From Millennials to Gen Z: How Luxury Brands Can Adapt their Strategies
Millennials, the sun is setting on your day of glory. You are no longer the ‘favorite child’ of marketers and luxury brands. Very soon, your influence will wain and all attention will be diverted to Generation Z consumers, the post-millennial group who is now coming of age and becoming a spending force to be reckoned with. According to the Deloitte study Global Powers of Luxury Goods 2018, millennials and Generation Z represented around 30% of the luxury goods market in 2016. The research predicts that collectively they will represent over 40% by 2025. This increase will, in large part, be a direct result of the financial maturity of today’s Gen Z’ers.
First, a couple of basics:
Millennials are roughly defined as those born between the 1980’s and 2000’s.
While varying definitions of Generation Z abound, most people agree that they were born after 1990. When we talk about Generation Z consumers, we are usually referring to teenagers and very young adults with spending power.
While they are the generation that comes after millennials, it would be a mistake to think that targeting Generation Z consumers can be achieved through ‘more of the same’. This is a unique demographic; their upbringing has been markedly different to the generation that came before them and they are spending, and will spend, differently.
So, what is this going to mean for luxury brands in watches and fine jewelry? How should these brands target Generation Z consumers? And which brands are already making waves?
Gen Z has borne witness to the economic instability experienced by working millennials. As such, they are hardworking and pragmatic. They value financial stability and smart purchases. In an interview with Luxury Society, President of FutureCast Jeff Fromm said “they (Generation Z consumers) like to work hard for their money and spend it wisely. I think their appetite for luxury brands will be greater (than millennials).”
3 Luxury Brands Targeting Generation Z Consumers Successfully
Tag Heuer: Successfully Bridging the Gap between Tradition and Modernity
In their #dontcrackunderthepressure campaign, Tag Hueur, a master of Swiss watch finery, reached across the void and grabbed millennials (and to a lesser extent Generation Z) by the shoulders and shouted “we are relevant for you too”. This campaign saw the brand modernize their dialogue around precision and technology by bringing model and actress Cara Delevingne (herself a Gen Z’er) on board. Tag Heuer’s CEO Jean-Claude Biver told Women’s Wear Daily that they “needed someone disruptive yet elegant like Cara to open our minds to the brashness and boldness of today’s youth”.
Gen Z is also the first generation born directly into the digital revolution; it is not enough to say they are tech savvy. They are what many refer to as ‘digital natives’ and know no other reality. As a result, this is a cohort of young people who are naturally predisposed to change and innovation and who demand ease in digital processes. The New York-based marketing agency Sparks & Honey found that this group spends 41% of their time outside of school multi-tasking with computers and mobile-devices, compared to 22% ten years ago.
The brands who really want to reach out to and connect with these buyers need to avoid the pitfalls of stereotyping. Luxury brands should not assume that social media and social media alone is the answer to their prayers. They must not put all their eggs in this basket as studies conducted on this purchase channel are conflicting: Accenture’s 2017 Consumer Survey found that yes, Gen Z are likely to give their loyalty to brands that adopt the newest digital trends and channels.2/3 of those surveyed stated that they are interested in purchasing directly through social media like Instagram and YouTube. As they are already going there for fashion inspirations, they would like to be able to buy there too. However, data firm eMarketer predicts that use of Facebook is dropping significantly amongst this generation. Instagram and Snapchat are already very popular and are predicted to remain so. The communications expert Hill Holliday on the other hand found that 34% of 18 to 24-year olds they surveyed have already quit social media entirely and that 58% expressed a need for social media “relief”.
De Grisogono: Embracing Conscious Social Media and Reaping Major Gains
De Grisogono. Timeless crafters. Tradition in the veins. De Grisogono founder Fawaz Gruosi has said of social media “I am slightly skeptical about it… but I think it is good in moderation. I think we need to be very careful with the concept of over-sharing; seeking validation from others and the potentially addictive effect this can have, especially on the younger generation. On the other hand, social media can also represent a sort of window into other people’s lives, cultures and experiences. It can be something enriching and exciting…”. This conscious, careful embracing of social media and its potential is in line with how many Gen Z’ers feel; they are aware of the pitfalls and are more skeptical, measured users than millennials.
That said, De Grisogono’s commitment to studying and selecting the best social media influencers for the brand has paid off. The brand has recently seen a 1000% increase in mentions, as well as an explosion in media coverage, all thanks to an astute, serious approach to social marketing. As well as that, the jeweller has always known how to harness events to promote their story. Now, they maximize the ‘event effect’; at the 2015 Cannes Film festival they reached millions of new, young consumers by offering live purchase opportunities though social media content and influencer marketing.
Sparks & Honey research also indicated that Generation Z’s values are greatly different to those of millennials. 60% of Gen Z expressed a desire to have a positive impact on the world, compared to 39% of millennials. This desire is reflected in shopping habits with sustainability and positive messaging becoming more influential than ever.
Baume Watches: Hitting Home with Sustainability
The luxury Richemont Group’s latest offering, the new watch brand Baume, must surely be interpreted as a bid for Generation Z’s wallets. Starting at $560, Baume watches are made from sustainable materials and via sustainable manufacturing processes. This is a brand that has built ethics into its DNA. On top of that, the watches are customizable, (appealing to Gen Z’s desire for uniqueness), the name is new enough to provide a counterpoint to established, “stuffy” brands, and last but not least, Baume’s advertising is big on the ‘real people feel’; no celebs here.
Want to know more about how luxury brands are accessing digital luxury consumers? Download your copy of Understanding the Digital Luxury Consumer: Key Insights from East to West, a comprehensive data report with insights on how luxury brands are leveraging digital strategies and influencer marketing in China, North America and Europe.