Gen Z is over celebrity glitz; wants transparency and authenticity
Move over experiential marketing, celebrities and influencers. To connect with Generation Z, the luxury industry will have to refocus on products and stores, while also creating a real emotional link with consumers. These are the conclusions presented by a study undertaken by management consultancy firm Bain & Company and revealed in Milan on Tuesday during the MFGS Milano Fashion Global Summit 2019.
For the first time, five generations of consumers now coexist on the luxury market. Currently, the youngest of these demographics, Gens Y and Z, represent around 30% of luxury purchases, with Gen Y accounting for 31% and Gen Z for only 2%. However, this market share is set to shoot up to 80% by 2035, with 40-45% of purchases coming from Gen Y, and 35-40% from Gen Z.
Even though they are approaching their 40s and will soon be considered "older consumers," members of Gen Y, aka millennials (born between 1980 and 1995), dominate the market, as their mentality has had – and continues to have – a profound effect on all luxury consumers. They have accompanied the rise of e-commerce, informing its conception and contributing to its construction, and have also cemented the importance of social networks and influencers, all while prioritizing experience over product.
These consumers should not be confused with those that make up the next generation, however. Born between 1996 and 2010, Gen Z has a vastly different attitude, which is reflected by new purchasing behaviors that the luxury industry will have to adapt to. As the study's author, Federica Levato, explained, "Gen Z has no memory of the September 11 attacks. They were born into a climate of uncertainty, underscored by the threat of terrorism. Another difference to note when comparing them to their older counterparts is that they were not raised by permissive baby boomer parents, but by Generation X, who were born between 1960 and 1980, and experienced the crisis of 1992, a fact which led to their offspring being more responsible and independent."
As a result, this new generation is more determined and pragmatic. Its members know that change is necessary and that it will not just happen by itself. In their view, it's up to them to become activists and lead the movements that will generate the change they want to see. Plunged directly into the digital age from birth, they also use technology in a more balanced way.
For them smartphones can't replace face-to-face interaction, only serve to complement it. In a similar vein, celebrities and influencers lose something of their sparkle in the eyes of the members of this young, tech-savvy generation. Gen Z prefers to be inspired by family and friends, as well as by role models that have achieved some kind of goal in their lives, such as sportspeople.
"They don't see themselves as simple consumers. They want to be protagonists in the luxury sector, engaging with brands through a dialogue based on a spirit of co-creation. These young people demand a real emotional link from brands. They're no longer happy to see experience as an end in itself," highlighted Levato. "As consumers they are more humane, responsible and critical, which brands should respond to by opening up and working on transparency."
In this context, brands will have to focus on product once more. Their offering should be excellent, not only in terms of its quality, but also of its values – which is to say it has to be made in an ethical and responsible manner. Brick-and-mortar stores are also reclaiming their central role for retailers, serving as a fundamental channel through which brands can create an emotional attachment with their customers.
"Over the next five to ten years, the challenge will be uncertainty about the future. Just like Gen Z, companies will have to react to changes more pragmatically and be more like activists in order to guarantee their success," concluded Levato.
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