Rachel Terry explains how to reach the first purpose-driven digital natives
In just six short years it will be 2030, by which time generations Z and Alpha will have taken over as the largest target segment in the luxury market.
With a disposable income that had already reached $360 billion by 2022, Gen Z is quickly becoming the most influential consumer group.
The challenge for luxury brands lies in how to engage with the markedly different values and expectations this cohort holds when compared to its predecessors.
There are three major differences by which Gen Z distinguishes itself from previous buyer groups.
Gen Z appreciates the value and high quality offered by luxury brands, as well as the personalised experience and community that comes along with them. But having come of age during the cost of living crisis, Gen Z is also instinctively price sensitive. Driven by the post-Covid economic dip followed by rapid inflation, this cohort of consumers is more likely to search for opportunities to save, reduce unnecessary spending and resort to repairing and recycling if possible.
Gen Z’s purchasing behaviour is also centred on the values at the centre of each member’s identity. Whether principles of diversity and inclusion or sustainability, younger buyers expect their values to be reflected in the brands they engage with.
Authenticity and transparency are non-negotiable. From the origin of materials to animal welfare, manufacturing conditions to advertising campaigns, not only does Gen Z expect open, honest communication and commitments from brands, but it is highly activist in targeting those who fall short.
The final challenge with Gen Z is that its preferred channels are often incompatible with the traditional luxury experience. Where even Millennials could be reached through more established forms of advertising before being treated to the classic, in-person selling ceremony, Gen Z’s client journey often begins and ends via smartphone.
What starts as a viral TikTok trend will inevitably drive more traffic to online platforms than physical stores. But regardless, Gen Z expects a seamless transition and consistent brand experience across every channel – both physical and digital – as it does still value human interaction.
Luxury brands are already adapting by creating seamless omnichannel experiences, combining social communities with deeply personal, digitally integrated sales journeys.
Collaborations with Snapchat, Instagram and TikTok, along with their fashion influencers, have helped to build both engaged audiences and brand awareness. At the same time, brand apps offer opportunities to deliver immersive AR shopping experiences.
However, it’s not enough to know where Gen Z likes to engage. You need to understand the personal beliefs that its members stand by, the expectations they have of you as a company, the causes that will win their loyalty and what they’re willing to pay as a result.
This is not the kind of information that you’ll find in your transactional data. From quiet luxury to conscious consumption, the best way to truly understand their values and meet their needs is through targeted consumer insights, created through robust, bespoke data collection and sampling.
This type of market research can fill the knowledge gaps by connecting with your Gen Z clients directly about their views and beliefs. You can learn where you’re already successfully fulfilling their requirements and where your competitors have the upper hand.
And since Gen Z is so connected, this also presents an opportunity to evolve what type of market insights are collected and how they are analysed. From app analytics to influencer engagement, there has never been more data available to understand trends and behaviours.
The findings can enhance your understanding of buying habits and help tailor your proposition and message to promote brand loyalty and maximise Gen Z’s willingness to pay. They can also provide the basis for recommendations on how to build your commercial model, from your channel plan to pricing levels.
The results won’t just help to mitigate the risks inherent in big decisions, they can also answer critical commercial questions and secure buy-in from senior stakeholders.
As the most value and purpose-driven consumer group so far, Gen Z has no patience for luxury brands that fail to meet their expectations of ethics, engagement or experience. To learn how you can embrace the needs of younger buyers and effectively engage this generation, contact our expert consultants.
