Gen-Z and Millennial consumers lead call for responsible behavior in luxury
The luxury fashion market has been built on mystique, tradition, decadence and an aspiration.
Read the original article on The Drum As such, it is one of the most observed and valuable categories. The market grew by 29% last year, according to Bain, and is predicted to be worth between €360bn – €380bn by 2025, enjoying a sustained annual growth of between 6% and 8%.
There are many factors at play, boosting and shifting the luxury sector. One of the key drivers of change is the influx of younger luxury consumers. Millennials and Gen-Z are helping to push growth in luxury, and are set to make up 70% of the market by 2025.
Millennials and Gen-Z bring a fresh set of social and environmental values to bear in the category, and combined with global events such as the pandemic and the Black Lives Matter movement, luxury brands are feeling the pressure to transform from makers of products to purpose-driven actors in the push for a more sustainable, diverse and equal society.
Heritage credentials are no longer enough to win over the new generation of luxury consumers. While luxury’s legacy of superiority and supreme quality may hold true for older audiences, Millennials and Gen-Z are far more motivated to choose brands based on their personal values and beliefs.
And in tandem with changing world events and shifts in luxury audiences, advances in technologies are seeing some of the world’s largest luxury brands becoming the new innovators. The likes of Gucci, Burberry and Dolce & Gabbana have been quick to embrace opportunities in the metaverse.
So, as new forces emerge and the buying power shifts to Millennials and Gen-Z, we are seeing increasing pressure on luxury brands to meet new social and consumer expectations and to take real leadership in responsible behavior. To better understand how luxury should meet these new challenges, Revolt researched these issues with over 2000 consumers across the UK, Europe and China, asking big questions around purpose, technology, sustainability and inclusivity.
The move to sustainability is far from complete
There’s been a lot of hype around ‘sustainable’ actions with luxury positioning itself as the antidote to fast-fashion. This has been supported by the rise of fashion resale sites and the growth of the global second hand fashion market, which is now worth an estimated $130bn.
However this journey is far from done in the eyes of the consumers and society. A huge 76% of consumers believe luxury brands need to do more to act sustainably. Among Chinese consumers, this rises to 93%.
While some luxury brands are moving in the right direction, just doing the expected isn’t enough. And while Millennials and Gen-Z are spearheading the move to resale, pointing to second hand sales as solving the issue simply won’t resonate with these exacting audiences. Sustainability needs to be embedded at every stage of the brand journey – in an ownable way. As brands try to work out how to ‘own’ the resale opportunity, the luxury market needs to blend resale with craft. Crucially, it must commit, measure and track sustainability progress, with real transparency.
The future matters more than the past
With spending power shifting to younger audiences, consumer focus is moving from perceptions of the past to the issues of the future. This is a big wake-up call for the luxury sector, which has been built on highly managed narratives and stories. Revolt found that 66% of consumers care more about what luxury brands are doing in the future, than what they’ve done in the past. And 65% believe that luxury brands need to evolve in order to remain relevant, A similar number, 62%, say that luxury brands are at risk of not keeping up with new, innovative brands, innovation and future focus is mandatory for luxury.
Heritage has clearly built value for the luxury sector, but brands now need to focus on creating value based on looking forward and embracing the new. It’s no coincidence that the most valuable luxury houses in the world, are the ones who’ve started their journey into the metaverse first.
Addressing the barriers to transparency
There is increasing pressure from governments, consumers and activists for brands to be more transparent, but this seemingly conflicts with a luxury business model based on the opposite.
Supply chain transparency has been an issue in luxury and fashion for some time, but is now becoming a central challenge for brands wanting to appeal to the next generation of consumers. Our research highlights the difficult balancing act that luxury faces, as 55% of consumers say that If a luxury brand is too mysterious they feel like they have something to hide, but 44% says that if a luxury brand is totally transparent, it removes the allure.
Luxury brands need to be the leaders in a new type of storytelling. With their DNA and focus on bespoke craft, they are in a position to tell these stories in a more positive way, highlighting responsible actions and creating new conversations with their audiences. And these conversations need to start soon: we found that 75% of young consumers want luxury brands need to be more transparent on sustainability and worker rights. This rises to 91% for Chinese consumers.
Stand up and stand with
The appetite for inclusivity, cause-driven brands and purpose remains front of mind for a new generation of luxury buyers. This is born out in our research, with 72% of people saying that luxury brands need to be more inclusive and want luxury brands to engage more with diverse grassroots communities, and 73% stating that luxury brands need to make more of a stand on social issues.
While we know that many luxury brands are leading the way in inclusive marketing campaigns, and causes are fast becoming a key part of a marketing leaders strategy, our findings show that both these things need to be front and center of how brands express themselves, not just ‘doing good’ in the background.
Purpose is here to stay
With an ever increasing focus on the environment and sustainability, and growing scrutiny from governments and consumers alike, purpose has never been more critical for the luxury market. And not surprisingly, our research is testament to this, with 66% stating that luxury brands may lose them as customers if they are unable to become more purposeful.
A larger number, 70%, said that ‘if a luxury brand isn’t clear on its purpose for people and planet, they may lose me as a customer’. Luxury has risen to a place in societal language like never before. Young consumers are looking to luxury be responsible and to show true leadership in this: 73% said they believe luxury brands must set new standards for the rest of the industry to follow.
So, as luxury brands start to grapple with shifting consumer and societal expectations, the real opportunity for the category is in truly reconsidering the role of luxury. It is no longer just about beauty or adornment, but an industry that is being called on to both behave and lead responsibly.