The next generation poised to become the core target market for luxury brands is bringing a whole new outlook on style and value into the luxury marketplace. As Millennials mature in their careers and grow in affluence, luxury brands need to connect with this generation in compelling ways that meet its unique set of expectations and needs. One thing Millennials don’t want is their parents’ or grandparents’ traditional luxury brands. They want their own.
In an anecdotal example, a Millennial generation associate lawyer told us that the grey-haired partners at his firm wear their Rolexes and other luxury brand watches to signify their wealth and status. But his status symbol watch isn’t some expensive Rolex, but rather his Ironman Triathlon watch. He explained, “It says ‘I am this kind of man, a triathlete. I need this watch.” The status statement this young lawyer wants to make is not about how much money he has, but who he is and what he has accomplished. Another young woman said her status symbol isn’t the car she drives, the handbag she carries, or the designer clothing she wears, but the initials after her name —in her case, Ph.D.
For this next generation of luxury consumers, making money, getting promoted or becoming a partner is all well and good, but the traditional rewards of their accomplishments are not the only prizes they are after. Rather, it’s the non-material accomplishment of achieving a personal goal and digging deep to succeed at something truly remarkable, such as completing an Ironman triathlon or doctoral dissertation. These smart, accomplished young people on the road to affluence know that just about anybody can make a lot of money, if that is what one aims for. But not everyone can achieve what he or she has set as a goal, so personal status watches are not icons that symbolize success. This next-gen female introduces herself as Dr. rather than Ms.
In a recent talk at the Hackers on the Runway conference in Paris, an event designed to foster collaboration between digital and luxury organized by TheFamily, marketer extraordinaire Seth Godin asked, “Is digital the end of luxury brands?” I think instead the question should be, “Is the digital generation, i.e. the Millennials, the end of luxury brands?” The key challenge for luxury brands is not about how they connect with this generation—through Internet marketing tactics, etc.—but how these brands create new and compelling reasons why they’re meaningful and important to this digitally-empowered generation.
Getting to the “why” of the luxury brand is the foundation on which the future of the luxury market will be built. Tailoring the brand message to the unique psychology of younger consumers is what’s needed, not just creative programming or digital marketing tricks. It is all about catching the Millennials along the road to affluence. Today, luxury brands telling stories of exclusivity, status, indulgence and over-the-top extravagance repel Millennials more than they attract them. New narratives are required that maintain the elevation of the brand above the masses, yet connect with the unique consumer psychology of the next-generation luxury customer, which is by nature democratic, not elitist.
There are four thematic narratives that resonate with the zeitgeist of today’s next luxury generation.
Luxury can’t exist only as a product concept any more—it has to deliver an experience that is meaningful to Millennials. It has to perform. Performance Luxury is exemplified by brands like Canada Goose—a name that has been around since 1957 and historically has associated with lumberjacks and polar adventurers. In a surprising marketing move, Canada Goose shed its functional image on the cover of Sports Illustrated, where supermodel Kate Upton appeared wearing little more than a $595 Chilliwack Bomber jacket on a ship in Antarctic waters. Canada Goose has well earned its reputation as a provider of outerwear to battle the worst that a North American winter can throw at you. But it’s become a hot brand in demand through clever marketing— not least of which is becoming a sustaining sponsor of the Sundance Festival in Park City, Utah, where a Canada Goose coat is both functional and stylish. Some fashion pundits suggest that the sudden popularity of the Canada Goose brand, enhanced by a reported $250 million cash infusion from Bain Capital, will ramp up the tide on the brand. But the brand has become popular not because celebrities wear it, but because it does its job really well: it keeps you warm in extraordinarily cold weather. As long as Canada Goose continues to perform for the customer—which the company guarantees—it may hold onto its luxury luster.
Create Your Own Luxury
While Baby Boomers were once known as the Me Generation, Millennials have taken self-reflection to a whole new level. They are a generation raised on self-expression about everything, including making their own skin into a canvas for personal expression and creativity. The emotional need for self-expression in home furnishings that adapt to all different room sizes and life stages is what the Lovesac Sactionals furniture concept provides. Lovesac is a brand better known for its iconic beanbag chair. Today, Lovesac offers a uniquely customizable take on conventional upholstered furniture. Its Sactionals are described as a cross between “upholstery and Legos™.” Sactionals consist of two basic upholstered pieces that can be combined in any configuration imaginable—no tools necessary. With a starting price over $2,000 for a basic loveseat configuration, Sactionals are pretty pricey for many young couples starting out, but the add-on flexibility that allows the furniture to grow and change as the couple’s needs change is the ultimate in luxury. Sactional furniture expresses an upscale performance vibe that delivers a personal experience in both design and function.
Tapping into an individual’s collecting instincts is the ultimate way to build brand loyalty. Lots of brands have exploited collecting, but few have been able to sustain it over decades as the tastes of new generations of consumers have evolved. That’s why the Vera Bradley brand of colorful, provincial print handbags, fashion accessories and luggage is worth noting. The company has been able to ride the fashion waves from its original “Grandma’s” carryall for quilting and knitting projects to a fashionable Millennial’s cross-body bag for today. The Vera Bradley brand has done so by continuously reinventing its product line around the distinct stages of a woman’s life, from schoolgirl totes, backpacks and dorm accessories—including linens, day planners and lap desks—to diaper bags for young mothers, sports sacks for athletes and gym rats, luggage for the world traveler, and handbags and computer totes for the mobile professional. Vera Bradley’s homespun luxury stands in sharp contrast to the elitist luxury of Louis Vuitton or Gucci. Quite reasonably priced, most of these cloth bags offer the avid collector nearly unlimited opportunity to amass a collection worth many thousands of dollars. The luxury angle? Each bag tells a story for the collector: when she bought it and what experiences she has enjoyed while carrying that bag. Vera Bradley is also a social brand, being so distinctive and recognizable that anyone carrying VB is no stranger, just “a friend you haven’t met yet.” Many people wrongly think that collecting isn’t for the Millennial generation, but they are wrong. Their take on collecting is focused on collecting experiences and feelings that make memories, not on amassing a bunch of things to display on a shelf. Self-expressive brands like Pandora and Alex and Ani have tapped into this desire, as well.
Ultimately the most compelling luxury narrative for the Millennial generation is value. These younger consumers are, as a rule, intent on maximizing their return on investment when it comes to the products and services they will buy. They diligently research their purchases, tapping into social networks to find the right combination of quality, service and price. They aren’t afraid to pay a premium if they find the right match. This is why I see a bright future for bespoke footwear in this generation. Unlike Boomers, who wore $10 Keds or $25 Chucks, their children grew up in $100 Air Jordans. Their sneaker wardrobes, specially crafted for each and every kind of sport and athletic endeavor, was a major capital investment. They are a perfect fit for bespoke shoe brands that offer handcrafted shoes—brands like Berluti and Tod’s, both of which are expanding into the U.S. market. They are also customers of disruptive brands like handmadebrogues.com, which offer made-to-measure shoes at around $200 to $300 a pair. This is affordable luxury compared to the $675+ required to step into a pair of custom-made Tod’s Gommino Club driving shoes, or the $1990+ for Berluti Oxfords.
For Millennials, luxury is a state of mind, not a price point or a brand logo. The luxury stories crafted for Millennials must go well beyond stated status, privilege and exclusivity—all values linked to the 1 percent who are not their role models. They want luxury that speaks to their unique values,such as luxury that is inclusive, yet individualized; luxury that is self-expressive but not self-absorbed or narcissistic; and luxury that delivers unique and meaningful experiences.