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Millennial and Gen Z shoppers are poised to change the way luxury brands do business. Faye Bradley reports.

Think of spending big on luxury brands, and you might imagine a seasoned shopper. However, a 2022 report from Swedish fintech company Klarna takes this idea seriously. According to the online financial services company’s survey of 1,000 luxury buyers in the U.S., the majority of Gen Z (60 percent) and Millennials (63 percent) respondents have made a luxury purchase in the past year. The figure is significantly lower among Gen Xers. (46 percent) and especially baby boomers (18 percent).

According to market and consumer data provider Statista, global sales in the luxury goods market are projected to reach $312.6 billion by 2022, with the Asian market accounting for more than a third of the total $124.2 billion. In a webinar titled “Asia’s Booming Luxury Market” held in September at the UN campus of the University of Chicago in Hong Kong, experts said the region’s resilient luxury sector was already emerging after the COVID-19 dip.

According to auction house Christie’s, the Asia-Pacific region contributed more than two-thirds of the value of global auction purchases by Millennials and nearly 50 percent of the value of global purchases by new Millennial buyers. In Hong Kong, millennials from Asia and the Pacific will contribute 21 percent of the total value in the first half of 2022, almost double from 11 percent in the first half of 2019. Like their counterparts from mainland China, millennials appeared from Hong Kong a penchant for the categories. such as contemporary art, Chinese art, jewelry, watches and wine.

Luxury brands have been quick to present their products to the new generation of big spenders in a language they understand more easily. Their target audience, which consists mainly of digital natives, has never known life without the internet and is therefore unlikely to be influenced by traditional forms of marketing. This is a demographic that has a different idea of ​​luxury than their parents.

Tech-savvy millennial buyers are eager to stay abreast of market trends, says Francis Belin, president of Christie’s Asia Pacific. [PHOTO PROVIDED TO CHINA DAILY]

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device redefined

For Gen Z, a luxury item doesn’t have to be the rarest or most expensive. “It must be able to express the owner’s style, character or identity,” said Julia Hu, general manager of Bonhams Asia. “The most important thing for them is that they can achieve something that appeals to their vibe.”

While the luxury market has thrived on exclusivity and aspiration, today’s youth want to invest in brands that promote inclusiveness. It is the cultural identity of the conscious spender that matters. Srinivas K., academic director of the LVMH-SMU Asian Luxury Brand Research Initiative at Singapore Management University. Reddy says Gen Z consumers don’t spend as much as their parents. Key considerations include how well a brand’s purpose and mission align with the buyer’s own values.

So what do Gen Z buyers like?

“We have seen interest in contemporary art, especially pop art and art toys, as well as designer jewelry and even antiques like Song ceramics,” says Hu. Many of them also enjoy cross-category shopping, she notes. For example, a collector of contemporary art may also collect watches, wine, whiskey or traditional Chinese paintings.

Gen Z shoppers care less about what generates buzz and are more likely to rely on the judgment of their inner circle, says Ashley Dudrenok, China marketing expert and agency founder Alaris & Chosen. . “Gen Z is realizing the demands of being different from others through personalization and customization,” she adds. “They value convenience, intelligence and fun.”

Fashion designer Vivienne Tam agreed: “The new generation is looking for something unique. They go for customization, for personality.”

Julia Hu, general manager of Bonhams Asia, says Gen Z collectors are most interested in items that reflect their personality. [PHOTO PROVIDED TO CHINA DAILY]

nft rules

With their unparalleled influence and reach, platforms such as Instagram and TikTok have become powerful marketing tools to target young consumers while also providing consumers with ways to showcase their purchases. “Younger generations are more willing to share their luxury purchases on social media,” said Francis Belin, president of Christie’s Asia Pacific. Brands are also partnering with major online influencers to win over the latter’s fan bases and convert them into potential customers.

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Social media ads are less common than ever as brands try to entice audiences with Dudarenok endorsements. In Hong Kong, where TikTok is not available, Gen Z uses Chinese social media platforms such as Douyin and Xiaohongshu to access short video content and entertainment. “Millennial buyers from Hong Kong and the mainland are tech savvy and hungry for information to stay abreast of market trends,” said Belin.

In 2021, the popularity of non-fungible tokens has skyrocketed, prompting several critical responses based on industry volatility. Many NFTs represent or are linked to objects in the real world, from art and music to games, videos and more. According to Hu, Generation Z drives the NFT market by believing in their value as an alternative to traditional art collection. “Gen Z are open to their choices and they like to organize exhibitions to share their collections and knowledge.”

That so many young people are the primary consumers of any form of art is something new. Canis J says: “In the past, an expensive painting was placed on the mantelpiece, visible only to dinner guests. Now NFTs are used as signatures on the owner’s web page or phone for anyone to see.” Prendergast, author of The Limits of Bureaucratic Efficiency. “The appeal isn’t just in owning a digital image, which can also serve as an investment vehicle, but one that gives the owner access to a community.”

NFTs were the theme of Tam’s Spring 2023 New York Fashion Week show, where her physical collection bridged the virtual world through clothing embellished with blue-chip cyberpunks and cryptopunks. She’s also one of the high-profile names creating pieces for the Council of Fashion Designers of America’s 60th Anniversary NFT collection, due out this month. “The unisex designs and casual streetwear style capture Gen Z and show collectors how beautiful these digital images can be in the physical world,” says the couturier.

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Other luxury brands such as Tiffany & Co, Dolce & Gabbana and Burberry have also launched NFT collections. But, Dudrenok warns, “many Gen Z and millennials don’t see the point of NFTs.” Those who do, she says, tend to view them more as a form of self-expression than an investment vehicle.

Vivian Tam celebrates Gen Z’s fascination with NFTs by embellishing her new clothing line with blue-chip CyberKing and cryptopunk motifs. [PHOTO PROVIDED TO CHINA DAILY]

tenant market

Many Gen Z designers prefer to rent rather than buy designer items. Reasons include sustainability and cost, but also the realization that what is hot today may lose its appeal in the medium to long term.

According to “A Survey of Global Collecting in 2022,” an Art Basel-UBS report released earlier this month, sustainability is a growing priority among high net worth consumers. Ninety-eight percent of respondents said they would be willing to pay 5 percent more for sustainability, while 57 percent said they would pay up to 25 percent more for an environmentally friendly alternative.

US-based Rent the Runway has bucked the luxury rental trend for the past decade. In mainland China, platforms such as ZZER, Feiyu and Ponhu are popular, while in Hong Kong Cloakroom Collective and Hula resell authentic luxury goods.

However, most luxury brands have so far refused to come on board. “The luxury market has to catch up or it will be lost,” says Reddy. “Redefining ownership has implications for the industry.”

While consumer desire to wear the real thing is going nowhere, luxury brands may need to rethink their strategies to appeal to the younger generation of big money lenders.

Source: news.google.com

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