Three communications strategies luxury and premium brands should pursue in 2023 to attract, engage and retain their communities
I was reading an interesting newsletter from McKinsey last week about the “head-scratching spending habits of Gen Z”. Apparently, one trend is for younger people to move back in with their parents to save money… so they can invest in a Hermès Birkin bag.
The article wasn’t dismissing this behaviour: in fact, it reinforced that as Gen Z is more pessimistic about reaching financial milestones such as owning your house, it can often manifest as financial defeatism. Maybe that’s why, according to Luxe Digital, Gen Z and Millennials alone grew the luxury market grew by 21.5% in 2021-2022.
This got me thinking: with shoppers adopting cost-cutting measures in a tough economic climate, will this still be the case in 2023? And what communications strategies can luxury/premium brands use to convince their younger fans to continue making purchases with them rather than lower market competitors?
Here are three strategies I believe they can start doing today to address this question:
Reframe the conversation
History has already taught us that brands that lean into the lipstick effect (the pattern where people treat themselves to small indulgent purchases that help them temporarily forget their financial problems) can often do well during tougher economic times.
Interestingly, recent ‘Slowdown Lowdown’ research from GWI highlighted that when choosing a brand right now, more people say quality is more important to them than the cost. And a webinar I attended on the global luxury sector by Internet Retailing only last week reinforced that this point is particularly prevalent with younger shoppers.
This says to me that more premium brands can benefit from reframing their messages around value (an old behavioural science trick). For example, posts from Hotel Chocolat reinforce that a night in can still feel indulgent – without the price tag of a night out.
Double down on passion points
Time and time again, studies have shown that sustainability is important to younger shoppers. Luckily, this is often where luxury items have an advantage as – not only do they typically use more premium materials that stand the test of time – but their value increases with age.
Vintage Chanel bags are a great example. These have boomed in price over the past few years (63% since 2019 according to CNBC), making them increasingly appealing to those who value unique experiences and items.
Recommerce is not only a way to keep core fans engaged while being a powerful tool to reduce waste, but it is also an area that is driving significant growth. The luxury secondhand market alone is growing four times faster than the primary luxury market, at 12 per cent each year versus three per cent according to Luxe Digital figures.
Develop meaningful collaborations
A recent study by the University of Essex showed Gen Z shoppers typically ignore influencer campaigns they believe to be controlled by brands. This is also likely where the “de-influencing” (creators using their platforms to show why certain trending products just aren’t worth buying despite going viral) trend has come from.
Influencer and brand reputation are now intrinsically linked. This means that all brands (not just the premium ones) need to consider how to find, evaluate, activate, and measure influencer partnerships in a way that brings long-term value not just to their business, but their fans.
With so many brands communicating on cost first during these tough economic times, it can be hard for luxury and premium companies to understand where to communicate. But by reframing the conversation, and understanding key purchase motivators for their fans and the channels that will most influence them, there are still opportunities to drive loyalty.