Inflection point of luxury consumption: luxury goods are not so important to millennials

The age of luxury consumption has dropped from 48 to 34, and 53% of the population will choose a high-end experience rather than a luxury gift.

With the improvement of the taste of the millennials and the gradual mastery of the consumption power, the luxury goods themselves become unimportant, and the culture, connotation and experience they carry are more and more important. Social word of mouth, whether the product has an environmental concept, etc. may become one of the considerations. Further, luxury bags and watches are not enough to provide spiritual satisfaction. Now they are more willing to go to Europe for ski vacations, go to Paris to see a fashion show, go to the Metropolitan Museum of Art and the Museum of Modern Art in New York. Visit or enjoy a meal at the Michelin restaurant in Japan.

Deloitte, one of the world's "big four" accounting firms, recently released a research report called "Bling It On", which in-depth study of the "millennials" luxury purchase behavior. The report surveyed more than 1,000 consumers from the United States, the United Kingdom, Italy and China, aged 20-30. These countries are currently the world's largest luxury consumer and production market. Nowadays, the average age of luxury consumers has dropped from 48 to 34. In the trend of increasingly younger luxury consumption, purchasing behavior has also undergone significant changes. This has also prompted luxury brands to start to change their minds and adopt new marketing methods to cater to the changing tastes of “Millennial Generation”.

Luxury embraces e-commerce and social platforms

“Millennial generation” refers specifically to the people born in 1984-2000. As the largest consumer group today, they become the new generation of wealth owners and powerful luxury consumers. For the consumer groups in the 17-32 age group, although social media accounts for a large proportion, they still use multiple sources of information to make purchasing decisions.

The data shows that 20.5% of respondents receive new luxury goods and trends through social media when they get the latest fashion trends and new products, while 15.1% of consumers will go through the official website of each brand, and 14.4% Consumers will read magazines. They are more concerned with online reviews of social multimedia sharing, ratings of products, etc., and the current US social platform Instagram is considered by luxury brands as the most influential social channel.

In terms of purchases, the data shows that 64% of the “millennials” in China will buy directly into the store, while “online online shopping and mailing home” and “online booking offline delivery” account for 24.3% and 11.3% respectively. In the United States, online purchases exceed the offline, 46.8% of people will choose online shopping, 43.3% will enter the store to buy, and the remaining 8.7% will order offline delivery.

This probably explains why many luxury brands are aiming at the Chinese online shopping market. Earlier this month, Tmall's luxury platform, Luxury Pavilion, was officially launched. It is reported that the platform implements a brand-oriented invitation system and is limited to open to the brand. The first batch of companies including British brand Burberry, German brand Hugo Boss, Italian luxury car Maserati, high-end skin care brand Hailan mystery, and the world's largest luxury goods group LVMH's French Guerlain, watch Zenith, Taige TAG Heuer and other 17 Brand.

According to industry insiders, the traditional luxury goods in the past pursued slow, scarce and high prices, but in recent years, physical stores have begun to weaken. Today, the average age of luxury consumers has dropped from 48 to 34, and they are accustomed to online consumption. The “Millennial Generation” has fueled the rise of direct purchases of luxury stores and luxury goods. Old-fashioned luxury goods have had to lay down their shelves for the scarce market share, embracing e-commerce and social platforms.

Use environmental protection to please new consumers

The explosion of massive information and the stacking of fragmented information is not good news for some luxury brands: because it means that the brand loyalty of Millennials is not too high. Regardless of whether it is online or offline, the younger generation is less affected by public opinion. Although it will refer to some opinions on the Internet, it will still more follow its own preferences to purchase products. This has prompted luxury brands to use more ways to please the "millennials."

“Millennial” is considered to be an environmentally conscious consumer. Data shows that consumers from the US and China are more likely than European consumers to consider the eco-friendliness of the brand. However, 50%-75% of the research participants said that they rarely consider the eco-friendliness and morality of the brand before buying. They believe that luxury consumption does not occur frequently compared to daily consumption, so the impact on the environment or the community will be much smaller. In the past, luxury goods were often associated with things like fur and leather. Nowadays, “sustainable development” has become the mainstream. Whether it is marketing or environmental awareness, luxury brands are beginning to make a fuss about eco-friendliness and environmental friendliness.

The French brand Chanel has long recognized the ability of environmental protection to drive fashion. Fashionistas should not forget the Chanel classic "Glacier Show" led by designer Karl Langefeld in 2010. In order to appeal to everyone's attention to global warming, "Lafayette" Carl Langefeld will be a The huge iceberg moved to the center of the show, and also used a lot of artificial fur in the works of the season, which is the most luxurious environmental show. Since then, Chanel has also planned environmentally-related theme shows such as solar power, underwater palaces, and the Wizard of Oz.

The jewellery brand Tiffany & Co. has also established its brand image by leveraging its public action on climate change to support the removal of corals from jewellery and to protect the more special places such as Bristol Bay in Alaska. Similar to the luxury goods group LVMH, the establishment of an environmental fund, each of its brands will pay a certain amount for environmental projects.

The old luxury group Kaiyun is also one of the fashion groups that strive to adhere to environmental protection. In the Kaiyun Financial Report, carbon emissions also have the same weight as Ping, e-commerce revenue, exchange rate fluctuations, etc., and the sustainable development department at the Kaiyun Group level has expanded from 15 to more than 50 people. Kaiyun also expands its control over the supply chain, such as the acquisition of raw material plants and the selection of partners with the same environmental philosophy.

PVC (polyvinyl chloride), which often appears in luxury bags, faces certain environmental problems during manufacturing and recycling. Kaiyun’s 100-year-old Gucci, with its new tanning technology, can save about 30% of water and 20% of energy. It abandons the metals used in traditional tanning processes to reduce resource inputs to demonstrate an environmentally friendly philosophy. And Stella McCartney, the brand that focuses on “sustainable development”, believes in “vegetarian principles” from designers to products – never using any leather fabric. The CEO of Kaiyun Group, François-Angli Pino, used it as an example: "When we first started doing (environmental), everyone was laughing, but today, it proves a truth, environmental protection and It doesn't have to be at the expense of revenue."

High-end experience into a new trend in the industry

Another interesting finding is that 53% of Millennials will choose a high-end experience as a gift, not a luxury, when the budget is sufficient. In the relatively mature luxury market such as the United States and the United Kingdom, 66% of the “millennials” will make the above choices, while in China it is only 34%.

As the millennial generation gradually grasps the spending power, the luxury itself itself becomes unimportant, and participation is the key. After experiencing the conspicuous consumption phase, the individual's physical and mental experience, such as a high-end travel experience, a luxury accommodation experience seems to be the choice of more people around the world. Luxury bags and watches are not enough to provide a sense of spiritual satisfaction, now they are more willing to go skiing in Europe, go to Paris to watch a fashion show, visit the Metropolitan Museum of Art and the Museum of Modern Art in New York, or Michelin in Japan Enjoy the food at the restaurant.

In this experience, luxury hotel brands have begun to invade the market when luxury stores continue to close the store. Ritz-Carlton, St. Regis, Four Seasons, and Banyan Tree have established themselves in the first-tier cities and are beginning to move toward second- and third-tier cities. According to a survey by the luxury data group of the Swiss luxury research consultancy, in 2015, the number of Chinese consumers searching for luxury hotels on the Internet increased by 39% compared with the previous year; in the United States, where the overall hotel industry is the most mature, the increase was 7%.

According to industry insiders, compared with pure material possession, the biggest characteristic of experiential consumption is that it is one-off and non-repeatable. This more private and rare feature has been sought after by the rich European and American classes at an earlier stage. The new state of luxury consumption in China has long been the norm in the more mature European and American markets. When the era of conspicuous consumption has passed, the labeling of labels such as “environmental protection” and “experience” may allow luxury brands to seize the consumer’s “culture, experience” preferences and consumer expectations, and tap into the market.

Editor in charge: Wang Zhen