Luxury has a problem. A brand after another is announcing ‘slower than expected’ year over year growth. The reason is depending of the source China, Russia, US, terrorists or millenials.
It is easy (and nice) to blame slow increase in China, overall crisis in Russia or terrorist attacks in Paris/Nice/germany. Blamers assume, that there is a temporary problem, and once that is fixed or has disappeared, revenue increase is back on track.
World is changing. It is just a matter of time until luxury has to go through same challenges as transportation, hotels, music and films. Remember the times before EasyJet (or my personal favorite, Norwegian), Uber, AirBnB, Spotify and Netflix? Well, barely. Have those players changed the industries? Defenitely. Have those answered to consumers’ needs? Even more so.
The weak signals
Vintage watch market is increasing. Luxury beauty is selling better than ever. Athleisure has created a huge room for high+end sport clothes. I can not assure Lululemon is any better quality than Reebok, but Lululemon generates good vibes in my brain by offering complimentary yoga classes every Sunday.
Millenials an their appetite for the new luxury
And then these millenials; they do not want to invest in luxury at all. To be specific, it looks like millenials do not want to invest in luxury. Branded bags, fast cars and blingy jewelry is not the thing for the young generation.
Many of millenials do not have a job – and those who have, might struggle paying their rent. If one doesn’t struggle, it might be just not-cool to rub that on your peers’ face.
Those who have observed a bit, have most likely noticed, that millenials are spending money. Travelling off the beaten track, staying in upscale air bnbs, buying products which have values and a story. They consume enormous amount green juices, pay a lot for exercise classes and apply top-end make up. Community and experiences, locally and globally, is much more important than traditional signs of successa than traditional, branded luxury products. Millenials are savvy, have been marketed to since they are babies and know when the price tag is just glued on a product.
What can luxury do?
Offer value. Be authentic. Offer an experience – even with a product purchase. We might not purchase because of the product, but because of the experience. Make us feel good – do not think we are after status symbols. Tell your values, they might resonate with some. If we can not find any values, we assume you have none.
Only uncertainty is certain. Make leaving a digital footprint easy. Remember, millenials are a narcistic generation that aims to a massive following on instagram – or we just like to share, good and bad.
Financial crisis since 2008 might have given some of us a slow start on career, but millenials will be as big as baby boomers.
Will the sharing economy work for luxury
Millenials and luxury spending
Think Tank: Why Millennials Are the Future of Luxury
Monocle film: What luxury means today