Millennials and Gen Z (those born after 1997) are shaping the world of fashion and luxury brands are scrambling to keep up. But the formula of relying on brand name to influence the hearts (and wallets) of the younger generation may no longer be enough to weather through fashion’s toughest year yet.
In November 2016, two young Stanford University-educated female entrepreneurs decided they have had enough of unstylish laptop bags. Coral Chung and Wendy Wen founded their San Francisco-based start-up Senreve with one simple goal: To make a stylish laptop bag for working women.
In a world where practical rarely met stylish, Chung and Wen — the latter was part of the financial strategy team at luxury brand Chanel — wanted to make a bag that would meet this sweet spot of fashion and function. The result? The direct-to-consumer Senreve Maestra, a leather tote bag-cum-backpack that was simple, stylish and most importantly, practical.
These structured leather bags could be worn on a shoulder or turned into a backpack. Today, it adorns the backs and arms of celebrities like Anna Kendrick and Lady Gaga, and has stood out as a brand which disproves the need for a recognisable name in order to sell luxury bags.
And these were luxury indeed — the Senreve Maestra is priced at US$895 ($1,219) — yet it convinced thousands of women across the world that $1000 was an acceptable amount of money to spend on a handbag. The fact that it was ‘not branded’ did not matter either.
The success of Senreve — the name is taken from the French words for “sense” and “dream” – is but one example of the rapidly changing world of luxury, especially when it comes to the younger generation. Experts agree: There is more to luxury than just a name.
More than just a name
For starters, direct-to-consumer brands (DTC) like Senreve — some of which are priced close to the most established luxury brands — are finding favour with the fashionable younger set. These DTC brands are mostly purely digital, and advertise heavily over social media, popping up every so often on the Instagram feeds of young women (and men) everywhere.
They eschew the traditional storefront, glamorous boutiques and white-glove service of established brands, instead choosing to tout their sustainability credentials by creating a sense of exclusivity without the need for glitzy marketing or editorial campaigns.
Senreve, for example, offers a lifetime warranty on its bags and promotes ethical sourcing of its leather, which also comes in an animal-free ‘vegan’ option.
But amidst the challenging times faced by the fashion industry — according to market research firm McKinsey’s ‘The State of Fashion 2020’, the fashion industry is expected to grow only by 3%-4% this year — it is more crucial than ever to tap into the hearts (and wallets) of the world’s largest consumer segment of Gen Z and millennials. After all, this segment is expected to account for over 45% of global luxury spending by 2025. Still, how are luxury brands — whose names carry not just an assurance of quality but also social standing — going to compete for this segment?
To the young working adult, brand names and social clout are not nearly as important to them as it was to their parents. And experts agree: They have noted that marketing to millennials is not like marketing to their parents or grandparents.
Millennials are, after all, digital natives, whose idea of status is not necessarily shaped by luxurious and exclusive possessions. Yuriy Boykiv, co-founder and CEO of Gravity, a full-service advertising agency in New York, notes that these digital natives are committed to freedom of expression, new experiences and technology.
“Luxury alone just will not cut it. With many alternatives to choose from, millennials demand better value for their money and greater real-time curation from their luxury brands. They will not accept a brand’s status at face value, preferring to unearth information for themselves. This means that brands must cater to this digital outlook to have any hope of attracting millennial interest,” he writes in Retail Dive, a retail analysis news site.
At the heart of it, millennials do not want to feel like yet another nameless, faceless customer to a multi-billion dollar corporate. They want to feel a sense of belonging to the brand, to associate themselves with a brand story.
Daniel Langer, CEO of the luxury, lifestyle and consumer brand strategy firm Équité, writes on Jing Daily (the China-based digital publication on luxury consumer trends) that brands need to focus on storytelling, and to put their focus on building brand equity — in other words, forming clear rational and emotional positions about what the brand stands for.
“The youngest consumers are the most discerning. If they don’t quickly get what’s in for them, they simply won’t be interested,” he writes. “In its most elemental form, it’s the way a brand creates value. Brands which are weak in storytelling will never be perceived as authentic and relevant, and they won’t be able to create luxury value and sustain their market position.”
Consider the backlash faced by fashion house Dolce & Gabbana after an ill-advised advertising campaign in China in 2018, which was deemed racist after it depicted a Chinese model struggling to eat a pizza with chopsticks. As a result, its Asia Pacific market share dipped to 22% from 25% of total turnover, and it was forced to cancel a show in Shanghai that same year. Calls for the brand to be “cancelled” came fast and strong on social media, as well.
One obvious shifting trend is happening in the digital space.
In ‘The State of Fashion 2020’, it is noted that traditional engagement models struggle on established social media platforms, and fashion players will need to rethink their strategy and find ways to maximise their return on marketing spend.
The report stated that attention-grabbing content will be key, deployed on the right platform for each market, using persuasive calls-to-action and, wherever possible, a seamless link to checkout. However, merely pushing content and advertising on social media isn’t enough to turn clicks into sales.
Advertising overload could be hurting sales, and there is increasing fatigue and apathy towards advertising content. McKinsey noted that in light of consumers’ growing apathy — and sometimes antipathy — towards traditional social media advertising models, fashion brands are expected to significantly re-evaluate their strategies in a quest for meaningful returns. “This means having a deep understanding of which platforms and networks their target consumers are engaging with, both in terms of region and demographics. Brands will start to establish content creation as a discipline within their organisation, focusing on engaging and tailored content that can work across a range of channels,” it stated.
It is no easy task for luxury fashion brands to capture the attention and spending power of a generation that are all at once notoriously fickle, yet fiercely loyal to brands that resonate with them. They are frugal but willing to splurge if they so choose. They are a consumer group full of contradictions. But one thing remains constant: A rose by any other name will indeed smell as sweet to them.