How Can The Luxury Brand Correctly Interpret The Millennial Generation?

For a long history

In terms of brand, youth is always an abstract concept. Facing the variable millennial generation, how to cater to the preferences of young consumers has become one of the most difficult problems of luxury brands.

Bain&Co. a recent report by Bain Research Institute shows that luxury products in 2017

It will resume growth again.

In 2016, global luxury sales fell 0.8% to 249 billion euros compared with 251 billion euros in 2015.

In the first quarter of this year, the growth rate of luxury market sales was 4%. The report predicts that this year's growth will return to 2 to 4%, contributing 254 billion euros to 259 billion euros for the economy.

For the recovery of global luxury consumption in 2017, Bain said in the report that three factors were attributed to the increasing purchasing power of luxury goods, the recovery of European tourism and the change of consumption concept of the millennial generation.

Among them, the attitude of millennial consumers is the most important factor affecting the development of the global luxury market. The report emphasizes that the millennial generation is the key group to redefine the development direction of the luxury market in the next ten years.

Bain predicts that the millennial generation and Z generation will account for 45% of the global personal luxury market by 2025, but this is not only an opportunity for luxury brands, but also a challenge, because the way of thinking and shopping of the millennials has changed greatly compared with the previous generations.

According to Claudia D'Arpizio, a partner of Bain Research Institute, the consumers born after 1950 have a clear and stable goal for their life, such as getting a high degree, finding a well paid job, then getting married and having children, and setting up happy families. Their desire for a prosperous life is largely reflected in their consumption patterns. They generally want to show their status by buying luxury brand products.

However, a stable and prosperous life is no longer the ideal life expected by the millennial generation. Especially in developed countries, they are born at a time when economic and technological development is developing rapidly. The life that the previous generations yearn for is just a normal day for them. For them, it is more meaningful to achieve spiritual goals than material goals. This is also one of the reasons why the luxury brands are now starting to digitally reform.

In the era of digitalization, time, space and feasibility are the concepts of integration. Marketing management mode is more diverse, flexible and novel. This is the premise of new retail and full channel marketing.

Previous analysis has suggested that millennial consumers are looking for novelty rather than uniform life.

However, the pursuit of freedom and freshness by millennial consumers makes their consumption preferences even more elusive, which is the majority of luxury.

The biggest resistance encountered in the process of digitalization reform and reorganization.

Jasmine Gupta, a luxury brand consultant in London, wrote in an article last week that the performance of the American high-end jewellery brand Tiffany Tiffany&Co. has not been improved until now, because the brand lacks the knowledge of the millennial consumers.

Tiffany HardWear series, launched in February, is the last one in charge of Frederic Cumenal, the original creative director of the brand.

At the beginning of this year, Tiffany made the first public announcement of the new HardWear jewelry advertisement endorsed by Lady Gaga at the opening ceremony of the US super bowl, which attracted the attention of the industry.

Some analysts have pointed out that Tiffany risked being attacked and insisted on inviting the controversial Lady Gaga to endorse and shoot a new series of HardWear advertisements. The purpose is to convey to the millennial consumers the awareness of Tiffany's bold innovation.

There is also a view that this is Tiffany's resistance to the view that more and more millennials think it is old.

Although the HardWear series advertising has indeed broken the original image of Tiffany's elegance and elegance to some extent, its effect is not as good as expected.

As far as HardWear series products are concerned, they are innovative and younger in design, but their materials are still dominated by pure gold and pure silver. They lack originality and do not have any advantage in price.

The Danish jewellery brand Skagen already has a similar design, pricing is Tiffany HardWear series 1/100.

Therefore, even under the double packaging of Valentine's day and Lady Gaga, the launch of HardWear series has not improved Tiffany's performance.

Tiffany's HardWear series invites Lady Gaga as spokesperson and is made of pure gold and sterling silver. The overpriced pricing is daunting the millennial generation.

According to LADYMAX data, Tiffany&Co. did not grow in the same quarter for 12 consecutive quarters. Net profit rose 6.2% to 92 million 900 thousand US dollars in the first quarter of this year, but sales growth stagnated, which was 899 million US dollars in the same period last fiscal year, less than 915 million US dollars, and same store sales fell 3%.

Jasmine Gupta said in the article that the ignorance of millennial consumers is the key reason for the failure of Tiffany's marketing. This is also a common problem of many luxury brands. At present, most luxury brands have misunderstandings about the Millennials. They urgently need to make clear the following three points:

First, the millennials do not need to gain identity through brand names. They do not want to be tagging for buying a product.

This is contrary to the needs of previous generations who want to show their identities through luxury goods. In the HardWear series of advertisements, Tiffany unintentionally offended the line of millennial consumers.

Tiffany chose a distinctive Lady Gaga endorsement, which is intended to convey its innovative determination to young consumers better. The contrast between Lady Gaga and its brand image can cause social media discussions.

However, this is not the case. Lady Gaga is too fashionable and cool to make consumers feel cool when buying HardWear products, and the Lady Gaga single strong woman in advertising films is also considered to be nothing new.

So far this year, feminism has been used by many luxury brands in design and marketing, but the response of the millennial generation is lower than expected.

Second, the digital retail channel is important, but it is not the only choice for the millennial consumers. The experience in the shop is also important to them.

The millennials grew up with electronic devices such as mobile phones and computers.

Because of their changing consumption habits, the e-commerce platform has become the mainstream in the fashion retailing industry, but this does not mean that the millennial generation does not need physical retail stores. According to the data of NPD Market Research Institute, many millennials will choose to buy luxury goods in physical stores, but single digital channels can not meet their needs for experience.

The HardWear series of Tiffany has made this mistake, which has been sold only through network channels and has not entered the offline stores.

Because the Tiffany HardWear series is different from the classic series before, many consumers can't afford to buy it because they can't go to the store to try it on. After all, the price of the product is only $6500, and the brand completely ignores consumers' concerns about online shopping.

For expensive luxury brands, it is the right way to embrace the millennial generation by integrating electricity providers and physical retailers in a rational way.

Thirdly, most of the millennials have high incomes but are not rich. The idea of timely enjoyment makes most people moonlight.

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Data show that the United States now has about 80 million to 85 million millennial consumers, a record high, but it also represents the diversity characteristics of this consumer group. Therefore, luxury brands should focus on their target consumer groups when formulating marketing solutions, and the traditional marketing model is outdated.

Some analysts consider the luxury consumers of the millennial generation as HENRYs (High earners not rich yet) groups, that is, high-income but not wealthy, who do not have stable deposits, but they are the most potential luxury consumers in the future.

Jasmine Gupta believes that luxury brands should be more cautious when pricing products.

For millennial brands with weak brand awareness, excessive pricing will discourage them.

It is reported that the cheapest product of the Tiffany HardWear series is a $150 ring, and the most expensive one is a double pearl necklace worth 13500 dollars.

According to the world clothing and shoe net, only 8 million 200 thousand of the 46 million 700 thousand families in the United States belong to affluent families, accounting for 17%. Most of the rest are HENRYs (High earners not rich yet) families with high income but no deposits. The average annual income is between 100 thousand and 250 thousand dollars. However, analysts predict that 1/3 in the group will change the wealthy families with an income of 1 million US dollars in the future.

The picture shows us income data from all walks of life.

It is worth noting that, based on the study of the consumption habits of Americans from 1984 to 2014, the Deuthe Bank Securities Inc concluded that the highest income group in the United States spends the most on luxury goods, but even the poorest American families will spend a large portion of their income on luxuries.

The report points out that the wealthiest families in the United States spend 65% of their money on luxuries and 35% on necessities; the proportion of luxuries and necessities in middle-income families account for half of the total; even the lowest income household expenditure in the United States is 40% for luxuries and 60% for daily necessities.

At present, the average annual income of the US family is 59 thousand and 300 dollars.

This data is almost higher than the overall expectation of consumers, and also confirms the future consumption potential of the Millennials.

So how can luxury brands interpret the Millennium generation correctly?

Jasmine Gupta concluded that luxury brands should try their best to help them to resonate with the idea and culture advocated by the brand in the marketing of the Millennials. First of all, they should be regarded as a mature and responsible group, not to try to conquer them, but to respect them first.

The changes that have taken place in the millennial generation by the luxury brands that really grasp the needs of the millennial generation have worked.

Dior creative director Maria Grazia Chiuri is gradually building the 70 year old Christian Dior into a luxury brand catering to the millennial generation of young consumers.

When she designed the first 2017 spring series for Dior, she made it clear that it would bring changes to the brand.

Contrary to Tiffany's rigid propaganda of women's independence through advertising films, in the spring series of Dior2017, Maria Grazia Chiuri skillfully used design and slogans to convey her understanding of feminism, whether it was feminist feminist We Should All Be Feminists Feminists declaration T-shirt, or white ribbon J "cat and shoe", which became a highly recognizable single product in social media and street shooting in a short half year, and was welcomed by younger generation of consumers.

After Maria Grazia Chiuri took office, Dior's star single item J'ADIOR cat and heel shoes.

It is worth noting that Dior is advocating women's rights rather than lonely women. The former is the true concept of the millennial generation.

It is easier to put the Manifesto on a T-shirt, perhaps more than in an advertising film, to emphasize that women's rights are more in line with the life style pursued by the millennial generation, that is relaxed attitude towards life, but without losing attention to serious issues.

The latest data show that the Maria Grazia Chiuri initiative for Dior has been initially successful, and its sales rose 18% to 500 million euros in the first quarter of March 31st, and retail channel sales increased by 19% compared with the same period last year.

Jasmine Gupta also stressed the importance of correctly understanding consumers' access to luxury brands through digital channels and achieving full channel retailing.

She pointed out that many luxury brands are simply adding an electronic business platform to digitalization reform, but they neglect the improvement of service and technology in physical stores.

According to the analysis, most of the millennials purchase the luxury goods through digital channels to search for the products they want, and compare the prices, but the final purchase behavior takes place in the physical stores.

In addition, the millennials are very concerned about experience and feelings. Whether online or offline, experience is usually the key to their purchase decisions.

Therefore, luxury brands should pay more attention to the combination of digitalization and physical stores in the digital reform in the future. Improving the service and experience of offline stores by digitalization technology is the premise of brand sustainable development, and the ultimate goal is to achieve seamless convergence of retail channels on line and offline, that is, the so-called new retail mode.

In this regard, luxury brand Gucci is a good example. Last week, Gucci officially announced its online shopping service on the official website of China (Gucci.cn). Consumers can purchase a full range of products in the season, covering handbags, shoes, clothing and jewelry series.

The website will become the only official e-commerce platform of Gucci in China.

It is not difficult to understand that the original intention of Gucci to launch the Chinese e-commerce platform is to provide close access to Chinese consumers by offering online shopping options which are not subject to the market place and business hours.

The most important thing is that Gucci's offer service is very intimate. Apart from its flexibility and efficiency in physical distribution, it also provides the express delivery service on the same day.

In addition, Gucci also provides online customer service and telephone customer service in order to receive timely consultation and feedback from consumers.

Considering the diversity of electronic devices used by the millennial generation, the design of Gucci official website can be flexibly switched among different devices, and consumers can get a more smooth shopping experience.

Gucci.cn adaption design for each mobile terminal

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At the same time, Gucci's endless digital creativity and artists cooperation project, from the first 360 degree VR panoramic movie "dancing freedom" not released recently, to the global expansion of online business, Gucci has continuously infiltrated digital penetration in every level of creativity, marketing and information dissemination into the life of millennial consumers.

Thanks to this, sales of Gucci in the fourth quarter of last year jumped by 70% over the third quarter.

In the entire fiscal year of 2016, the millennial generation bought almost half of Gucci's products.

Data show that Gucci grew faster than the group's other luxury brand Saint Laurent for the first time in the first quarter of this year. Sales surged 51% to 1 billion 354 million euros, the strongest growth in 20 years, and contributed more than 1/3 of revenue to Kai Yun group. This is enough to show the influence of Gucci on the millennial consumers.

Jasmine Gupta also believes that luxury brands should understand deeply in the process of understanding the millennial generation. Besides the most basic consumption preferences and ways, it is more important to understand the purchasing power and consumption concept of the millennial generation, and to formulate targeted marketing strategies from their consumption motivation.

Gucci CEO Marco Bizzarri has said that the fashion industry is full of variables all the time, traditions and rules will be overthrown at any time, and consumers are the real leaders. In other words, luxury brands should always be alert to the danger of consumers' aesthetic fatigue.

Prada is also considered the next most luxurious Italy brand with the most potential recovery potential, thanks to the significant pformation of the product younger and digitalization strategy.

Group income in Asia, the main market in Greater China sales began to rise from the third quarter of last year, and continued to grow in the fourth quarter.

Some analysts pointed out that Prada rediscovered consumers by relying on the revitalization of handbag business and the new digital strategy. The two is undoubtedly the most interesting part of young consumers.

The group's first electronic business platform is expected to open to consumers in China, South Korea, Australia, New Zealand and Russia at the end of the year. Other countries and regions will be launched in 2018.

Claudia D'Arpizio points out that the most important difference between millennial generation's attitude towards luxury goods and previous generations is that they do not need to buy luxury goods to prove their abilities, and rich material life makes millennials more confident than their predecessors.

Claudia D'Arpizio said that the millennial generation is affecting the entire luxury goods industry. The younger generation has clearly become the key word in the development strategy of the major luxury brands.

What's more, millennial generation consumers are different from traditional luxury consumers. When they discover that luxury brands can't satisfy their values and self definition, they often choose to create their own brands to define new luxury and fashion. "Luxury goods industry is at a critical stage of revolution."

Claudia D'Arpizio added.

In addition, the highly digitized living environment makes distance no longer a hindrance. Hai Tao and overseas travel become a popular consumption style of the millennial generation, and the popularity of social media has also narrowed the distance between consumers all over the world. Through the network, they can exchange information, use and purchase experience at any time and anywhere.

In the report, Bain's consultant pointed out that in the Chinese luxury market, which is regarded as the most promising potential, Chinese consumers have changed a lot about luxury goods in recent years. "They used to buy luxury goods to show off their wealth, but now they want to show their good taste and the top commodities that the luxury goods industry can provide."

The report says Chinese luxury consumption is increasing overseas.

China now has an increasing number of people earning more than three hundred thousand a year, and showing a younger trend.

According to the WeChat survey released by i2i group, the top four brands that Chinese young people like to buy abroad are Dior, Prada, Gucci and Coach.

They also like Herm s, Chanel, Burberry, Boss and Tiffany.

Louis Vuitton, which has been among the best in the past few years, slipped to tenth this year.

I2i chief executive Alexander Glos said this shows how many Chinese millennials "crave luxury brands different from their parents".

For Chinese consumers who like to buy luxury goods abroad, McKinsey said in a report that the main reason for the luxury consumption outside China lies in consumers' dissatisfaction with the luxury shopping experience in China.

The report shows that the rich group has an average of 5.9 outbound trips a year, and is the main group of Chinese outbound tourists.

The tolerance of the rich to the price difference is getting lower and lower.

In 2012, 60% of consumers were willing to accept a 20% price difference. Only 20% of consumers today can tolerate this. Only 70% of consumers will choose to purchase in the mainland when the price of luxury goods is similar.

In addition, the dissatisfaction of China's rich contacts to luxury shopping in China still exists in such problems as fewer products, poor store experience and customer service quality.

Between 2008 and 2016, the proportion of overseas luxury consumption in consumption increased from 2/3 to 3/4.

According to McKinsey, the supply and demand of luxury goods in mainland China does not match.

Overseas luxury consumption is booming, while the mainland market is still in the doldrums. From 2008 to 2016, the number of luxury stores in mainland China increased by 3.3 times, but sales increased by only 2.3 times.

In addition, two major changes have taken place in China's luxury consumption in recent years. First, the main driver of luxury consumption growth has shifted from the first consumption to incremental consumption; two, the consumer characteristics are mainly from the past 100 thousand to 300 thousand yuan of household income in the past, and become the group of households whose annual income exceeds 300 thousand yuan, which accounts for 88% of China's luxury consumption.

It is undeniable that the millennial generation that occupies China's huge population has become a powerful group, and they are redefining the rules of content creation.

However, relying solely on effective marketing of young people does not necessarily give the luxury brand the right reward, because what consumers buy in the end is not only experience, service, but also the product itself.

Earlier, the Swiss Union Bank's survey of 2109 millennial consumers from China and the United States showed that millennials were also concerned about the quality of products.

As a result, luxury brands constantly create new feelings for consumers while they are younger. At the same time, they must prove that their products are value for money, not just rely on mystery.

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