Connecting to Today’s Young Luxury Consumer
According to Boston Consulting Group, Gen Z and Millennials are set to represent more than 60 percent of the luxury market by 2025. And while these young consumers are more thoughtful and demanding than older generations, they're also optimistic about the future.
Cultural credibility is the key because sharing values with consumers has never been more important, Sarah Willersdorf, global head of luxury for Boston Consulting Group, told WWD. Brands who are winning are building their place in the metaverse
— the shared, persistent virtual space — to connect with consumers at an even younger age through social media and build a community of, and with, followers.
Here, Willersdorf talks to WWD about connecting with the young luxury consumer, forming relationships through innovative technologies and the influence Gen Z and Millennials have had on the luxury space.
WWD: What does it mean for the luxury segment to say that the Gen Z and Millennial Shopper is more thoughtful in their purchases?
Sarah Willersdorf: Our research found that, while traditional markers of luxury remain critical — superior quality, attentive design and an elevated narrative — these are no longer sufficient to drive passion for Generation Z and younger Millennials.
For these younger consumers, cultural credibility is also important. The building blocks of cultural credibility are the brand's timelessness, a brand narrative that evokes emotions, the advocacy of key opinion leaders and a consumer's social circle, as well as a curated assortment and creative partnerships with culturally relevant authorities.
Brands that are culturally credible foster loyalty by enabling and encouraging participation and communication. They constantly engage. They spotlight relevant or unusual causes and amplify them in the mainstream through advertising, creative projects, business philosophy and through the products themselves.
They collaborate with others to meet and subvert expectations, and harness local and subcultural knowledge, seeking advocacy from “Cultural Pioneers” and the circles they direct. Most importantly, brands that are culturally credible are both accessible and aspirational.
WWD: How can luxury brands utilize culture commerce and social media to connect with today’s young consumer? S.W.: Luxury brands are increasingly using culture commerce and social media to connect with younger consumers. These platforms often offer the ability to inspire consumers, as well as to drive purchases. For example, livestream events are highly relevant for the U.S. and Chinese luxury and accessible luxury consumers. From Boston Consulting Group's annual True-Luxury Global Consumer Insights survey, we know that, of the 46 percent of luxury consumers who are aware of livestream sessions for shopping, 70 percent of shoppers have purchased during or immediately after the session (43 percent during).
WWD: How do these innovative strategies help to drive discoverability? S.W.: There is a need to move beyond the traditional funnel model tracking a linear path from awareness, to consideration, to purchase. Today, consumers are often in awareness, consideration and purchase mode simultaneously. Most importantly, our research found that young consumers are spending increasing amounts of time seeking inspiration or discoverability.
BCG's research suggests that Gen Z spends 50 percent of their purchase journey on seeking inspiration and inspiring others post-purchase, rather than on more directly purchase-related activities. Social media and community platforms, as well as esports, are interesting ways to drive engagement with younger audiences.
Gaming, for example, and the relationship with luxury has accelerated. In our recent True-Luxury Global Consumer Insights survey, more than 50 percent of luxury consumers say that their perception is positively affected by their favorite brand taking part in online gaming experiences. Of those, 34 percent say this is because they can better discover new luxury collections and experiences from their favorite brands, and 30 percent say online gaming allows them to better express themselves and their style through their digital persona.
Boston Consulting Group's Sarah Willersdorf talks to WWD about how luxury brands can reach Gen Z and Millennials.
WWD: What about the designers in the accessible luxury market? How can they win young consumers?
S.W.: Accessible luxury brands are increasingly using similar playbooks to traditional luxury brands, especially when it comes to inspiring and engaging with younger shoppers, including social media, collaborations with ambassadors and influencers, livestream events, supporting more social causes and esports. There are also several accessible luxury brands that are enabling their consumers to collaborate directly with the brand by leveraging usergenerated content and other communitybuilding tools to drive further engagement and advocacy.
WWD: Is it important to form a relationship with consumers at a young stage?
S.W.: It can be a double-edged sword. While building relationships with consumers early is important, this accessibility needs to be balanced with the brand maintaining some level of aspiration, if not, there is a risk that a consumer will “age out” of the brand. It also sometimes depends on the category.
For example, trainers and sneakers are often discovered in early teens and connected with sport activity, and that early-built loyalty can carry through to later years — this is true for brands like Nike, Vans and Adidas.