Millennials and the Secondhand market: a game-changing duo"

Investing in capturing Millennials or securing Baby boomers? That is the marketing dilemma that many brands are facing nowadays. According to Financial Times, Millennials are becoming ‘’the world’s powerful consumers’’ with a buying power of more than $24 trillion, and obviously brands are battling for a piece of this delicious and juicy pie. (FT, 2018)

In this weekly blog we will be deepening in one of the strategies that is allowing luxurious brands to reach the attention of millennials: the secondhand market.

But before getting down to the real business, let’s first ask ourselves: How in the hell are these two generations different? 

In today's blog we have identified 5 key differences of "THE" millennial luxury consumers compared to the previous generation:

·     Political correctness: the current generation demands more CSR practices in exchange for more volumes Millennials are attracted to brands that show committed to ethical approaches (Primo, 2018)

·     Personal pleasure: millennials care less and less about traditional values such as high – quality craftsmanship, displaying status and paying high prices. (Rowe, 2015).  They care only about pleasing themselves rather than impressing others and imitating their idols. (Moni, 2021)

·     The love for scarcity: it is not all about lower prices that attract these new luxury consumers, millennials want scarce pieces in the market such as vintage items and limited - editions (Danziger, 2019). However, it is also true that millennials have a peculiar attitude towards brands: in fact, research shows that Millenials have a lower attachment to brands, which often lasts only six to eight months (Lazarevic, 2012).

·     E–commerce and Recommerce: a less predictable phenomena that resulted from the online migration of millennial shoppers is the rise of recommerce, fast – fashion logic is slowly approaching its end; not only millennials care about the environment, but it is cheaper for them to approach the secondhand market for well-made items.

“The idea of fast fashion has really taken a big dip, so they [millennials] are willing to pay more for something that will last”, said Pamela Drucker Mann, Conde Nast’s CMO.

Hence, it should come to no surprise that Gucci and Louis Vuitton are millennials’ favourite brands, according to a survey conducted and social media data analysed by UBS. To win with millennial consumers, brands should understand what these consumers value: personal satisfaction and purpose. And that is exactly what Gucci did. So, if you are wondering what is behind Gucci’s blastoff - in 2018 sales grew by 44,6% and in the first quarter of 2018 the brand posted ~$2.2billion - one reason: millennials. 

 

The real challenge for luxury brands is to be technologically present AND remain attractive, trying to predict the (volatile) preferences of this generation.

Therefore, we thought that incorporating the secondhand market into strategic decisions may be a good idea, and it is what actually more brands are doing now.

An excellent example of a brand that was able to incorporate this market into its strategy is Gucci.

Indeed, Gucci and The RealReal Announced a Game-Changing Partnership in 2020. With this partnership, they want to encourage all consumers to support a circular economy and reduce carbon footprint emissions. 

“Gucci is raising the bar not only for the fashion industry, but for all companies by continuously innovating to make its business more sustainable,” said Julie Wainwright, founder and CEO of The RealReal.

Firms are trying to become more sustainable and so are the consumers' behaviour. Having taken to heart environmental concerns will only be beneficial to attract millennial luxury consumers in the years to come. The secondhand market is continuing to grow and expected to be worth $51 billion by 2023 (Stone, 2020), underlying the fact that interest for high-end clothes will never die, it’s just evolving (Madori-Davis, 2020)

 

In conclusion we can say that it is not an easy task to predict how millennials' expectations and preferences towards luxury brands will develop onwards, but one thing is certain: environmental and ethical or social issues will be key factors in millennials’ future purchasing decisions. And not to forget that Millennials buying power will keep rising in the future (Rowe, 2020). 

Sources

Danziger, P. N. (2019, May 09). 3 Ways Millennials And Gen-Z Consumers Are Radically Transforming The Luxury Market. Retrieved from Forbes: https://www.forbes.com/sites/pamdanziger/2019/05/29/3-ways-millennials-and-gen-z-consumers-are-radically-transforming-the-luxury-market/?sh=74e87dd479fd

Financial Times. (2018, Jun 5). How millennials became the world’s most powerful consumers. Retrieved from Financial Times: https://www.ft.com/content/194cd1c8-6583-11e8-a39d-4df188287fff

Lazarevic, V., (2012). Encouraging brand loyalty in fickle generation Y consumers. Young Consumers, 13(1), 45-61.

Moni. (2021). What Can Luxury Brands Learn From Gucci About Millennials?Retrieved from Moni: https://www.monigroup.com/article/what-can-luxury-brands-learn-gucci-about-millennials

Ordun, G. (2015). Millennial (Gen Y) Consumer Behavior, Their Shopping Preferences and Perceptual Maps Associated With Brand Loyalty. Canadian Social Science, 11(4), 40-55

Primo, D. (2018, February 02). What Can Luxury Brands Learn From Gucci About Millennials?Retrieved from Forbes: https://www.forbes.com/sites/forbesagencycouncil/2018/11/02/what-can-luxury-brands-learn-from-gucci-about-millennials/?sh=3a3c67275e5b

Rowe, L. (2015). Gen Henry: How Millennials are redefining luxury. http://www.pbjs.com/blog/how-millennials-are-redefining-luxury/.

Yeoman, I. (2011). The changing behaviours of luxury consumption. Journal of Revenue and Pricing Management, 10 (1), 47–50.

Rowe, L. (2020). Millenials and the New Luxury. New York; Publicisxp. 

Vale, A. (2021, May 21). How luxury brands can win gen Z and Millennial Shoppers. Luxury Daily. Retrieved October 3, 2021, from https://www.luxurydaily.com/how-luxury-brands-can-win-gen-z-and-millennial-shoppers/. 

Studio, B. F. (2021, September 9). How gen-z buys luxury. The Business of Fashion. Retrieved October 3, 2021, from https://www.businessoffashion.com/articles/news-analysis/how-gen-z-buys-luxury. 

Davis, D.-M. (2020, October 6). Gucci just partnered with the Realreal, joining a growing number of legacy luxury brands on the platform. it shows how the appetite for high-end clothes will never die, just evolve. Business Insider. Retrieved October 3, 2021, from https://www.businessinsider.com/gucci-and-therealreal-announce-partnership-as-demand-in-resale-grows-2020-10?r=US&IR=T. 

The RealReal. (2020, October 5). The Realreal and gucci launch circular economy partnership. GlobeNewswire News Room. Retrieved October 3, 2021, from https://www.globenewswire.com/en/news-release/2020/10/05/2103336/0/en/The-RealReal-and-Gucci-Launch-Circular-Economy-Partnership.html. 

Morhart, F. (2021, September). The Luxury Consumer. Lecture.