Gen Z's luxury revolution: Adapt now or fade away

The general consensus in the luxury industry is that client experience should be reinvented, as brands cannot continue providing the experience they do today if they want to maintain their position as leaders. We are living in an era of accelerating change. Gen Z, already responsible for 20 percent of all luxury sales globally, will be the number one client group for luxury brands by 2030. And yet, I am often asked, “why do we have to adapt to them, they are not our clients.” My answer: to survive. Any brand whose customer base isn’t made up of at least 20 percent Gen Z in Western countries, or 35 percent in China, risks extinction. But the reality for most brands is that they aren’t capable of creating the service experience Gen Zers expects, and therefore, they are at a disadvantage, which will be hard to move on from. Do or die The next five years will see numerous legacy brands become less relevant or, in many cases, irrelevant. Équité Research estimates that 50 percent of today’s luxury brands will disappear within the next 10 years. Business as usual is not an option. Time and again, luxury brands have struggled to strike the right balance between maintaining their heritage and appealing to a new generation of consumers. As Gen Z consumers are maturing, and their purchasing power growing, luxury brands find themselves at a critical juncture. The brands that adapt their service experiences for Gen Z will thrive, and those that don't will be consigned to the annals of history. Narrative evolution Brand storytelling is the weak spot for most brands, according to Équité Research. Traditionally, luxury brands have excelled at craftsmanship, exclusivity, and superior product quality. But in the age of digital storytelling, these are expected as standard – they neither define nor differentiate a luxury brand. Gen Z expects more. This group demands a brand narrative that aligns with their personal identity and values. Yet, most brands falter at basing their service experience on a compelling brand story. But when there is no story, there is no value and no differentiation. Brand storytelling is not a marketing campaign. It is the very foundation of your brand and its experience. Your brand story must permeate every interaction the customer has with your brand. Without a deeply ingrained story, your brand becomes nothing more than an empty façade, dramatically underperforming in terms of revenue and profitability. Based on countless brand and competitive audits, less than 10 percent of luxury brands today have a well-defined story. This is a critical area that requires attention. If there is no defined story, then the experience will be random, hence inconsistent and confusing for consumers. Defining a brand story is, in my view, a vital task for any luxury brand. My research at Pepperdine University indicates that in some cases, more than 95 percent of a brand’s perceived value depends on the story. Therefore, companies in the luxury industry need to invest time and management resources in ensuring proper storytelling. However, in real life, top luxury brand management teams often give imprecise, ambiguous, and often contradictory responses when asked to describe their brand in one sentence, according to our audits of projects. It’s not surprising that inconsistency at the top multiplies the more we move through the organization. Know your story On arriving late for a recent first-class flight because of traffic, albeit still 45 minutes before departure, the check-in agent castigated me: “Don’t you know you have to be at the airport in time?” What was supposed to be an end-to-end luxury experience was tarnished at the most critical customer touch point, where a brand makes its first impression. In luxury, front-line staff are mission critical and, importantly, they are responsible for the emotional response of a client. However, their training, rooted in legacy practices, usually lags behind changes to the brand, and lacks precision in terms of brand story execution. The basics are often not taught. It’s often a case of heritage over experience. Every team member, from sales to customer service, needs to be well-versed in the brand story and what the brand represents in terms of luxury. This isn't just about reciting the brand’s history, or product features. It's about immersing themselves so fully in the brand ethos that they become authentic ambassadors. But if the principles behind the luxury are unclear, then it’s almost impossible to achieve this level of engagement. The number one mistake: forgetting that a luxury experience is pure emotion. Mapping experience touch points Gen Z's purchase journey is no longer linear. Between social media, online stores and in-store experiences, brands have multiple touch points where they interact with customers. Each of these touch points must not only be identified, but also meticulously crafted to reflect the brand story and meet the high standards of luxury that Gen Z expects. Roles need to be clarified, and expectations set. Is your social media team empowered to tell the brand story effectively and, more importantly, in a differentiating, consistent, and relevant way, evoking massive emotion? Does your in-store and digital experiences make people crave more and communicate the lifestyle that your brand represents? These are not trivial questions – they are existential imperatives. Real-time measurement, speedy responses Gen Z digital natives expect real-time feedback and instant gratification. Consequently, luxury brands need to measure the delivery of their experience in real-time. Did an in-store interaction go as planned? Did the latest Instagram story resonate with your audience? Immediate corrections should be made based on real-time metrics, allowing for a fluid and responsive customer experience that continually improves and adapts. Clock's ticking In an era when young consumers wield their social influence like currency, time is a luxury that brands can no longer afford. The urgency is real. The world is not waiting for brands to catch up – it's marching forward with or without them. Luxury brands must invest in understanding and adapting to Gen Z now, or they risk becoming relics. Your brand’s future doesn’t just depend on crafting exceptional products, it relies on delivering exceptional experiences that resonate with Gen Z’s ethos. Remember, heritage is not about creating value for this generation. Storytelling excellence, superior on-brand experiences, and client-centric adaptability will determine how far you go. Change is not an option — it's a strategic necessity. The luxury market is at a tipping point, and the brands that invest in reshaping their service experiences for Gen Z will not just survive, but have the best chance of flourishing. As a new generation takes over, the call to action is clear: Adapt or become irrelevant. This is an opinion piece where all views expressed belong to the author. Named one of the “Global Top Five Luxury Key Opinion Leaders to Watch,” Daniel Langer is the CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the executive professor of luxury strategy and pricing at Pepperdine University in Malibu, California. He consults many of the leading luxury brands in the world, is the author of several best-selling luxury management books, a global keynote speaker, and holds luxury masterclasses on the future of luxury, disruption, and the luxury metaverse in Europe, the USA, and Asia. Follow him: LinkedIn: https://www.linkedin.com/in/drlanger, Instagram: @equitebrands /@thedaniellanger

Gen Z's luxury revolution: Adapt now or fade away

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Published September 11, 2023

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Gen Z's luxury revolution: Adapt now or fade away