A study by Unity Marketing, a market research group that specializes in affluent consumers, has revealed how the spending habits of millennials will change the luxury goods landscape in the coming years.
Depending on who you ask, millennials are either the greatest generation or the most narcissistic in history. But one thing seems certain: They're set to be the primary influence on the consumer landscape for the next few decades.
Also referred to as Generation Y, millennials are roughly categorized as anyone born between the early 1980s and early 2000s. Currently responsible for over $800 billion in yearly sales in the United States alone, this generation is set to shake up the status quo when its members reach their peak earning years in 2020.
While this coming-of-financial-age should be cause for celebration for most manufacturers, since it signals the rise of a new affluent consumer class, the outlook is pretty grim for luxury goods. The study determined that millennials will differ from previous generations when it comes to luxury goods, even going as far as to reject such established status symbols. Instead, they'll place emphasis on earned as opposed to purchased status.
The term "luxury" will inevitably lose a great deal of its clout. Millennials regard the word as a marketing tool, not a guarantee of quality. That means it will no longer be enough to slap the luxury label on a product. Instead, manufacturers will have to convince these shoppers that their top-shelf goods are worth the additional cost.
Millennials also place more value on their personal time than the generations that came before. That means they'll sometimes choose to spend less time working, even if it means making less money. As a result, they'll have less disposable income for high-end goods like, say, Viking's $15,000 range or Thermador's similarly pricey grill.
Finally, millennials are more likely to let ethical, environmental, and social values drive their consumption habits. This is a trend that's already causing changes in advertising across multiple industries.
Does the rise of the millennial generation spell doom for the luxury market? Probably not, but manufacturers would do well not to rest on their laurels. Perceived value will no longer suffice for a tech-savvy, highly informed generation.
There are signs that companies are already preparing for the changes in consumer habits the next generation will bring. GE, for example, recently unveiled its Artistry line. This series of high-end appliances was designed by 27-year-old designer Tomas DeLuna, with the express purpose of courting millennial buyers.
It's impossible to know what the future has in store for the luxury goods market, but one thing is certain: Manufacturers will need to adapt.