When Lord Alfred Tennyson said more than two centuries ago, “The old order changeth yielding place to new”, he may not have taken into account the extent and speed of change. The sluggish eras of entitled landed gentry, industrialists and ageing corporate heads past their prime, who were wined, dined and wooed as the target buyers and consumers of premium products, has given way to new tech superstars. The goal posts have shifted, the rules are all new and those who have a clue please raise your hand! The Luxury Chronicle continues its dialogue with the experts in the business of luxury to figure out the conundrum, bringing here the views of Dr Mahul Brahma for our esteemed readers.
By Dr Mahul Brahma
Two things changed the world of luxury for good – Gen-Z millionaires or Gen-Z M and, of course, COVID. Let me take you through this transformational journey of luxury led by these two factors, wherein the conventional drivers have taken a backseat.
Let us first talk about the conventional drivers. While some of these will stay on, albeit in a limited way, the others are likely to perish. One of the biggest drivers historically was the 45-plus demographics that every luxury brand used to woo. Therefore, the design of the products were tailored to suit that age of maturity and the tenor of the advertising was targeted towards creating an aspiration of this demographic bracket. Small wonder, the media chosen were conventionally the leading publications. The location of boutiques thus was five stars hotels where this category with means, who are frequent travelers, will spend some time to explore.
Aspiration is an economic term, so that remains a strong driver. The means of creating aspiration, however, have changed.
IMPACT OF COVID
Let us understand, besides hitting the economy hard, how Covid has been able to transform the way business is conducted with technology and digital media marketing.
Due to social distancing and the power of Gen-Z M, all luxury brands were forced to explore technology to create a connect with the customers in a more digital space. So, social media handles and UI / UX (User Interface / User Experience) engagement have become an integral part of their marketing. Innovative formats such as Zero Inventory Stores as well as Pop Up stores are quite in vogue, creating the mix of e-commerce and physical stores. As I had mentioned in my earlier column ‘Mythic Value of Luxury: A Study of Transformations’: “There is also a role that AI (artificial intelligence) and ML (machine learning) can play. Using analytics, the clothing of the customer can be analysed and options suggested from what is available in the stores. AI spend is all set to rise to USD7.3 billion in 2022.”
So now that we have established the transforming in the business that is brought by Covid, let me further elaborate on the Gen-Z M and how they are changing the name of the game.
IMPACT OF GEN-Z M
Rolex never thought that their biggest competition would be a technology giant – Apple.Smartwatches by Cupertino, California-based Company have become the biggest threat to the legendary Swiss watchmaker. How the times are changing! When the pace and preferences of tech-tuned, temperamental Gen-Z M are forcing the luxury businesses to be on tenterhooks.
Consumers of luxury brands were initially classified into Experientialists, Connoisseurs, Flaunters and Aesthetes. Now, we have Gen-Z M.
Luxury brands need to first understand their choices and preferences – what dazzles them and then fine-tune the marketing and product strategies. Let me describe Gen-Z M mindset and give a solution for the luxury brands to follow.
– To Gen-Z M it is very important for a brand to be conscious of the environment. So sustainability has become a key word for all brands to look into and adopt.
Solution: Luxury brands need to look into the fairness of their sourcing channels so that there is no exploitation of humans or animals such as for exotic leather.
– Gen-Z M are always connected, so they know the latest trends in luxury, fashion and technology across the globe.
Solution: So luxury brands need to change their area of marketing to social media – Instagram, Facebook, Whatsapp, etc., and make available their products across geographies. With Covid, the focus on digital marketing has gone up manifold.
– Gen-Z M are impatient and will always want their preferred product yesterday.
Solution: Brands need to be responsive on social media handles and fast at delivering solutions to the problems posted.
– Gen-Z are impulsive buyers.
Solution: Brands need to use this impulse for their benefit and incorporate this into marketing strategy.
– They will not bat an eyelid before changing their preferred brand. So NEVER, take brand loyalty for granted.
Solution: Brands need to stay connected with Gen-Z M and use AI to understand their needs and suggest options even before they realise they need it.
– Luxury brands have to bring in a “cool” quotient to woo them. Traditional excellence will not work well.
Solution: A great example is Apple watch and brands can look at how Apple created this aspiration for its products, not only among GenZ but also among Gen-Z M. Use of social media influencers, as opposed to old legends, is a great way to earn the “cool” badge for your products.
Last, but not the least, let me leave you with something to think about: post Covid, China is all set to become the highest consumer of luxury in the world with the biggest push from Gen-Z M.