A 'millennial tsunami' is sweeping over global luxury

Milennial 'hipsters': more likely to invest in experiences than objects
Milennial 'hipsters': more likely to invest in experiences than objects

New milennials assemble and disassemble their identity at will and they have no time for heritage, argues Jonathan Openshaw, editor of trends and insights at The Future Laboratory.

Millennial marketing has reached crisis point. The legacy of the hipster is a flat white coffee truck on every corner, cafés dedicated to cereal and several single-speed bikes to every East London resident.

The hipster also left us with a bankrupt brand lexicon however. From ‘heritage’ to ‘provenance’, ‘authentic’ to ‘curated’, words have been hollowed out by overuse and are now falling on deaf ears. It’s time for a new language of anti-authenticity – one that subverts the current consumer conversation and creates a more active and revelatory brand experience.

Traditional signifiers of wealth such as logos and conspicuous consumption are out of favour 

Millennials already make up 45% of luxury consumers and are set to eclipse the influence of Baby Boomers in the next few years, according to a recent report by The Shullman Research Centre. Whereas Boomers tend to be receptive to ‘heritage’ narratives and look for quality materials and ‘provenance’ in their brands, New Luxury Millennials (NLMs) are more conflicted in their attitude to the luxury mainstream.

According to Deloitte, more than half (56%) of European 18-34 year olds seek out niche logos that their peers haven’t heard about and are turned off by big brand names. A Millennial tsunami is set to break over global luxury, changing not only product but the whole articulation of value. Many brands seem underprepared for this impending transformation.

So who is the NLM, and how can brands create a more convincing relationship with them? One of the proprietary methods that we use at The Future Laboratory to help our clients understand the luxury market is the Five Stages of Luxury Index.

The changing luxury mind set 

The Index is based on Maslow’s hierarchy of needs, a seminal psychological theory dating back to the 1940s that follows a natural human progression through a ‘needs pyramid’ of five stages. People only move on to the next level once their needs at the existing level have been met. So for stage one, these needs tend to be ‘physiological’: the need to eat, sleep and reproduce.

Stage two would be ‘safety’: the need to situate yourself in the broader environment and eliminate threats, whilst stage five is focused on ‘self-actualisation’ – a much more abstract and poetic need relating to individual fulfilment.

Rather than looking for acquisition, this group is all about access, and are far more likely to engage in the sharing economy than the traditional luxury consumer

This same hierarchy can shed a lot of light on the changing luxury mind-set, with stage one luxurians exploring acquisition and value whilst stage five is about more experiential and poetic pursuits.

Our 2015 Luxury Index was published earlier this month and found a significant NLM clumping in stage five. This tells us that traditional signifiers of wealth such as logos and conspicuous consumption are out of favour for NLMs, who are far more interested in experiences that can give them access to intangible luxury values.

This younger breed of luxurian, raised amidst the convenient, me-centric ethos of the social media age, has little patience with tradition and even less with luxury service that fails to deliver on high expectations. Brand heritage is far less important to them than brand legacy, and they seek out brands with a vision that they feel is in line with their personal aspirations.

They assemble and disassemble their identity at will, and are on a restless search for bragging rights around rare experiences that can help them on this journey of self-actualisation. Rather than trawling Bond Street, you’ll find them at Burning Man festival or at an eco-retreat in the Nordic fjords.

A confusing time for brands

NLMs are defined by a post-recession mind-set and strongly reflect the realignment in values that we’ve seen since 2008. Rather than looking for acquisition, this group is all about access, and are far more likely to engage in the sharing economy than the traditional luxury consumer.

Looking at the luxury automotive sector for example, Audi is targeting NLMs through its Audi Unite scheme, which allows a group of friends to share the costs and upkeep of a single Audi car delivered through a fob and app system. Our own findings in the Luxury Index showed that 34% of stage five consumers hired items of luxury fashion and 24% hired jewellery – both of which would have been peripheral behaviours pre-2008.

It’s a confusing time for brands, as this philosophy of access in the sharing economy seems to run against the whole luxury mind-set of rarity and exclusivity.  Transfer these luxury values away from objects and onto experiences, however, and you’re getting much closer to the NLM outlook.

It’s about innovation rather than introspection, providing a bold vision of the future that feels like a provocation and challenge. This is how NLMs are approaching their own lives, and they expect the brands that they buy into to do the same. 

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