According to new research from Step, the finance company that caters to teens and their families, Gen Z has an estimated spending power of $75 billion as they become an increasingly important demographic for retailers and as studies have shown this cohort’s consumer behavior varies drastically from generations before them.
Further, research by Boston Consulting Group found that in the luxury market, while traditional markers remain critical, including superior quality, attentive design and a narrative that situates consumers above the high street, they are no longer enough to drive the youngest generation. And notably, the company predicts that by 2026 Millennials and Gen Z will count for more than 60 percent of the global luxury market — suggesting we are sitting on the edge of a massive generation shift in the market. Rapidly changing behaviors, values and wants of the new luxury consumer could become unrecognizable to what they once were.
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“Brands that are culturally credible foster loyalty by enabling and encouraging participation and communication,” said Pierre Dupreelle, managing director and partner at Boston Consulting Group. “Successful brands no longer speak to, but rather through, their audience. While social listening and search metrics show the dynamics of trends from a topline perspective, the understanding on the frontlines of culture is that, in the streetwear landscape, the next big thing is designed by consumer choices, not luxury houses. Traditionally, fashion was directed by fashion houses; the entire game is changing because the consumer and the community are deciding what the next trend will be.”
Though while the young generation has retailers changing the way they conduct business and even how they communicate with shoppers, it is important to remember that Millennials, Baby Boomers and Generation X remain an important force in the market. But is it possible for brands today to reach a multigenerational audience?
“There is no one-size-fits-all for multigenerational success,” said Karla Martin, managing director at Deloitte Consulting LLP. “The brands that do it well have some consistent through-line that resonates across generations, or they have a legacy such that the products become a rite-of-passage. These brands produce product that keeps true to their DNA, but also translates that DNA into looks and silhouettes that speak across generations.”
Concurrently, Vic Drabicky, founder and chief executive officer of digital consultancy January Digital, said there is no “secret sauce” to appealing to multiple generations, but instead a combination of all of the things that make a brand great and exceedingly important is a brand’s ability to build a true relationship with customers.
“There isn’t necessarily a secret sauce, because every business is unique, but there are certainly similarities, [like] consistent product quality and cutting edge product design, comprehensive yet flexible marketing strategies, a strong understanding of consumers emotional connection to brand regardless of age, and a heightened willingness to take risks and test new products, media platforms, designs and so forth,” Drabicky said. “It’s also important to note that in most cases, people didn’t set out to be multigenerational, it organically happened. Tory Burch, for example, didn’t start her company and say, ‘I am building a brand for women from 18 to 70, now let’s go design for it.’ Instead, they focused on impeccable, timeless design, quality product, listening to customers and being true to who they were versus trying to adapt to be for everyone.”
It is important, Drabicky told WWD, when developing a multigenerational marketing approach to consider the existence of cross-generational influence.
“Because of ease of access to information, a 50-year-old Gen X parent is just as likely to influence their 20-year-old Gen Z child as the child is to influence the parent,” Drabicky said. “Therefore, brands must consider how their marketing strategies play into this dynamic. For effective generational marketing — and to build an engine in which consumers of all ages feel ingrained — brands need to find the similarities that tie generations together. Most often, those include a common sense of humor or a shared emotional mind-set.”
At the same time, new technologies and a continued rise in social media, which target a younger demographic, have shifted the way brands communicate with consumers.
“The rise of social media has led to consumers wanting to have more connection with brands in ways that are very different,” Martin said. “They expect to have an ongoing dialogue with the brand, to feel like they have input into product and to feel like they are part of a community. From a brand marketing perspective, that means that you need to have a lot of touchpoints with consumers and those touchpoints need to feel customized to every demographic. The product is, in many cases, the same but the messaging needs to be tailored.”
Further, Martin said, the ability to use social media to send targeted messaging could indicate an upcoming shift toward brands focusing on specific individual consumers and less on trying to hit a trend that speaks to mass audiences. And at the same time, research by Boston Consulting Group reveals these targeted messages through social media, which serve to reach a specific consumer do not interrupt relationships with others.
“While it is critical that the overall message of the brand is rooted in its distinct set of emotional and functional benefits, it is possible to articulate that message with distinct nuances to different generations,” Dupreelle said. “With the micro-targeting possible through sophisticated digital marketing and personalization, brands are able to highlight key drivers of cultural credibility to younger consumers through media or channels that will reach younger consumers without alienating older generations.”
Overall, Dupreelle said, brands must make sure they are clear on brand positioning and messaging above the specific nuance of different generations. Today, he said, isolating generations could run the risk of having conflicting messages that impact a brand’s credibility. Moreover, according to Martin, the retail industry is experiencing a time of less rigid silos between generations. “While all trends aren’t for everyone, you see more younger women borrowing pieces from their mother’s closet, and then mothers are looking to younger generations to pick a trendy piece that updates her look,” Martin said. “Today, generational hard lines seem to be more permeable. More and more marketers are starting to talk about ‘perennials,’ consumers whose behavior is dictated less by their age than by their beliefs. These perennial consumers are trying new things and, as a result, they tend to be less concerned with what they are ‘supposed’ to wear. Instead, it is all about finding a look that feels authentic for them.”
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