At a recent NYC Luxury Marketing Council meeting, Linda Ong, ceo of TruthCo., an omnichannel branding firm, said: “In 2017 Millennials will eclipse Baby Boomers in luxury spending.”   Sounds impressive and reassuring. But whether or not this prediction is true, this sound bite says nothing about what it means for your particular brand. Nor how to make sure your brand gets its fair share of that future luxury spending.

Let’s look at the nuances behind that statement…

This will be true: Millennials will match, then overtake, the Baby Boomers in spending in every market segment that they participate in. Generational demographics tell all.  

The Millennial generation, born from 1980-2000, number 78 million in the U.S. At their peak Baby Boomers, born 1946-1964, numbered 76 million, but are fewer now.  Whether Millennials will overtake the Boomers in 2017 is up for grabs, but even if it does, 2017 will NOT be the Millennials’ peak years in the luxury market. That won’t happen until about the middle of the next decade.

• Until about 2025 the luxury market is trapped in a trough (GenXers) between the crests of two wealth waves (Boomers & Millennials)

The luxury market is experiencing the rise and fall of wealth waves: Boomers, aged 52 to 70 this year, are moving out of the prime age demographic for luxury (from 40 to-55 years), while Millennials, aged 16 to 36, are ascending and won’t reach critical mass for luxury brands until the middle of the next decade.

In the meantime, Generation X (1965-1979) are the prime target for luxury brands, but they are roughly half the size of the Boomers ahead of them and Millennials behind.

GenXers are a trough between two huge generational waves, and given their significantly smaller numbers, will never make up for the loss of spending by Boomers, while luxury brands must wait for the Millennials to crest and grow in affluence.

• Millennials will be delayed releasing their rising income into the consumer market

Millennials will reach their peak of affluence and earning power starting at age 35 and continue to build income until age 54 years or so, but their road to affluence will not follow the same path as previous generations.

The U.S. economy in which Millennials are coming of age is vastly different than that of the Boomers or GenXers. While it is better than it was, the U.S. consumer market still hasn’t recovered from the recession.

As a result, Millennials face a tight job market and those with the best prospects of reaching high incomes (i.e. the most highly educated) are under water with daunting educational debt, estimated $25,000-$30,000 per student.

No generation before has faced such a debt load, which will delay Millennials spending their growing earnings in the consumer economy. They will have to pay off that debt before buying a home, starting families, and acquiring the material expressions of a luxury lifestyle.

• Millennials won’t aspire to the same luxuries as their parent’s and grandparent’s

It is a mistake to assume that the Millennial generation will aspire to the same luxury as previous generations. This generation, thanks to the internet and how it has uncovered the ‘smoke and mirrors’ on which the allure of luxury brands are based, are discovering they can acquire luxury-quality goods at significantly lower prices.

Status symbols as represented by luxury brands don’t have the same meaning for Millennials. They still value status, but for them it is status defined by who they are and what they have achieved, not how much money they spent buying some overly-expensive luxury brand.

Luxury is a state of mind, not a brand or a price point. Millennials still want luxury, but luxury that expresses their personal values.

The Millennial wealth wave could result in a new luxury boom starting in the middle of the next decade, but only if brands meet this new generation with luxuries that reflect their values and world view. However, if luxury brands keep doing what they’ve always done, putting status before substance, they will miss the mark. The world’s changed and luxury brands must change with it.

Prepare to Catch the Millennial Weath Wave with a Unity Marketing Study

Unity Marketing has a study, Millennials on the Road to Affluence, to prepare brands to catch the Millennial wealth wave. It is a detailed road map to capturing the attention and spending of the next luxury generation. It will help brands bridge the gap with today’s core consumers and tomorrow’s affluent Millennials.

Order this powerful new report today to catch the next wealth wave

This study answers the following critical questions for marketing success as the Millennials reach their peak earning and spending years, from 35-54 years of age. Marketers will gain valuable new insights into the next huge consuming generation:

• How demographics of Millennials on the road to affluence and the current population projections identify 2026-2029 as the peak years to tap the generation’s customer potential.
• How Millennials’ career aspirations, their parents’ economic status and their lifestyle aspirations will impact Millennials’ purchasing power and spending potential.
• What consumer lifestyle goals and aspirations are most important to Millennials and how can marketers position their brands around those aspirations.
• How social media influences Millennials in their purchasing and shopping decisions.

This study dives deeply into Millennials and their current attitudes about luxury. It reveals:

• What luxury means to Millennials in order to connect your brand withthe positive attributes that Millennials associate with luxury.

This study will help you capture the spending power of Millennials on the road to affluence, the coming luxury generation.