Inside the Industry: Millennials Changing the Face of the Luxury Market
The New York Times International Luxury Conference took place last month in Versailles. Tim Jackson - Programme Director for the subject area Fashion Marketing at Regent's University London - reports on the transformation of the luxury sector.
It’s no longer business as usual for the luxury sector as International President of the New York Times Stephen Dunbar-Johnson revealed; “The context for the luxury sector has become complicated. A myriad of factors are driving change amongst luxury consumers and the market place.” Luxury has taken for granted demand for its products from a wealthy 1% of consumers and a marketing formula centred around core attributes and values including exclusivity, premium pricing and heritage.
In defining luxury Vanessa Friedman, fashion director The New York Times, explained; “It is history and beauty, it’s craftsmanship with a human hand, it’s innovation and experimentation, it’s employment and an awful lot of tax dollars.” Maureen Chiquet former global CEO Chanel, stressed a redefining of luxury was taking place; “We are not just in competition with each other anymore. The appropriation of luxury is stretched across multiple sectors. The word luxury has come to mean entirely new things. In its last ad campaign Volvo made a luxury out of simplicity, sanctuary and confidence. Many travel brands are making a luxury out of time and convenience. What’s precious in this world is shifting and we need to look outside our industry.”
Debate exists about meaning beyond a product and there are questions about the relevance and possible over saturation of brand logos in luxury markets. Marco Bizarri, President and CEO Gucci, pointed out that there is a problem if the meaning of the logo is only connected with the past; “The way in which you look at logos, it must always be in a modern and contemporary way. For example timeless doesn’t mean to be stuck in time.” “You need to be proud of 95 years of history.
"Of course the way you play with the logo makes a difference.” Bizarri quoted his creative director Alessandro Michele; “The GG logo is an incredibly powerful asset of Gucci. It is part of its story and is something any brand would love to have.” Explaining that 80% of the business is driven by retail the brand needs to be able to talk to the customers when being distributed wholesale; “We can easily work with Lane Crawford and talk to a customer that would never enter into a Gucci store. In that last few months we saw a jump in Chinese buying back into Gucci after many months of decline.”
Chiquet agreed; “Consumers may still want the badge of success or show that they’re hip or in the know, but now they may also want them to say what a unique or conscious person they are.” I have never seen a Nike product without a logo. Sometimes they are bigger sometimes smaller but in a way we care about and identify with."
There is a consensus that Millennials don’t like being marketed to according to a number of speakers. Chiquet identified key traits of this segment; “Millennials, soon to be 50% of our population continue to gain power and drive the digital economy. This is a generation that values authenticity, collaboration contribution and participation both as consumers and as employees. They will make purchase decisions from companies whose ethics and values they endorse. They insist on transparency, and want to purchase when, how and where they want. And they are going to make it happen even if we don’t.” Chiquet added; “We have never had more diverse cultures, more diverse clients. Millions of people all over the world are sharing information about our products, brands and companies daily. And these younger generations, both customers and employees, are expressing very different values. They are making it clear that we are going to have to appeal to them in a radically different digital economy, where brands are increasingly the least trusted sources of information.”
MAC began without one dollar of advertising or marketing. It’s a brand that began completely out of word of mouth and it was built on press relations, community relations and working with sub-cultures. MAC is the biggest brand in social media across all platforms. When we just launched Ariana Grande, lipstick, which was a generation Z initiative all we did was go out on our platform and her platform with a press release and that did it. The old days of having long lead(time) press, having a party and having an event and doing all that …. (are gone). When somebody has 55 million followers and we collectively have 24 million followers and you take the ripple effect amplifying that voice across all the other social networks that’s on point works. We actually learned this accidentally about four years ago. Nicki Minaj came into our office and we had just discovered Lady Gaga and Nicki said I am going to be bringing out this music called Pink Friday. We didn’t know what to do with her. She had pink hair and seemed very sub-culture and said to us ‘let’s do a lipstick online and make it pink and sell it only on Friday’. We made 5000 pieces and after going out on her social media platform and ours it was gone in 15 minutes.”
Maurice Levy, Chairman and CEO Publicis Groupe said; “Advertising is there to create difference (between brands). In the last 20 years we have seen a sea-change in the way we are interacting with consumers. People today have a role in the co-creation of the dream and in the content of the brand. They own the brand. When we (brands) are successful, the brand doesn’t belong anymore to Francois Pinault, to Kering, or to Gucci, but the brand is owned directly by the consumer.” In the new world you don’t control and you don’t try to control. Consumers are already empowered. If you want to control you are dead.”
