Skip to main content

Millennials Force Luxury to Step Into the Digital Age

You can thank millennials for the sudden outbursts of innovation happening at some of the best-performing luxury brands. Gucci’s digital prowess has nudged it to the front of the pack, but other brands are experimenting, too, with new ways of reaching consumers.

High-end labels caught flat-footed by the arrival of the digital era and the rise of a new generation of young, affluent, highly connected consumers with lofty expectations for what shopping should be, have been compelled to abandon their fears of overexposure through e-commerce and go hard with cutting-edge technologies.

Expected to account for 40 percent of luxury shoppers in 2025, up from 30 percent in 2016, millennials and the Gen Zers following fast behind will wield increasing consumption power for luxury houses, Deloitte said in its Global Powers of Luxury Goods 2018 report.

Millennials are creating ripples of change throughout both the high and low ends of retail, and growth-minded luxury brands have tweaked their business models to accommodate a demanding new breed of customer. For many, the high-earning young Chinese consumer is too tempting to ignore, and Alibaba launched its online Tmall Luxury Pavilion in 2017 to lure Western brands to a trusted destination that aims to recreate the rarefied brand experience. Luxury brands cannot afford for their authentic goods to mingle with counterfeits, and the pavilion creates a reliable, curated and invitation-only hub for exclusive brands to reach a coveted cohort of shoppers.

Related Stories

Italy’s Moschino, known for its graphic designs, is the latest luxury brand to join the Chinese e-commerce site, making available to shoppers selected products from its recent collections plus a six-piece “Moschino X Tmall” capsule designed by creative director Jeremy Scott and exclusively for sale on the pavilion.

“To win in the China luxury market, you need to win over millennials,” Gabriele Maggio, Moschino’s general manager, said. “We already see quite a bit of brand love among this powerful consumer group which we plan to grow in partnership with Tmall.”

Moschino will leverage its presence on the pavilion to build a social and digital presence in China, according to Maggio.

Whether it’s selling via digital commerce or creating engaging digital experiences in stores or on shopper’s devices, the future of luxury retail will be digitally powered, with artificial intelligence and augmented reality leading the way. LVMH created a AI-driven “virtual adviser” chatbot through Facebook Messenger to field shopper inquiries about the Louis Vuitton brand online. The bot helped search the product catalogue, for example, and offered tips on product maintenance.

Ever the digital innovator, last fall Burberry leveraged Apple’s ARKit to create augmented reality experiences for users of its mobile app, which it had relaunched earlier in the year. The AR feature enabled users to “redecorate” their physical spaces with virtual Burberry-brand art decals and share the resulting mixed-reality photos on social platforms.

Those kinds of experience might be helpful for spreading brand awareness but millennials expect a similar approach to technology in stores, which they continue to visit and value despite hand-wringing over the death of physical retail. And they want brands and retailers to use technology to create an in-store experience tailored to their unique selves and needs.

“Unlike Baby Boomers, many millennial luxury consumers expect to interact with brands across a range of digital platforms, rather than only through traditional channels,” Deloitte said. “Millennial consumers are also important for in-store shopping and expect a high-value, customized experience.”