Marketing and Branding of Luxury Products in America to Sell to New Generations

What "Heritage" Means for Millennials and Gen Z in 2023 in America

The cultural legacy of a brand can either weigh it down with outdated traditions or serve as a solid springboard to launch it towards the clientele of the future: Millennials, Generation Z, and soon, Gen Alpha

The time is ripe to rethink the concept of Heritage in brand management in America and its true importance in the choices of American consumers, especially the new consumers, the new generations: Millennials and Gen Z. How do luxury brands with generations of customers behind them stay relevant and beat the competition? The heritage of historic brands in hospitality, fashion, accessories, and jewelry must become an opportunity to continue growing the brand.

One example stands out: Lancome took 100 years to reach a valuation of 1 billion dollars, meanwhile building a reputation as one of the most solid and well-known quality cosmetics producers, becoming part of the L’Oreal group and providing jobs to thousands of employees worldwide. When it comes to Heritage as a brand's legacy of quality, the French giant certainly has something to teach.

Kylie Cosmetics, on the other hand, is an American beauty and makeup company founded in November 2015 by American social media star and Kardashian family member Kylie Jenner. The company primarily sells lipstick and lip liner kits, and it reached a valuation of 1 billion in just 4 years.

Unlike Lancome, Kylie does not spend millions each year on research and development, does not sponsor women's literacy campaigns, nor hires movie stars as brand ambassadors. Instead, Kylie pays a team of 7 people who work full-time for her on social media and outsources all formulation, production, sales, and logistics activities; she spends most of her time attending events, posting photos on Instagram, and interacting with her 110 million followers.

Luxury Goods Sales Data and Forecasts: Growing Importance of New Generations

The luxury goods market is expected to be resilient in 2023, thanks to significant contributions from millennial and Generation Z consumers. According to Bain & Company, the potential luxury consumer base currently consists of 400 million consumers but is expected to grow to 500 million by 2030. Expectations are for market growth of about 21% in 2023, reaching approximately 1500 billion dollars in global sales.

By 2030, Gen Z and Gen Alpha will represent one-third of the luxury market, with spending increasing threefold compared to previous generations. In particular, Gen Z starts purchasing luxury goods as early as age 15, ahead of millennials by 3-5 years.

In 2022, millennials and Gen Z dominated the luxury market with a 72% sales share, marking a significant shift from 2019. These data highlight the importance of targeted marketing strategies and the adaptation of luxury brands to meet the needs and desires of new generations, crucial for the future dynamism and growth of the sector.

The Importance of Heritage for Luxury Brands in the American Market

For a luxury brand that wants to sell while remaining relevant, does it still make sense to talk about Heritage as a lever to convince customers to buy its product or service? Let's see how

ExportUSA attended the annual Luxury Insight Discussion event presented by the Luxury Marketing Council and the Italy America Chamber of Commerce in collaboration with Boston Consulting Group to engage with representatives of luxury brands and discover the market trends for the next 5 years. Today, Millennials (21-35 years old) represent over 30% of the total luxury market sales value in America, but in the next 5 years, they will grow to reach 50%. It is more than essential for brands to understand what drives the interest and purchasing decisions of Millennials in America and their perception of luxury. Which is different from that of the generations to which traditional brands are accustomed to selling.

What Do American Millennials Look For, Where Do They Buy, and How to Reach Them? Luxury Products and Brands for Millennials and Gen Z in America

The Casualwear trend, which emphasizes comfort and personal expression, will continue unabated, benefiting casual, informal, comfortable clothing and accessories suitable for various occasions: at home, for physical activity, on weekends, and even at the office. While older customers buy these items for their comfort, younger ones choose them for their ease and rebellion against norms.

Goodlife Clothing www.goodlifeclothing.com

The New Opportunities for Made in Italy in America: The Historical Heritage of Made in Italy Brands is a Distinctive Factor

Made in Italy can still engage consumers through memories and emotions associated with a given product and is a source of opportunities for Italian producers of clothing, accessories, shoes, etc., who can reinvent part of their portfolio with a nod to the new generations and introducing casual products as entry-level items alongside traditional ones. Companies must promote their products in a way that highlights the social value evoked by the brand and the process of identification between the buyer and the brand.

In an increasingly competitive market, it is essential to expand the customer base downward, reaching younger segments, and laterally, introducing the brand to consumers with potential purchasing power who have not yet entered the luxury product world, those who window-shop from afar but do not enter stores because they do not believe they belong there.

The key phrases are "Streetwear and Urbanwear" and collaborations with artists for limited edition collections and products. The interesting thing about collaborations is that if done with partners who share the same values as the target, they do not affect the brand's perception by consumers of other targets, instead creating a positive ripple effect across the entire portfolio. A notable example of this strategy is Louis Vuitton with Supreme Vuitton

Values Beyond Quality: Historic Luxury Brands Have Already Found a Way to Convey Quality to New Consumers

In the next 5 years, as it has been in the past 5, the value of quality in terms of craftsmanship will no longer be enough to determine an advantage over other competitors and to justify the premium price that customers are still happy to pay to cover rent on the best shopping streets today.

The advent of DTC startups (Direct To Consumer) in sectors like jewelry (see Catbirdnyc.com), leather goods (see Linjer.co), watches (see Mvmtwatches.com), custom clothing (see Indochino.com) etc., will consolidate the trend of not paying high margins unless justifiable by the energy and resources invested in activities relevant to the target market.

• Old values: manufacturing quality, craftsmanship, exclusivity, status symbol.
• New values: environmental sustainability, ethical production, fun and extravagance, rebellion.
   

Where Millennials and Gen Z Buy Luxury Products: Tips for Luxury Brand Producers to Sell to Millennials in America

The Omnichannel strategy, meaning the possibility of purchasing both online and offline, will drive 50% of sales in America. Online-only purchases will grow among older consumers catching up with the times, while in-store purchases will remain stable if anchored to personalized and memorable experiences. If you are not yet selling online, you must ensure that the customer who takes the time and effort to enter a store (yours or a retailer's) is pampered properly, or else risk their disappointment and loss of trust.

Online Ecosystem: Mobile Shopping and Vintage Stores. In America, Selling Online is Indispensable, and Traditional Store Sales Must Become an Experience

33% of purchases will still come from your monobrand site, preferably accessible from social media, where you can control the viewing and interaction experience. 32% of purchases will focus on full-price multi-brand sector sites like Net A Porter, Farfetch, which offer the added value of being able to compare prices, products, and save user preferences. 23% of purchases will then come from generalist platforms like Wayfair, and only 2% from social media.

Mobile shopping via smartphones and tablets vs. shopping with computers has gone from 29% in 2014 to 55% in 2017 and is projected to reach 80% in 2024, driven by digital generations and China, where mobile technology has already become an integral part of daily life.

Driven by feelings of nostalgia, retro style, and positive environmental impact, channels offering second-hand and vintage products will enjoy steady growth. Indeed, more than 50% of luxury customers say they have bought or are considering buying second-hand products due to special deals and the uniqueness of the items.

How to Reach Millennials and Gen Z: The Role of Social Media and Influencers for Marketing in the American Market

Social media has been ranked by luxury company marketing managers worldwide from ninth place in 2013 to first place today as a tool to reach target customers. Increasingly, social media means Influencers: people who become brand ambassadors and post on their profiles. This paradigm is rapidly shifting to micro-influencers, with relatively few followers who seem more genuine and relatable to their fans.

How Are Made in Italy Sales Doing in America

Made in Italy Luxury Brands Maintain Their Position Among Millennials Except in Cosmetics Where France Emerges

When asked which country's production is considered most valuable, American luxury customers responded with 30% Italy, 22% France, 11% the United States of America, followed by Switzerland at 10% and Germany at 7%. Specifically for Italy, we report a 17% growth in the clothing segment, 18% in the bags, leather goods, and shoes segment, and a 2% decrease for cosmetics and perfumes, to the advantage of France, which grew by 15 points in the Beauty segment.