Luxury Brands Losing Next Generation of Customers
Targeting the luxury market in one way or another is a common retailing strategy. Given the economic mayhem facing the middle class, companies like Procter & Gamble have undertaken a barbell strategy of targeting higher and lower income families while putting less emphasis on the squeezed middle.
So you might think that those who have been in the luxury business for some time--particularly in hospitality, fine dining, apparel, and retail--are doing well. And they are often comfortably targeting and reaching their existing customer base in the 35 and older bracket. But they risk losing the next generation of consumers, according to Pam Danziger, president of Unity Marketing.
The problem is that the millennial generation is "skeptical" of luxury brands, according to Danziger's latest report, Wealth Wave: The Millennials & Their Luxury Aspirations, which focused on "exceptional, high achieving [young people] with ambitious personal goals"--or just the sort that you'd think would become the next luxury market:
This investigation into the mindset of these ambitious young people on the road to affluence uncovered many distinct differences and unique generational perspectives of critical importance to the future success of luxury brands. But perhaps the most profound and potentially troubling one is that for this generation of well educated young people, there is a real danger that luxury is going to be perceived simply as a marketing concept or a term used in a marketing context, not something that has real meaning or resonance to their lives. Simply calling a brand or a product or an experience a luxury doesn't necessarily make it so...
That is a distinct problem, because the association between a brand and someone's actual experience of luxury are what make the marketing work. But there are times at which concepts of status, success, and money change. Look at the 1960s, when the marketing assumptions of the 50s had to go out the window.
Danziger calls the millennials a "generation in search of meaning," and one that often associates the word luxury with something "over-priced and hoity-toity."
Companies that want to continue their success with luxury branding beyond 2020, when this generation becomes dominant in the market, will require products, services, and strategies that match the aspirations and drive for meaning that the generation has.
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