The concept of what makes a luxury brand an attractive option worth buying into is undergoing a massive mind shift. This is especially true for the future luxury consumers, often referred to as the Millennials and Gen Z, or even more precisely HENRYs (‘High earners, not rich yet’). A 20+ years’ supply of new customers to be precise.
This younger group of would-be spenders are developing a different approach to the idea of what a luxury brand should entail compared to the older generations of consumers. They value luxury experience more than luxury products and are thereby looking for more authentic, personalized, life-enhancing moment with which they can connect emotionally. It’s suddenly less about status and more about the type of emotional outcome a luxury product can engender. More introspective concepts such as health, happiness and mindfulness are fast becoming the new luxury commodities. The luxury sector is having to wake up to the fact that it is not exempt from the changing trends in young consumer values.
Economy precepts laid out fifty years ago are now resonating more than ever. To understand how to weave new value into luxury branding, much inspiration can be taken from authors such as Alvin & Heidi Toffler in their 1970 book ‘Future Shock’ that promoted the ‘psychologization’ of a product, along with Pine & Gilmore in their 1998 ‘Experience Economy’ article arguing how businesses should create memorable events for their customers and charge for the value of the transformation. Today’s thought leader in digital analysis, Brian Solis, has based his entire business strategy on “designing products for emotional outcomes”, i.e.: an Instagram-worthy moment. Transformative experiences based on brand authenticity is the without doubt today’s name of the game.
“There is a fundamental shift in consumer values towards luxury experiences over things that bring happiness and well-being,” reports Euromonitor, citing a survey among millennials which found over 50% of U.S. millennials prefer to spend money on experiences over things.
What can luxury brands do?
Even though luxury brands are aware of this important trend, as witnessed by their efforts to appear more authentic, it seems that they fail to be perceived as such by these younger generations. Indeed, based on a survey among 1590 consumers from the U.S., UK and Australia, Stackla (a marketing content agency) reports that 90% of consumers declare authenticity is important when choosing which brand to buy while only 50% believe brands create authentic content. So, what can brands do to increase their authenticity perceptions and attract Millenials and Gen Z?
Thanks to an extensive literature review, as well as several qualitative and quantitative studies involving more than 2500 consumers, a team of researchers from Swiss and Canadian universities identified the dimensions, antecedents and consequences of perceived brand authenticity. Thanks to their findings, it is possible to propose a set of recommendations for luxury brands wishing to become more authentic.
How to reach the consumer?
Understand how consumers judge brand authenticity. As consumers rely on three different sources of information to judge a brand authenticity – facts, impressions and inner-feelings – luxury brands should exploit all three sources to influence consumers’ perceptions. First, since objective facts are difficult to influence, luxury brands should be more transparent about their practices and should highlight parts of their history or production processes that might appear as particularly authentic (i.e.: founder’s vision, craftsmanship, cult for details, service excellence). Second, regarding consumers’ impressions of authenticity, luxury brands should focus their communication on their values and roots, using ‘real’ content, such as user-generated stories or ‘non-photoshop’ pictures. Third, to influence consumers’ feelings of authenticity, luxury brands should address consumers’ self-consciousness by helping them find their true selves through transformative processes such as upskilling or educative experiences.
How to measure brand authenticity?
Before implementing concrete actions, luxury brands should measure their own brand authenticity along the four dimensions of perceived brand authenticity: continuity, credibility, integrity, symbolism. By using the scale developed by the researcher team, luxury brands would be able to assess on which specific dimensions of brand authenticity they should work on. Continuity relates to the ability of a brand to remain true to its roots and survive changing times and trends. Credibility relates to a brand’s ability of delivering on its promise and not betraying its customers. Integrity relates to the sincerity of a brand’s intention, the genuine purpose behind a brand’s values, its non-commercial aspect. Symbolism relates to the ability of a brand to help its customers in constructing their identity and revealing who they are as citizens.
By understanding how consumers form authenticity perceptions and on which brand authenticity perception they score low, we believe that luxury brands could be able to become more attractive to the “HENRY” consumers and develop a long-term growth strategy.