Millennial Definition of Luxury
“It is not the employer who pays the wages. Employers only handle the money … It is the customer who pays the wages.” – Henry Ford
HENRYs are the new kids on the block, and the target group marketers in the luxury sector are thinking about, or should definitely be thinking about.
HENRYs? Millennials that have high disposable income and a propensity to spend on luxury items, experiences and services are called HENRYs* (High Earners, Not Rich Yet). Look around and we see them all over, those high earning young lot that are completely digital beings (Instagram is their weapon of choice!).
They are big on personalisation and uniqueness of a product or an experience, and don’t mind paying for convenience. This lot is quite tolerant and non-judgmental on the whole, but also, impatient and certain about what they want. These people think from the heart and are drawn towards products that give back to society in some way. I can almost hear most of you going ‘hey I have a few of them at home’.
Psychologist Dr. Jean M Twenge, in her 2006 book Generation Me suggests that Millennials are tolerant, confident, open-minded, and ambitious but also cynical, depressed, lonely, and anxious. They have been taught to expect the moon, just as the world is getting more competitive thereby, creating a clash between reality and expectations, and this certainly has changed the landscape of marketing in the luxury sector.
Personalisation, authenticity and a commitment towards following sustainable practices are the new keywords for marketers in the luxury sector looking to connect with this group. Of course, along with making sure that the brand is available across all digital media platforms. Things have changed drastically; the consumer is no longer looking for an interaction with a hoity-toity sales person who looks as if he would break into fluent French at any moment, instead the consumer is looking for a real connection. A welcome change I dare say, but what does the marketer think about all this?
I decided to speak with some luxury sector players in India, to understand what according to them is the millennial definition of luxury, here are the excerpts:
“Luxury, to Millennials is unique. It does not have anything to do with acquisition - it is an experience. They like to invest in a meaningful narrative rather than a superficial image.” – Gaurav Gupta, Fashion Designer
| The Global Power of Luxury Goods 2019 Deloitte Report* states that the world’s Top 100 luxury goods companies generated an increase of US $ 30 billion, annual growth also jumped to 10.8 percent, on a currency-adjusted composite basis, much higher than the previous year’s 1.0 percent growth. This was despite the general slowdown in markets like China, the United States and even the Eurozone. As per the report, FY2017 was a good year for luxury goods companies, with year-on-year growth sales across all major countries. |
“To me they are an early bunch of new generation population who started questioning the status quo and redefining paradigm shifts in lifestyle, culture and consumer behaviour. This became a societal course correction and many of the pre-millennial generation also changed their thinking. For them luxury is about authenticity. Nothing is more scarce, rare and luxurious to find than real stories, real people and authentic brands. Authenticity between spoken values and real action demands a conformity to ethics, sustainability, aesthetics, quality and shared value creation for all. This then is luxury.” - Manoj Kumar, founder Araku Coffee. (a specialty, certified organic luxury coffee brand from the Eastern Ghats of India. After having achieved international acclaim in France, Araku is now available in India.)
“Millennials prefer a life full of rich experiences whether material or non-material, or both. And if such experiences are exclusive, personalised and offer a higher degree of convenience and comfort, then they are considered as the epitome of luxury, the ultimate symbol of one's status.”- Rohit Suri, President & Managing Director, Jaguar Land Rover India
“Millennials value experiences tremendously — and while thinking about a purchase, experience trumps ownership. You find millennials leaning toward curated and inspiring experiences. In response, luxury brands are creating more experiential shopping spaces.
For millennials, aesthetics are not enough — they also look for brands whose values they align with. Values like transparency, authenticity, sustainability, community are preferred by this age-group. With social media, the brand has the ability to communicate their ethos more easily. Millennials still want luxury, but luxury that is consistent, and in line with their personal values.” - Adwaita Nayar, CEO, Nykaa Fashion
Some key trends set to define the Luxury industry over the next few years as per the EY Luxury and Cosmetics Financial Factbook*
Digital media is connecting with the consumer in new and immediate ways – 70% of the consumers connect with their favourite brands through social media
Growth is driven by consumer spending in emerging luxury markets
Store formats are impacting capex – Omnichannel strategies to connect with the consumer are key
Expansion into developing countries and low levels of debt are seen with stronger market capitalization- The average increase has been 8% compared with 2017
Premium and entry-to-luxury segments are where growth is.
Luxury requires a “haute couture” digital approach- Fears that digital would not evoke the same emotional response as a luxury shop are being allayed as brands see how the physical and digital can merge, with customization and personalization, virtual reality enhancement and multi brand platforms that allow them to remain true to the brand experience.
Innovation must be innovated, with luxury brands taking cues from startups.
Sustainability matters in the fashion industry.
* Usually, individuals under the age of 55, with an annual income of more than $100K but are yet to amass investable assets of $1M as per the Equifax definition of the acronym, are HENRYs.
* This report examines and lists the 100 largest luxury goods companies globally, based on the consolidated sales of luxury goods in FY2017 (which are defined as financial years ending within the 12 months to 30 June 2018). It also discusses the key trends shaping the luxury market and provides a global economic outlook.
* Luxury and Cosmetics Financial Factbook 2018 Edition.
