It may have taken 1,000 years to create them but it has taken far less time for marketers to fixate on “millennials”, the generation born after 1980 who entered the workforce at the start of this decade. Like baby boomers, generation X or other previous tags used to denote groups identified as sharing both a similar age and outlook, the millennials moniker excites almost as much disagreement as it does recognition.
There is a broad consensus, however, over some common millennial traits. They rely much more than previous generations on the web and other digital technology to communicate with friends, family and peers; they research purchases extensively before buying – and expect companies to provide the answers to their questions via websites, call centres or accessible in-store service; and they take at least nominal interest in how companies have sourced and produced goods, and their public statements on environmental and social policies.
All of which could be bad news for the luxury fashion sector, which has a weak record in all these areas. Though few believe names such as Chanel or Hermès have lost their ability to lure young consumers, the consensus is that brand owners will have to go beyond their traditional marketing channels if they want to reach the next high-spending generation effectively.
“Millennials haven’t yet attained the levels of income where they can buy real luxury goods, but when they get there, all the learnings that luxury brands have built up about marketing to baby boomers – the main luxury customers today – could rapidly prove obsolete,” says Pam Danziger, founder of Unity Marketing, a research group that specialises in luxury. According to Unity, which studied luxury customers in several markets including the US, Japan and China, by 2015 there will be almost as many millennials as baby boomers.
“No one believes luxury customers are going to do all their shopping online, but they are gathering information on brands and styles via online social networks in totally new ways,” says Danziger. “You have to be in that marketplace.”
The emergence of user-generated online content, blogs and the popularity of social networking websites such as Facebook and MySpace among the next generation of would-be luxury customers present new challenges. These so-called Web 2.0 phenomena are not obvious vehicles to carry mainstream advertising, let alone campaigns from niche designers, but the sites are attracting increasing attention from marketers because of the role they can have in disseminating opinions, both good and bad, about brands of all kinds.
“Millennials are an activist group. Not in a political sense, but they are tremendously active on consumer issues,” says Milton Pedraza, chief executive of the Luxury Institute, a New York-based luxury ratings and research firm. “They can launch activism – positive or negative – in a quicker and larger way online than any previous generation. You have already seen that with consumer petitions on Facebook.”
Luxury Institute research from March 2007 found that while the wealthy are not heavy users of social networking websites, 73 per cent of the sample studied used the internet to research information, particular for product referrals and reviews.
“Among the wealthy, you find a lot more young people than in previous generations,” says Mr Pedraza. “They want to connect to each other and share views on products.”
“High net worth individuals are very task focused when they are on the internet,” says Guy Salter, deputy chairman of Walpole, which promotes UK luxury goods. “When it comes to fashion and luxury, that is even more the case.” Thus, he believes: “One version of the future is going to be online communities that exist for very specific things, with a very edited approach to goods, which emphasises the rarity value and stories behind the goods on sale.”
Others, however, argue that the web is popular with millennials because it allows them to express their inherent scepticism towards institutions, businesses and, ultimately, brands, in the most immediate and powerful way.
“Millennials are definitely more questioning of the integrity of a brand,” says Clare De La Poer Beresford, director of creative services at Icon, a new London-headquartered luxury advertising agency. “If you make a mistake – employing sweatshop labour, for instance – that will all come out on online forums and blogs very quickly. And if you think about 15-year-olds rather than 25 year olds, they are even more internet-savvy. Brands are going to have be much more creative in their marketing without resorting to gimmicks.”
