Millennials & Their Luxury Aspirations
The consumer market is poised to experience the biggest generational shift in wealth and affluence since the Baby Boomers emerged as the core target market. The Boomers, born from 1946-1964 and numbering about 76 million, are still a force to be reckoned with in the consumer market, but a reported 10,000 Boomers will retire every day over the next 19-year period. Retirement is a pivotal time in a consumers’ life, as it marks a turning point in purchasing behavior and spending patterns.
Waiting in the wings is the huge Millennial generation, born from 1980-2000. As a generation, the Millennials are at least as large, if not larger, than the Baby Boomers, who are the parents of the Millennials. As a whole, they are more highly educated than the Boomers, which corresponds to higher-levels of income and affluence.
While the Boomers retire and downscale their lifestyles, the Millennials will become the leading force in the consumer market. And many of those Millennials with high levels of education and following career paths that will lead to high-earnings will become the core target market for luxury brands. Now is the time for marketers and retailers to understand the lifestyle aspirations of this generation and where luxury fits in their world.
Unity Marketing has published a new study, Millennials on the Road to Affluence: Mapping a Path to the Next Luxury Generation. It reveals the consumer dynamics of Millennials on a career path toward high earnings, the emerging generation and new target market for luxury goods and services between now and 2030. This is a report for all marketers and retailers no matter where on the income or pricing scale they play because the high-earning, affluent consumers are the ‘heavy lifters’ for all marketers, shopping everywhere, high-end, low-end and in the middle.
Millennials Are Poised to Become the Biggest Spending Generation in History
This year the leading edge of the Millennials reaches 35 years of age, an age when people’s incomes and earning start to rise to their peak from 35 years to 54 years. But for marketers, the Millennials may be late to the ‘party,’ delayed by high levels of unemployment or underemployment and record-setting educational debt. These factors in turn cause Millennials to postpone marriage, setting up house and starting a family, all of which translate into a blast of consumer spending. But then, it isn’t only economic necessity that is causing this generation not to rush into marriage. Personal choice is also a factor. Yet in today’s economy, it typically takes two fairly high levels of income to support a luxury lifestyle. Many single Millennials simply won’t have the necessary income to indulge freely or even occasionally in luxury.
For marketers at the luxury-end of the spectrum, younger affluent consumers, under age 45, are more valuable because the younger affluents spend significantly more on luxuries than more mature affluents, aged 45-64 years and older. Younger affluents are at an acquisitive life stage and make first-time luxury purchases (think luxe autos, major appliances, furniture and other home goods, fashion, jewelry, watches, and more) which become a rite of passage into affluence. Mature consumers, on the other hand, have already made these investments in their lifestyles and turn their luxury spending away from goods toward luxury experiences like travel. Over the past eleven years of Unity Marketing’s tracking of affluent consumer spending and purchases, young affluents (24-44 years) consistently spend one-and-one-half to two times more than older affluents on high-end/luxury goods. With the Millennials generation poised to assume the lead in the luxury market, marketers that aim to cross over to the next luxury generation need to understand these Millennials on the road to affluence.
Luxury marketers must get started now planning for the inevitable transition from one dominant generation (i.e. Baby Boomers and GenXers) to another (Millennials). That transition will start around 2018-2020 and begin to take hold in 2026-2029, given the projections of the U.S. population. The years 2026-2029 will be the optimum period to capture the market share of Millennials on the road to affluence based upon population demographics. But to assume that Millennials will respond the same way to the same brands and to the same marketing and branding propositions as the older generations is ridiculous.
The Millennials, once they come into affluence, will be as different from the generations that went before as the Boomers were from their Depression/World War II era parents’ generation. Millennials are going to create a whole new style of luxury, expressing it in new ways, favoring new brands with their loyalty, and new shopping experiences with their dollars.
Catch the Wave to the Next Luxury Generation
The years 2026-2029 are the prime years for marketers to get their act on for affluent Millennials. It will be the period when the share of young affluents (35-44 years) will be at their zenith over older-affluents (over 45 years). Now is the time to start thinking about how one’s brand is positioned for the Millennials and their unique and special needs and desires for luxury.
The most important thing to recognize is that the Millennials are not going to want their parent’s or their grandparent’s luxury. They will want luxury on their own terms and delivered in their own ways. Brands that want to continue their success in the luxury market beyond 2020 will require products, services, and strategies that match the aspirations and drive for meaning that this generation reflects.
That calls on marketers to delve deeply into the values that Millennials associate with luxury in their particular category of the market and position the brand around those values. Communicating luxury brand values in the right way to Millennials on the road to affluence will create desire for such brands. The key is to tell right story. This new report from Unity Marketing can be your guide.
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