Fleur Arbel and Christophe Kairouz, two 24-year-olds from France, were attracted to Louis Vuitton’s New York store by a colorful sculpture but would rather shop elsewhere, feeling Louis Vuitton’s style is outdated. Kairouz expressed that the brand needs to be more original to maintain its luxury image. This viewpoint reflects that of Generation Z, a demographic expected to grow its share of global luxury spending from 4% pre-pandemic to 25% by 2030, according to Boston Consulting Group.
Gen Z is a more challenging group for luxury brands to attract than previous generations. They are influenced by social media and blend products from well-known brands with more modern labels, shopping from a variety of platforms like TikTok and thrift stores. To resonate with this generation, brands have used strategies such as influencers, pop-up shops, and affordable accessories. Scott Roe from Tapestry noted similarities in Gen Z’s behavior across global cities, emphasizing that while they are brand-loyal, they have many options, making it harder for brands to reach them. Tapestry’s marketing budget has risen significantly to capture this audience.
Affordable luxury brands like Coach and Ralph Lauren have benefited from this generational shift. Coach, for instance, has seen a revenue increase due to targeting Gen Z through influencers and a commitment to sustainability. The brand’s revenue rose to about $5.6 billion. More established luxury brands like Miu Miu and Loewe also continue to do well with Gen Z, with Miu Miu currently leading the Lyst Index, partly due to their appealing accessory prices, making it easier for younger shoppers to engage with luxury.
Younger consumers, including those from Gen Z and Millennials, are still budget-conscious, with their spending increasing only slightly compared to Baby Boomers. For them, luxury purchases often involve seeking long-lasting items that will remain desirable over time. However, not all brands have thrived; Gucci, for instance, saw a significant sales drop, and social media engagement data showed it struggled to connect with younger audiences over the past year.
Legacy brands appear to be splitting into successful and unsuccessful categories, with some facing declines in stock value. New Chinese brands, like Uma Wang and Shushu/Tong, are becoming more popular among younger shoppers in Asia, thanks to their digital savvy and alignment with national identity. Chanel’s CEO highlighted the importance of staying relevant and modern to maintain iconic status in the market.
With information from Reuters
