Newly minted millionaires often purchase storied luxury brands as a way of expressing their arrival among a wealthy global establishment. This is especially true in China, where all money is, to some extent, new money. However, a recent report by Agility Research & Strategy suggests the best way to capture the attention of luxury millennial consumers is with innovative technology, not heritage and tradition.
In its Affluential Monitor Report, Agility Research interviewed close to 3,000 affluent respondents from across China, Hong Kong, Japan, South Korea, Thailand, Malaysia, Singapore and Australia. One of the 12 insights they offer for luxury brands in 2018 (see below for the complete list), is that, for millennials, innovation and technology trump heritage and history.
The report attributes the findings to millennials’ ‘tech savviness,’ and suggests luxury brands could benefit by making their products and services more innovative.
Across all regions the report found technological innovation to be the leading factor influencing millennials’ motivations to buy luxury products.
One case study of luxury brands using innovation to lure young consumers is Richemont, one of the luxury industry’s biggest holding firms, which opened its new Innovation Lab in 2017. The lab, located in Microcity, Switzerland, focuses on nanotechnologies and revolutionary new industrial processes.
According to August Danara, Research Associate at Agility Research, “With Richemont it’s the way they create a story around it. Their story revolves around the idea of perfection, describing their research as an effort to achieve perfection, even going so deep as studying the microfabrification of watchmaking.”
(The emphasis on watches taps into another key trend for 2018, according to the report. Luxury watch purchases are projected to rise especially among millionaires. The most positive outlook is in China, where three out of five Chinese consumers are planning to purchase a luxury watch in the next 12 months.)
Another brand gaining momentum on the mainland thanks to its innovative techniques is Shanghai-based luxury sportswear brand Particle Fever. The brand, which saw its store open at Shanghai’s luxury department store Lane Crawford last year, focuses on challenging the traditional design of sportswear with new scientific research. As the self-proclaimed, “first high-end Chinese sportswear brand”, the label has seen rapid success since its launch in 2015.
According to Co-Founder and Creative Director Lin Hai, “Technological innovation is a trendy topic, but the key point in catching young luxury shoppers’ attention is always a combination of the entire product. It’s a harmonious combination of appearance, function, and technology. I have seen a lot of products in wearable technology or intelligent garments, which fail to do well. The way we use technology is more invisible. It’s using material which is better designed; you can feel it when you wear it. It’s much more than just a technological stunt.”
Late 2017 also saw mega brand Michael Kors take advantage of technology to launch his latest line in China, using a killer digital marketing campaign, inviting consumers to interact with his runway show event via a live-stream sent out across popular Chinese app YiZhiBo.
According to Agility Research’s recent Affluent Insights study, in which almost half of the interviewees were millennials, Dior and Chanel emerged as the top luxury fashion brands they would seek to purchase in 2018. China i2i Group’s WeChat survey in June also saw respondents aged between 18 and 39 years old name Dior as the most coveted brand during their overseas shopping trips. Notably, Dior and Chanel have led the way among luxury fashion brands embracing technology. Back in 2015, Dior was the first high-end fashion house to invite consumers to view its runway show with the help of “Dior Eyes”—cutting-edge VR technology headsets designed entirely by Dior’s own workshops.
More recently, Chanel’s SS17 Paris runway show saw designer Karl Lagerfeld draw attention to data, algorithms, and microchips in a technologically inspired catwalk. Featuring dresses made from blueprints of computer motherboards and displays of coding on the runway, the collection was regarded by many as one of the tech events of 2017. According to Lagerfeld, “It is not technology in a cold way. It is intimate technology, from the outside world, and something much more refined for the private world.”
He went on to say, “Even if you don’t like the idea, technology rules the world, because it has changed the world.”
The 12 findings in the Affluential Monitor Report
1. Consumers are optimistic about their future wealth and will continue spending on luxury
2. The growth of affluent individuals in China leads to a new way of purchasing luxury goods
3. Blogs, forums, and review sites are becoming a more popular source of information on brands
4. Positive outlook for luxury watches in 2018, especially among Millionaires
5. Luxury Home Décor is on the rise in the Asia Pacific
6. Airbnb expected to further disrupt the luxury hotel business & Taiwan increases in Popularity as a travel destination
7. Luxury Brands & Dining Experiences are worthy of an Instagram post
8. Asia Pacific consumers welcome Virtual/Augmented reality and Artificial Intelligence interactions
9. For millennials, innovation/technology trumps heritage of the brand
10. For millionaires’ social responsibility trumps brand recognition
11. Casual streetwear worn by millennials and teenagers is creating a whole new Hype Beast Culture
12. Affluent Women as a driving force behind purchasing personal finance, real estate, and cars, not just fashion, jewelry, and beauty.