Millennials: The Future of Luxury Retail
According to the white paper, “Five Luxe Trends for 2015” by marketing expert Pam Dazinger, millennials will have the highest potential to become the largest spending generation in history by 2035. Bain & Co also predicts that the millennials, also referred to as Gen-Z, will heighten the value of the luxury goods industry to $324 billion, accounting for 45 percent of the market by 2025. This entails a challenge for many luxury brands as research reveals that traditional business models do not resonate well or align with their values and expectations.
Many brands used to focus on the creation of a superior product that embodied the ideals of desire and exclusiveness, whereas now, these brands need to focus on the values of younger generations. It has been noted that transparency, authenticity and community are vital values that influence their decisions on making a purchase for luxury goods.
Transparency and authenticity are somewhat overlapped when these consumers are seeking for products that are realistic in which they provide room for them to learn or even do some good after making a purchase. Community is translated to time shared together, be it with their peers or loved ones. These pillars of values further reflect the urgent need for luxury brands to create a diversified strategy allowing them to engage the millennial luxury shopper in an entirely new way.
The two greatest channels that drive sales are online and in-store purchases. Coupled with the growing demand for engaging experiences via these channels, it is imperative that the consumer experience needs to be immersive. The sales channels have to offer a viable reason for consumers to come to the store, otherwise it will lose to other competing channels that provide more convenience for them to buy the product. Based on a recent Deloitte study on millennials’ luxury purchasing behavior, it was revealed that 53 percent of the consumers surveyed prefer to choose a luxury experience over a product when making a decision to purchase. On another note, further discussions have also mentioned that the millennial behavior has influenced the way how older generations spend their income as well. The older generations are expecting a different kind of attitude, experience and transparency from luxury brands today as they are constantly exposed to new experiences and propositions.
It has become important for brands to remember that the consumer experience should be a premium commodity in their efforts to retain a premium pricing on luxury products. More than half of the respondents in the Deloitte study admitted that they would be prepared to spend a higher amount for a personalized product.
To sum it up, the millennial luxury shopper places a stronger consideration to buy a product when their consumer experience is personalized, convenient and immersive. This may seem challenging and tricky for most but it is easily translated into one technological innovation – Virtual Reality (VR).
The popularity of using VR to increase sales of luxury products has been constantly growing. Take a yacht for example, it is rather expensive to arrange and deploy several sea trials for potential customers. Furthermore, due to the product technicalities, it is almost impossible for interested customers to test pilot a yacht on dry land. The sheer size of it makes customization and modifications in real-time rather lengthy. However, VR grants your customers the full capabilities of customizing, piloting and even having a personal tour around their very own yacht within the comfort of an indoor environment. Not only does VR provide an immersive experience, it also shortens the sales cycle typically needed to sell a yacht.
The need to implement new strategies to market your luxury products becomes more apparent with every passing day and VR should be a key component to your marketing strategies. Brands such as Christian Dior, Tommy Hilfiger, Swarovski, North Face, Porsche, Audi and Shangri-la Hotels are just a few examples of luxury brands that are already using VR to create a heightened and premium experience for their customers.
Here at SWI, we are currently seeking shipbuilder partners to change the yacht retail market and soon intend to do so for other luxury goods. So, if you have more questions or are interested in finding out more about how VR can help to improve your business, do not hesitate to contact us!