- A new study by cultural communications agency DeVries Global found that the luxury sector is still struggling to connect with Gen Z, despite the popularity of big-name fashion houses like Gucci and Louis Vuitton.
- Industry experts tell Business Insider that luxury fashion is struggling with Gen Z in particular because many luxury brands have yet to successfully utilize social media.
- “Brands are going to have to reinvent themselves around sustainability and other things that are more important with the younger customers,” Jonathan Treiber, CEO of the management consulting firm RevTrax, told Business Insider.
- Visit Business Insider’s homepage for more stories.
Luxury has 99 problems — and Gen Z is one.
Out of more than 1,000 American teens and early 20-somethings surveyed in a new report by DeVries Global, just 24% said that luxury “understands” them. Beauty and even snack foods ranked higher, at 48% and 57%, respectively.
This comes despite the fact that consulting firm Interbrand found luxury to be one of the top-performing sectors in 2019, outpacing even technology, consumer goods, and the automotive sectors. Gen Z is predicted to reach a collective spending power of nearly $150 billion this year while the world’s biggest 100 luxury good sellers topped $247 billion in revenue in 2017, according to Deloitte. Luxury is growing in scale, and Gen Z is growing in spending power, and yet … they don’t seem to really get each other. If luxury doesn’t come up with ways to engage with the internet-native TikTok generation, it could be missing out on a big opportunity.
Some brands have had notable success in courting younger generations, such as Gucci and Louis Vuitton, with Gucci generating 60% of the past year’s revenue from sales to millennials. Overall, though, many players in luxury fashion are still struggling to find their footing when it comes to youth appeal. For instance, Louis Vuitton is one of the most mentioned brands on TikTok but does not have an official presence on the platform.
“Luxury brands are always nervous and are going to wait and see what the consumers feel, or what other brands in the space are doing before they jump in,” Joseph Yakuel, CEO and founder of consulting firm Within, told Business Insider. “There’s so much risk to them tarnishing their brand reputation, because luxury brand price points are only supported by their perception, and if their brand perception goes down market, their price point gets eroded very quickly. ”
Luxury’s faux pas: the new ‘white glove treatment’ happens online
Shopping has changed drastically with the rise of social media, direct-to-consumer brands, and e-commerce. As noted by Jonathan Treiber, CEO of the management consulting firm RevTrax, luxury retail used to be about the “white glove treatment” that came with, say, browsing high-end bags on a shelf. Today, many prefer to spend just as much money, but they prefer to do so online, from the comforts of home. The new “white glove treatment” is a speedy online checkout.
Yakuel also pointed out that luxury brands were late to have websites — and they weren’t easy to use once they did, which put them behind the direct-to-consumer brands who were born on the internet. Many luxury brands were also late to social media, with only a few now dipping their toes into the Gen Z beast that is TikTok.
Celine made waves in December when it announced it was hiring TikTok influencer Neon Eubanks as the face of its latest fashion campaign, but, showing its age, Celine called Eubanks a “teen idol.” And Celine is one of just a few luxe brands to appear on the platform, which launched in 2016 and has a user base topping 500 million.
“Any technology that is coming to the forefront [and] that’s showing aptitude has to be at the top of [the] mind for these luxury companies,” Shelly Socol, executive vice president and founder of the ecommerce agency One Rockwell, told Business Insider. “It is imperative for them to be able to start and utilize [technology] in a thoughtful and smart way.”
Meeting the consumer to establish a two way relationship, rather than relying on retail’s traditional transactional one-dimensional courtship, is also important to Gen Z, according to the DeVries Global study. Many industries fail to understand that the young generation is looking for a committed relationship, not a “fling” — and one that’s discerning rather than trendy, DeVries concluded.
“There is almost a backlash against over-consumption among certain types of younger customers,” Treiber told Business Insider. “Even if they have all the money in the world to spend on luxury goods, they may think twice about that purchase and they may, instead, think about other ways to gain fulfillment out of spending that much money. Brands are going to have to reinvent themselves around sustainability and other things that are more important with the younger customers.”
Luxury brands already have some social-media stars, showing they have the tools to reach out to Gen Z
But not everything is amiss in the luxury sector. In the study, DeVries Global also said the best ways for a brand to connect with Gen Z is through having a defined YouTube presence, embracing influencers more, and establishing a public presence for executives. Most Gen Zers don’t separate a business from its executives or a brand from its creative officer, DeVries said.
Gen Z’s tendency to personalize brands and identify them with their leaders could be a boon for the luxury space, which has traditionally associated designers with fashion brands. And many creative directors have robust social media presences, such as Virgil Abloh at Louis Vuitton, Alessandro Michele at Gucci, and Riccardo Tisci at Burberry. Tisci alone has 2.5 million million followers on Instagram, while Abloh has nearly double that.
It just goes to show that luxury brands are more than equipped to connect with the young generation. It’s not the money, time, or effort that is missing. It’s the risk. As Socol said, these brands need to “think toward the future.” Even if that future is, well, TikTok.
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