Luxury brands are going through a transition as millennials become a larger share of their customers. Millennials account for about 30 percent of luxury product buyers and that figure will increase 45 percent by 2025, says Claudia d’Arpizio at Bain & Company.
Brands realize they need to win millennials’ interest now in order to sustain sales in the future. However, millennials express different priorities, shop differently, and relate with brands differently than previous generations. They trust advertising less and interact more with social media.
A More Modern, Less Formal Image
Stodgy Tiffany updated its brand image in large part to attract younger customers. The goal was to take formality out of luxury, Andrea Davey, Tiffany’s senior vice president of global marketing, told CNN. The company credits its image update for helping attract a younger crowd and reversing a trend of declining sales.
Its new “Believe in Dreams” campaign features interracial and same-sex couples and celebrities who are recognizable to millennials such as Elle Fanning, Maddie Ziegler and A$AP Ferg. The campaign’s website quoted author David Sedaris about his partner, and Nigerian writer Chimamanda Ngozi Adichie, who was featured on Beyonce’s song “Flawless.”
Tiffany is careful not to cheapen its brand. It seeks to update but not overhaul its image. It offers some lower-cost products but has not significantly lowered overall prices.
Reaching Customers through Instagram
Gucci says half its sales are to millennials. Saint Laurent, another Kering brand, puts its share of sales to millennials at 65 percent, according to the UBS European Luxury report. Instagram is the key to their success, as they enjoy some of the largest followings of any fashion brands.
In today’s knock-off fashion environment where new designer styles are copied immediately and available quickly, there is additional pressure on luxury brands to follow suit. Because of that, several luxury fashion brands have introduced “see now buy now” campaigns in association with their runway shows.
Although luxury retailers traditionally favored conservative styles, vibrant colors, bold patterns, and playful designs work well on Instagram and other social media networks. “Millennials are more adventurous in their fashion choices, opting for outfits that make a statement and stand out in their social media feed,” writes Florine Eppe Beauloye for Luxe Digital.
Scarcity – real or perceived – can increase demand for luxury products. Some firms create limited-edition products and purposely limit inventory. They release one-off products that become collectable items for some, and investment items that can be resold almost immediately at a profit online.
Bottom Line: Luxury brands understand the need to court millennials in order to thrive in today’s consumer economy and to maintain long-term viability. That realization has prompted luxury retailers to update their images and revamp their PR and marketing strategies. While generally slow to embrace social media marketing, some savvy brands have proven expert at increasing awareness and driving sales through social media networks like Instagram. Non-luxury brands may benefit from mimicking the tactics high-end brands use to attract millennials.
William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, measurement and analytics solutions across all types of traditional and social media.