How to sell luxury goods to Gen Z
"Today, luxury needs to redefine the way it is presented to be relevant to different generations and cultural groups" says Suzy Menkes, International Vogue Editor.
According to a Bain and Altagamma report of 2019, the global luxury market is expected to reach 1.3 trillion euros (approximately 1.5 trillion dollars) by 2025.
And in this market, Millennials and Generation Z will form a significant percentage in the sector. Millennials, a generation that is laying its foundations in the work organization structure, will represent 50% of the luxury market in 2025, while Generation Z will account for 10%, according to the same study.
Even then, Gen Zs might be more interesting to the luxury sector, as they aren't familiar with concern and are just as digital as their predecessors. A study by the Kronos Incorporated Workforce Institute shows that 56% of Gen Z respondents are optimistic about their future career.
This generation is more likely to spend more and save less.
For this group the concept of luxury, a term often associated with items such as bags or jewelry, has changed, taking on a new meaning. For them, price or quality has been sitting in the background, while uniqueness, inclusion, value and personal expression have been treated as a priority.
As a consequence, this group has different purchasing priorities than the other demographic groups. The first factor to consider is the hyperconnectivity of these users. Social networks are the field of action of Generation Z. In fact, 92% of all interactions with luxury brands occur on Instagram, according to a Gartner L2 study.
To attract younger audiences, the Gucci brand posted a series of memes on social media to promote their new collection of watches called Le Marché des Merveilles. The images referred to the feeling of putting on a watch for the first time.
Social media has democratized luxury, taking the power from editors and handing it over to users. This group wants to participate in the product creation process. Item customization is an opportunity for Gen Zs to express their individuality. For example, the customers at the Blamain pop-up could access their latest sneakers, personalized exclusively by artists on site in a space created for that purpose.
Although they are a markedly digital group, Gen Zs also seek real experiences, far from the online world. Specifically, 80% of them like this type of business experience, according to a June 2018 survey by Criteo. Of course, these strategies are focused on creating a community - for example, the Hypefest streetwear celebration. Streetwear is the combination of urban and luxury clothing, highlighting the new standards of luxury among young people.
These experiences are also carried over to the physical store. Luxury brands are seeking more informal designs and creating interactive tools in-store to appeal to Generation Z. In their new store in New York, Gucci have incorporated video installations, Augmented Reality and tablets to design handbags.
73% of Gen Zs would pay more for sustainable items.
On the other hand, Generation Z is very environmentally aware and concerned about climate change. According to a First Insight survey, 73% of Gen Zs would pay more for sustainable items. Brands are already working on implementing organic products in their ads. For example, Prada announced that in 2021 all their nylon will be made of 100% recycled materials.
Early adaptation to Generation Z is a challenge that will bring great benefits in the future. Because of this, a startup or brand that wants to focus on this demographic group should know what their needs are, as well as which campaigns attract their attention the most.
This way, companies that advocate for sustainability, personalize their product based on consumer feedback, use social networks as a link to the Gen Zs and seek real experiences will gain a lot of ground with this group.
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