Millennials and Luxury
Put aside any preconceived notions that you might have about millennials. Because, love them or hate them, they now have the most purchasing power and cannot be ignored. So, why have Millennials caused such a stir in the luxury industry? It is because Millennials approach luxury in a very different way than past generations. They operate from a do-good perspective and are fiercely loyal to brands (but not blindly so).
Before I get ahead of myself, here are 5 ways to reach Millennials and create uber-loyal customers.
- Experiences
- Sustainability
- Ethics/Social Responsibility
- Wellness
- Authenticity
Experiences:
Let’s start with experiences. Yes, it is true that Millennials are spending a lot of their disposable income on experiences, things like vacations. And while vacations are often a driver, it isn’t strictly limited to those kinds of experiences.
“When we buy experiences, those purchases make us happier than when we buy things,” B. Joseph Pine II told BoF.
But, experiences aren’t limited to vacations. Take for example Lululemon’s yoga classes or Nike’s running clubs, when products are offered with an experience, the experience drives the sale. In the case of Nike and Lululemon, it is apparel, shoes and accessories. But, it is not limited to wellness or activity types of experiences. Luxury retail brands have learned to create desirable experiences too. Think pop-up shops, parties, concerts and music festivals.
Need more evidence? According to a 2014 Boston Consulting Group report, of $1.8 trillion spent on “luxuries” in 2013, almost $1 trillion, or 55 percent, was spent on luxury experiences.
Sustainability:
Knowledge is power. And, now most consumers know that the fashion and apparel industry is the second-largest polluter in the world. Not to mention animal welfare (remember the mistreatment of crocodiles and alligators that were used to make Birkins for Hermes). Instances of pollution and animal welfare have prompted more global awareness and action.
Take Miroslava Duma, a millennial herself, is starting a new company, Fashion Tech Lab (FTL), which is focused around socially responsible investing. FTL connects technologies with the fashion industry. The company’s investment arm has secured at least $50 million set aside to invest in sustainable companies.
Duma has said that her decision to set up FTL was based on her personal dedication and passion to the pursuit of finding sustainable practices for the industry.
But she isn’t the only one. There are several brands that have shown sustainable fashion isn’t as drab as people might think. Younger generations are demanding something different. And smart brands are stepping up to the challenge.
“Millennials and Gen Z, those are the ones who demand sustainability in every single area of their lives,” Duma told BoF.
There are a wealth of cool, sustainable, new brands (such as Reformation which has been praised by Vogue) rejuvenating the luxury market with several young celebrities championing it!
Take Emma Watson; a millennial whose has set up an Instagram account to amass all her eco-friendly looks.
Young consumers are truly driving the shift in attitudes towards sustainability and how luxury brands operate. Take LVMH for example, they understand that Millennials care about sustainability. They have made a strategic choice to focus on building a brand (or several) that focuses on connecting sustainability, quality and brand image.
“Until recently, marketing would focus mainly on product and brand image. But now people look for whether you’re both socially and environmentally responsible. People look at brands and ask what they do for the world. If you don’t do this stuff, you’re not a modern brand,” Charles Gibb, Belvedere’s CEO told Harvard Business Review.
Kering Group has also fast-tracked sustainability initiatives in the luxury space by becoming the first founding anchor partner of Plug and Play — Fashion for Good, an ideas accelerator. Yoox Net-A-Porter Group is also committed to shaking up sustainability in luxury by leading by example focusing on educating, empowering and innovation.
“Forty-four percent of younger millennials said they would like to see more eco-friendly fabrics used in clothes,” Alice Goody, retail analyst for Mintel told The Guardian.
Across the luxury landscape brands have been increasingly transparent regarding employee benefits, manufacturing processes and other corporate social responsibility touchpoints to demonstrate the industry’s pioneering nature.
Ethics/Social Responsibility:
Ethics and Social Responsibility are very much in line with sustainability. But here, Millennials are more concerned with the human cost, over the cost of the environment (same same, but different).
After the Dhaka and Pakistani Fires of 2012 and the Rana Plaza collapse of 2013, consumers have started to take notice and become more curious as to who is making their clothes (#WhoMadeMyClothes). And activity seeking out brands who are more transparent.
In each tragic instance, the building housed garment factories that produced goods for major retail companies in, you guessed it, North America and Europe. And while the retailers themselves don’t directly employ workers in these areas, they do have business relationships with the factories that are responsible for the workers’ well-being. It is in those relationships where brands can make a difference. It is the transparency in those relationships that are of interest consumers. Millennials have started to ask, what is the human cost?
“People are actively looking to make a change. They want to know more about the “how” and the “who” behind the clothes they wear – to understand the story behind their clothes,” Yael Aflalo, founder of Reformation, told the Guardian.
Wellness:
Similar to experiences, millennials are concerned with their general wellbeing. For many, Fast Food is not on the menu but the ethical treatment of animals is. As well as people wanting to know what is in their food, where it is from and how it was made.
“People really want to learn and tap into that ability to lead a better life,” Colleen Wachob, the chief branding officer of MindBodyGreen told BOF.
In many ways, it can be argued that fashion has always been transformative. An article of clothing can make you feel more attractive, or convey social standing (even if you are faking it). And sayings like, “dress for the job you want” and “look good feel better” didn’t come from nowhere. So, maybe connecting things like wellness focused transformations with your fashion brand isn’t that far of a stretch.
Authenticity:
Millennials can see right through ambiguous compliments. After all, we grew up with Mean Girls.
What I am getting at here is that it is imperative, that brands remain authentic. For example, I wore a wicked awesome headband the other day, took a selfie (thought I looked pretty good), posted to Instagram and tagged the brand in the caption. I immediately got a response (and a like) from the brand, actually, the designer herself! I was already in love with the brand, but the interaction was so genuine and kind. She definitely solidified my customer for life status!
Through all of this, there is a strong overarching theme, you or your brand, needs to be where your consumers are. Be on social and remain engaged. The underlying thing is, you have to create a connection to your brand that is personal to the customer. These five things that I have decided to focus on are, in a way, interrelated. Experiences can focus on Health, Sustainability and Ethics often go hand-in-hand and Authenticity has been a driver of brand loyalty for years.
Millennials, love them or hate them, are the do-good generation and are truly driving this revolution by demanding brands do things another way. This new wave of consumers really want to become better people. And not only for themselves but for the world around them.
The fashion industry has an undeniable opportunity to act. Act differently. Change the conversation. Pursue growth and profits while creating value for the world economy, not just Western ones. This opportunity for change and action comes with the vital need to place sustainability and ethics on decision makers’ agendas’.
