Gen Z's impact on luxury branding: How brands can appeal to the new gen of luxury shoppers

Luxury brands have their eyes set on Gen Z, the new generation of shoppers who are investing in high fashion and luxury goods.

With an increasing purchasing power at a younger age, this cohort of shoppers is now at the centre of brands’ target audience. A CNBC report on Gen Z shoppers in the luxury sector noted that luxury shoppers are getting wealthier and younger. In fact, purchases by the youngest customers are projected to grow three times faster than that of older generations over the next decade.

However, brands cannot equate Gen Zs to their predecessors, the millennials. Being raised in the ‘woke’ age has set Gen Zs and their shopping behaviours apart and what Gen Z looks out for in brands today is far different from millennials. 

According to a recent study by trend forecasting company WGSN, the five pillars that drive Gen Z behaviours include ‘self-definition’, ‘intentional wellness’, ‘pan-Asian creativity’, ‘Work 3.0’ - where Gen Z are pushing back against typical 9-5s and prioritising themselves and lastly, ‘consumption and money’ – where finances play a crucial to their overall health and wellness. Additionally, environmental consciousness is also at the forefront of their purchasing decisions.

“The underlying driver for Gen Z behaviour in the APAC region is self-empowerment. From new career aspirations to wellness as a status symbol, Gen Z consumers across the region are fundamentally changing the way they live, work and consume, with new implications for brands. From a creative standpoint, a slew of emerging local and regional creative collectives is reconceptualising cultural relics to take neo-Asian kitsch mainstream,” said Alison Ho, analyst of Insight at WGSN.

Wong Yan Ting, senior strategist at Ogilvy agreed with the findings from the study by noting that in previous years, brands may have spoken to the behaviour of collecting 'experiences' being the new luxury but there has been a significant and purposeful shift. "Conscious consumption - most obviously a move away from fast-fashion; prioritising personal health and wellbeing and even deprioritising work are all visible trends in Singapore and across the region," she added.

With that in mind, luxury brands are attempting to woo younger consumers and they need to do so while being 'woke' and keeping with the times, since they are at risk of falling victim to cancel culture if they fail to do so. 

So what is the code that luxury brands need to crack to appeal to the Gen Z crowd?

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Wong believes that luxury brands know that to appeal to a younger segment, they have to excite both their minds and their morals. Consequently, they have moved away from the traditional notions of extravagance, prestige and opulence. “Consumers are turning their backs on mindless consumption and are welcoming conscious consumption, where they’ll value brands who dare to stay in step with culture and the world,” she explained.

The trends she noticed include quiet luxury, which includes logo-less and timeless pieces, the re-emergence of second-hand vintage luxury and brand collaborations such as ‘Nike x Tiffany’, ‘Dior x Birkenstock’, and ‘Loewe x Ghibli’.

According to Lara Hussein, founder and CEO of M&C Saatchi, personalisation and co-creation also holds a large appeal for the Gen Z. “They like the process of personalisation because it makes them feel special, especially since they sense that their unique choices are being addressed,” Hussein said.

She went on to add that to have this new generation of shoppers be intrigued by brands, they need to see themselves reflected in its creations, be it through the values they uphold or the latest trends that have been incorporated into the collections.

One of these values, as Hussein noted, is being environmentally conscious. She noticed that Gen Zs pay more heed to brands that are proactive in their sustainability efforts. She referenced Patagonia, a high-end outdoor gear brand, that has made strides in its sustainability initiatives. For instance, its ‘The Worn Wear’ programme which is an e-commerce shop where customers can buy second-hand Patagonia products.

Following the same train of thought, Hussein believes that embracing diversity and inclusion is entirely beneficial for brands. She noted that this is a non-negotiable aspect that brands need to adhere to in this day and age as its momentum is growing at an accelerating rate. “These digital natives are forward-thinking, and principles of diversity and inclusion will be embedded ubiquitously in the future. It is important for people of diverse backgrounds to be the faces of brands, which links this back to Gen Zs wanting to see themselves reflected in the brand,” she explained.

Hussein pointed out athletic-apparel brand, lululemon's IDEA (inclusion, diversity, equity, and action) supplier inclusion and diversity programme. The initiative is designed to support and encourage diversity within the company's supply chain, with a focus on empowering underrepresented and disadvantaged organisations.

Commonalities and differences between millennials and Gen Z

The main commonality in approach for both generations though is the importance of online presence. Regardless of luxury brand or not, both generations grew up in the digital era and are digitally savvy, Hussein thinks. “I would say Gen Z would like a more immersive experience of tech, which explains the many luxury pop-ups we are seeing, with the most recent one being the Coach airway pop up in Melaka,” she added. Since Gen Zs have been born into the digital age, ‘instagrammable’ aesthetics are important to them, Hussein said, which makes elaborate pop-ups all the more successful.

The biggest difference that Hussein notes is how brands communicate to Gen Zs who have a shorter attention span and prefer bite size content on platforms such as TikTok and Instagram, whereas millennials consume long form videos, podcasts and even traditional advertising in magazines. “Advertisers need to consider these differences to ensure that the brand’s message is targeted and resonates with the right audience,” she added.

Wong concurs with Hussein on this, stating that more than 40% of Gen Z search now happens on TikTok as the location of people’s source of inspiration is shifting to these platforms. “And with it, brands from cosmetics to luxury auto brands such as BMW and Mercedes are turning to the platform.  Not just with traditional adverts that may have appeared on Facebook, which will be instantly scrolled, but with native-style content that looks like it belongs,” she said

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