If we’ve said it once, we’ve said it a hundred times, sustainability is the key trend focus of 2019. From fashion to travel, and cosmetics to food, if it’s not sustainable, it’s not meeting the requirements for a growing number of today’s consumers. While luxury goods may previously have been immune from this as a category, social consciousness is on the rise – and it’s crucial that luxury products, brands, businesses, and everyone involved, keeps up and moves towards sustainable design.
As more and more people appreciate the value of second-hand treasures, the so-called ‘re-commerce’ market is thriving. As mentioned in April’s Trend Report, research by thredUP shows that 72% of shoppers prefer to buy from environmentally friendly brands, while 59% expect fashion houses to create clothing ethically and sustainably. The report also reveals that the second-hand market has grown 21 times faster than the new apparel market, and is estimated to reach US$51 billion by 2023 – with both the ethical and environmental impact of purchases now a cause for consideration for a growing majority of consumers.
In fact, 60% of Gen Yers are interested in certified sustainable clothing, and as fast-fashion stores face scrutiny for their ethical track records, customers are turning to second-hand channels. In the UK, where a reported 92% of people are keen to reduce their environmental impact, London rental service Higher Studio lets members wear clothes that would have otherwise been off-limits or misaligned with their moral compass. Satisfying demand for luxurious products, variety and quality – while avoiding adding to the US$38 billion of unused clothing in British wardrobes – it’s a trend that’s also popular on the other side of the Atlantic. Cash-strapped lovers of luxury in the US now have an array of options at their disposal – from instalment payment plans from Vestiaire Collective, to rental pieces from the likes of Rent the Runway. Platforms such as The Luxury Closet can provide customers with the excitement of finding the designer clothes and goods they crave, without the official support of luxury brands that have traditionally been out of the reach of most consumers.
It’s not just runway fashion that luxury shoppers can now borrow on a short-term basis. Now, they can have a supercar at their disposal, rotate through a collection of high-end handbags, or transform their homes regularly with stunning pieces as and when it suits them. Modern luxury doesn’t necessarily mean owning a high-end item any more – it’s more about easy access and satisfying ethical expectations. This is a change in approach that is proving hugely popular at the moment, and still a ripe area for international growth if you're seeking your next business move.
“Millennial luxury shoppers’ online migration has resulted in another major shift in the fashion industry: ‘re-commerce’ ... the higher-end online resale of authentic, highly desired fashion brands.”
And, as the demand for luxury fashion grows, so too will the secondary market. Treasures of NYC saw its Instagram followers rise to 20,000 within a year, while online luxury reseller The RealReal hosts about 2.5 million visitors a month – even expanding to include two physical stores in New York and Los Angeles.
So, there you have it – if you want to attract the increasing number of Gen Y and Z customers whose product choice is steered by their environmental and ethical concerns, it makes sense to shout about your credentials. And, if you see any issues within your production process, the time to address them is now.
It’s not just the environmental and ethical landscape that’s moving with the times, there’s also a changing of the guard when it comes to age. While it’s not a case of ‘out with the old, in with the new’, both Gen Y and Gen Z are expected to account for 45% of the luxury goods market by 2025, according to PMX Agency – and their expectations are redefining the Luxury sector. Already, bastions of the industry like Vogue and Prada have taken bold steps to win over these younger consumers. Realizing that courting conscious shoppers is crucial, some luxury brands have begun to subvert the usual codes of the sector – whether that’s by recycling gold, or actively embracing imperfection.
Reflecting Gen Z’s priorities, Gucci has used beauty as a way to embrace individuality, with their ‘Be Bold. Be Bright. Be Beautiful.’ campaign – which leaned heavily on the uncharacteristic misalignment of its models’ teeth – resonating with shoppers. The brand saw its sales grow 20% in Q1 2019, following two years of “absolutely exceptional growth” in 2017/8. François-Henri Pinault, chairman and CEO of parent company Kering, noted that: “The attractiveness of couture, of the ready-to-wear [market] is much higher for that clientele that it used to be for older people before.” This is especially true for the Chinese market, where the popularity of European luxury brands continues to rise.
The work of Gucci, Vogue, and others has made the rest of the heritage brands take note. Rohaizatul Azhar, an adjunct lecturer at LASALLE College of the Arts, cites Hermès’s fifth boutique in New York City as a prime example. “It’s in the heart of the Meatpacking District, which caters to a younger, hipper crowd than their usual Madison Avenue clientele,” he says. “It’s no longer about suits and champagne.”
In a 2017 report by jewelers De Beers, Gen Yers accounted for 45% of diamond purchases in major markets worldwide – but now the market for precious stones is shifting, with lab-grown, ethical versions gaining traction worldwide. As maturing Gen Yers begin to invest in fine jewelry and buy engagement and wedding rings, this demographic’s demand for transparency around mining and the production chain is being recognized by the industry. Sahag Arslanian, the director of the Arslanian Group, a diamond-trading house, says: “Our research shows millennials... have different priorities when making purchases, they have values that will have them ask ‘where does this come from.’” Meanwhile, with its solar-powered synthetic production process, synthetic-stone producer Diamond Foundry can provide a guarantee of ethical and eco-friendly provenance that natural diamond brands simply can’t.
Young luxury shoppers aren’t only a force to be reckoned with in the West. Further east, China topped the Julius Baer Wealth Report in 2018 and, despite a general cooling of China’s economy, are projected to account for 70% of luxury growth up until the mid-2020s. The nation’s affluent youths are flocking to the Luxury sector, and are harnessing their purchasing power to manage new class identities, express themselves through fashion, and even break gender boundaries. In fact, all over the world, Gen Y and Z are pushing for more sustainable, diverse, and digitally led luxury. Altering perceptions of how people think about status, it’s allowed upstart sensations such as Rihanna’s Fenty Beauty to subvert the luxury behemoths of the past, while heritage brands like Balmain pivot to try to meet young shoppers in the middle.
It used to be that overt displays of wealth were the way to show off your status, but now, ‘value signalling’ (the conspicuous expression of moral values in your business) is becoming the done thing – and any brand looking to grow in the Luxury sector needs to wear their moral compass with pride. For many people, buying environmentally friendly luxury goods and from sustainable fashion brands, organic food and the like is more important than flashing expensive watches or wearing exclusive fashion lines. Values-based purchasing reflects a more culturally prized ethos of self-betterment, and the search for subtler forms of distinction could be considered a reaction to the increased accessibility of traditional luxury.
According to a study by YouGov, a substantial 74% of high-net-worth individuals in the US say they value simplicity in their lifestyles. When combined with the 21% that never spend on luxury items, you can see where the cultural shift is taking shape. And again, sustainability is also driving the movement, with just under half of all luxury shoppers ensuring their purchases are ethically produced before clicking the buy button.
In Europe, it’s been discovered that only 37% of Britons now consider a brand-new car to be a status symbol these days – a shift in dynamic that’s been fueled by environmental concerns, gender norms, advancing technologies, and the prevalence of ride-hailing services. Now, manufacturers across all industries are focusing their innovation – and marketing – on modern expectations of customization, user-centricity, and experience. Dr. Dina Khalifa, lecturer at the British School of Fashion, believes that Gen Yers are no longer shopping for special occasions, but for everyday life. “As Gen Yers settle into adulthood and see their spending power grow, they’re now asking, ‘how does luxury express me?’ … Members of this generation are shopping for products that can differentiate their identity and add extra value.”
As the imperfection-heavy Gucci campaign showed, there’s a market for realness – and the growing trend of Instagram vs. Reality photos is giving influencers the chance to be more relatable to their audience. With a high number of impressionable Gen Z followers, they’re now showing off their camera skills, rather than their sculpted abs. Focusing instead on how photos are framed, and the ways in which angles can alter perception, they’re educating users, while supplying content (and ads) that their viewers enjoy. Matt Klein, senior cultural strategist at sparks & honey, says: “We all know the jig is up, we’ve all participated in those staged photos. We all know the stress and anxiety it takes. And we can see through it. Culture is a pendulum, and the pendulum is swaying. That’s not to say everyone is going to stop posting perfect photos. But the energy is shifting.”
In a Christmas survey of 2,600 customers by the YOOX NET-A-PORTER GROUP, results showed that most high-end purchases made over the holiday season were by affluent Gen Yers. And, that these individuals were far more likely to engage in indulgent ‘self-gifting’ – with a penchant for exclusivity and top-tier extravagance to maintain a luxury lifestyle. The site offered people the option of packaging Jaeger-LeCoultre timepieces with bespoke gem-setting courses, and US$600 yoga tights with spa retreats in Abu Dhabi. The desire for something bespoke and different is still prevalent, and it’s not just NET-A-PORTER doing it. Robert Bird, who co-runs the online vintage store Treasures of NYC, said: “We see this time and time again – a million Birkins or Chanel flap bags on a wall in store, but do you really want to buy a US$15K bag from a place lined up with ten other $15K bags? We would sooner find one, maybe two of something really special, and when it’s gone, it’s gone.”
The world of luxury is changing, and that can only be a good thing. As more people, from more countries, find themselves with not just the disposable income, but also the freedom to shop from anywhere in the world, things continue to look good for luxury retailers who are willing to listen to what their customers want. If you'd like to discuss how DHL Express can help your business take advantage of the spending power of Gen Z, Gen Y, and beyond, contact a Certified International Specialist to start your global journey.