and encourage the participation and exchange of people at different levels. "Gen Z and young millennials are looking for a brand narrative that evokes their emotional resonance, which includes advocacy by opinion leaders on social media and consumers' own social circles, as well as well-planned and creative partnerships with culture-related institutions. Sustainable and socially ethical companies will increasingly become the focus of attention for all consumers. ”
Online channels are one of the main channels for younger generations of consumers to shop
At the same time, brands need to cultivate a real community. Sarah Willersdorf pointed out that although products are always the most important, from the current point of view, and the younger generation has a common value system, like-minded luxury brands can often win the favor of young consumers. For young consumers, buying a particular brand is to highlight the personality and show themselves to the cultural circle to which they belong. "Therefore, how to use community culture to make a direct connection with young people is a problem that luxury brands need to think about at present."
In addition, brands need to commit to building strong brand-owned channels to achieve consumer conversions. Research in Boston shows that brand-owned channels, such as brand websites, physical stores and mobile apps, are still the most important channels for consumers to shop, so through the construction of these channels, it will play a key role in promoting consumer purchase behavior.
Sarah Willersdorf said: "In addition to building on these channels, brands also need to tell the same story in these channels. For example, when consumers access limited or unique content in a branded app or website, that proprietary content can serve as a powerful tool to drive consumer behavior. ”
It is also important to provide young consumers with flexible payment methods. Sarah Willersdorf told WWD: "Buy-before-pay and installment plans are increasingly being pursued by younger generations who are looking for transparency and convenience in payment methods. ”
The buy-first-pay-first-come payment method is popular with younger consumers
Sarah Willersdorf believes brands also need to be prepared to fail and be more proactive in experimenting with new platforms in order to build closer connections with younger consumers. In this regard, Sarah Willersdorf explained to WWD the example of esports games. A recent global study in Boston showed that more than half of luxury consumers say their favorite brands' investment in video games has had a positive impact on their perceptions.
More than a third of these consumers said it was because they could better discover new products and consumer experiences from their favorite brands, while another 30 percent said it would help them better express their personal style through the brand's digital persona. "Savvy luxury brands are increasingly experimenting with cultural commerce, augmented reality and social shopping to connect more with younger consumers, and these initiatives will stimulate their desire to spend and drive purchasing behavior."
From the Chinese market to the global market, as the consumption power of the young generation continues to be released, their unique consumption behavior habits will also prompt this industry that does not like radical change to change its own rules of the game. Perhaps in the future, a more transparent, more open, more diversified and more extensive luxury consumer market will gradually take shape under the impetus of the younger generation. WWD
Written by Alexandra Pastore
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