In 2017, Bain and Company published a report that shook the luxury world. It projected that by 2025, Millennials would account for 40% of the global luxury market. The idea that the 16 to 35-year-olds of the day, and their digital habits, would dominate the luxury space meant a change was coming. Then the pandemic arrived, pushing the gas pedal on digital - globally.
Now, only ten years after Millennials were expected to overtake the market, Gen Z, is giving them a run for their money. The generation born between 1997 and 2012 is poised to make up 40% of the global luxury market by 2035.
Who is Gen Z?
As the generation after Millennials, Gen Z is the first true generation of digital natives. Millennials, many growing up as the internet's capabilities were expanding, differ from their younger counterparts who never experienced a world without it. Their take on non-judgemental fluidity, accountability in the social and ethical public arena, casual entrepreneurship, and slow-living make this a generation of new perspectives.
Here's what they're all about and how their completely different approach to luxury will irrevocably change the space.
Flexible Payments: Buy Now, Pay Later
Flexible payments open up the luxury space to younger generations in a big way. It shatters the traditional evolution of luxury consumption, that as you get older and your personal wealth increases, luxury shopping becomes more available to you. While entry products like fragrances and small leather goods allowed younger demographics to participate, most purchases were still economically out of reach. The introduction of flexible financing makes it possible to purchase higher up the brand umbrella rather than settling for what you can pay for in full.
With a buy-less-but-better mindset, 87% of Gen Z, when shopping for luxury, find it helpful to pay over time.
With flexible, interest-free payment options, like Shop Pay, hitting major e-commerce platforms like Shopify, e-commerce is making it easier to do just that. This move ushers in an era of installment-paying often available to the ultra-wealthy. If going to a retail store means paying in full instead of losing sales to e-commerce, it presents an opportunity for retailers to match that. Shopping in person for the luxury experience doesn't need to mean having fewer options.
#ThriftedLuxury
The thrill of the hunt, saving money, and sustainability have created a perfect storm in the second-hand market. The circular economy mindset shifts the focus from materials and production to a product's longevity and reusability.
The hashtag #ThriftedLuxury has over 712.7K views on TikTok alone. And with over 3 in 5 of younger luxury shoppers believing that purchasing high-end goods is more sustainable, shopping luxury becomes "not just the right thing to do, but the thing you want to do."
And their luxury purchases don't just save them money. It makes them money in the long run. Able to give their items a second life in the consignment and vintage markets, shopping luxury means less waste and a better investment.
A different but valid way of entering the luxury market, recommerce provides a low-risk investment they can feel good about.
Luxury service takes on new expressions
Excellence, one of the three elements of luxury brands, can take on many forms. And even online, luxury still comes with certain expectations.
Thoughtful service manifests itself in new ways. The ability to buy online and pick up in-store, talking to a sales representative online before a purchase, and a one-day delivery turnaround are just a few examples of how a luxury experience will find new forms with Gen Z shoppers.
To a generation whose youth was relinquished to lockdowns and digital-only relationships, a luxury experience is about ease-of-access rather than exclusivity, a world of complementing rather than competing touchpoints, and a means of creative and financial expression that is fluid and amazing.