Gen Z: the challenge for luxury brands

Published: August 29, 2017 3:12:19 AM

As the 390-million strong cohort moves away from traditional ownership concepts, luxury brands in India must aim to go beyond celebrity-led ads and embrace authentic marketing

Gen Z, luxury brands, Emerging Consumers of Luxury, Indian luxury market , TCS, Luxury marketingIf the consumption story of India over the past decade or so is defined by the naked aspirations of Gen X and the millennial generation, then that template is in for an overhaul.

As the 390-million strong cohort moves away from traditional ownership concepts, luxury brands in India must aim to go beyond celebrity-led ads and embrace authentic marketing

By: Ameen Khwaja

If the consumption story of India over the past decade or so is defined by the naked aspirations of Gen X and the millennial generation, then that template is in for an overhaul. Gen Z, the bustling cohort of 390 million Indians born after 2000, is at the heart of this change in consumption patterns. Driven by values like inclusivity and pragmatism, Gen Z is moving away from traditional ownership concepts towards other personal aspirations that they hold close to their heart.

To this generation, luxury as a concept takes on a whole new meaning. Born when the digital revolution was already underway, these digital natives thrive on technology, which is also deeply entrenched in their online personalities. The idea of ‘my luxury’ defining Gen Z is simple — conventional, aspirational brands no longer command the same value as they did with previous generations — decreeing a new era of individual choices based on what brands mean personally on their own terms. Unlike previous generations that placed emphasis on the perceived brand value and the resulting prestige it brought; quality, personal excitement and value rate higher for Gen Z. This change in mindset and consequently, buying behaviour, is particularly pronounced in tier II and III cities where ‘my luxury’ as an idea has seen greater acceptance.

A CII-IMRB luxury report titled Emerging Consumers of Luxury — India tiers II and III says that the Indian luxury market grew by 25% y-o-y in 2016 to $18.5 billion driven by an increased penetration of brand awareness beyond metros.

The perceptive generation

Young consumers are relating to brands that offer them inclusivity, pragmatism and shared or borrowed ownership, which is diametrically opposite to what luxury brands have traditionally espoused —exclusivity and treasured ownership. The migration away from the exclusivity of luxury brands could have to do with historical factors. Being born in the new millennium, this is the first generation whose parents were able to afford luxury brands like an iPhone, a Louis Vuitton handbag or a pair of Chanel glasses. The scarcity value that the exact same brands gave their parents has transformed into saturation for this generation and lowered the lure that it held.

This is also a generation that is far more realistic than its predecessors. They are perceptive and can see through traditional brand campaigns that aren’t rooted in reality. Being born into times with internet access and mobile technology, they have well-developed filters for promotional content. Gen Z is more than twice as likely to respond to advertising that features real people as opposed to celebrities, who usually graced advertising campaigns of luxury brands. Some global luxe brands have already embraced ‘authentic marketing’.

Italian jeweller Pomellato, celebrating its 50th anniversary, implemented this tactic and linked its campaign with female empowerment — a movement being encouraged through various platforms. Its 2017 campaign features six women with professions ranging from an artist to a nutritionist to a brand advisor to an art curator and a writer who were all photographed wearing different signature Pomellato pieces.

This is a generation that cares less about what you are selling to them but places value on what brands can do for them. What they aspire for is tangible self-improvement over self-aggrandisement (picking up skill sets over money, for example). But luxury brands are yet to wake up to the potential of this and offer products that can only help the consumer make a statement. Luxury brand communication is still largely celebrity and image-led, which will work against them with Gen Z.

Digital natives

About 72% of Indian Gen Z participants surveyed by TCS, considered themselves happy. Health, relationships, academic and career achievements, social life and reality-based financial aspirations are considerations for their happiness. Luxury marketing, which has relied on the insecurity of individuals, faces a fundamental challenge in gaining mind share with this relatively secure generation that cares more about social issues facing humanity and is keen on volunteering.

As digital natives, they multitask across at least five screens daily and spend 41% of their time outside of school with computers or mobile devices. This has resulted in an eight-second attention span and the tag of being the most technologically fluent generation, thus far. This translates to extreme comfort with online shopping and resistance to the physical experience-led shopping at luxury stores. No physical store is going to be able to cater to the extreme attention deficit that this generation is comfortable with.

Gen Z is thus turning to brands that cater to their aspirations, based on individual choice on their own terms. Conventional marketing wisdom used to engage with previous generations can safely be thrown out of the window to be able to market to these youngsters, who on an average use five screens. Brands that can meet Gen Z on the latter’s terms are likely to capture the imagination of this 390-million strong cohort.

The author is founder and CEO, LatestOne.com

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