Over the last few months, I have held countless workshops with luxury brands about the new codes of luxury and how to best prepare for future clients. No topic is more challenging than the transition from Gen X and Y to Gen Z.
In a presentation to one luxury brand, many of the sales team members could not believe that about 20% of luxury purchases are done by Gen Zers, or those under 25, in 2023. Equally shocking for many is that in China, the average age of luxury buyers is 29, among the youngest in the world. By 2030, Gen Z will be the number one client group for luxury brands.
The reason for the disbelief is that many brands are significantly underindexing with Gen Z. They lack the ability to inspire the next generation of clients and their brand storytelling often does not match today’s, much less tomorrow’s, requirements. As a result, brands that currently underperform with Gen Z shoppers often underestimate the need for change because they don’t see them yet as their clients and often harbor the belief that this audience will just come at some point. That puts them in a significant strategic disadvantage compared to today’s best brands.
In other words, brands that are already lagging behind market leaders are losing further momentum by not acting decisively enough about Gen Z.
The road to hell is paved with good intentions, and so it is with many luxury brands targeting young consumers. There's a noticeable and worrying pattern: many brands continue to stumble on the same missteps by building barriers to this crucial demographic. Many managers also underestimate the purchasing power of Gen Z. Not only is it the wealthiest generation that has ever entered the luxury market, particularly in China, but it’s also a generation that is expecting the largest wealth transfer ever. Therefore, any brand that is not yet Gen Z ready will pay a steep price in the near future.
Let’s take a closer look at the factors that are holding brands back.
First, many luxury brands operate under the misconception that Gen Z is a undifferentiated, even monolithic entity. Managers often categorize Gen Z as one giant demographic and thus underestimate the diversity of their interests, lifestyles, and aspirations. This oversimplification is particularly alarming given Gen Z’s unparalleled diversity.
Because this generation places a heavy emphasis on self-expression, there is an unprecedented need for brands to personalize their services and experiences. And while many brands talk about it, few are great in execution. Gen Z is the most ethnically and racially diverse generation in history, with varied socio-political viewpoints. Members of this group have full digital fluency as well as a mastery at building their own personal brands. Grouping them into a one-size-fits-all demographic discards opportunities for differentiation and extreme value creation.
Secondly, the luxury industry often misunderstands Gen Z's attitude towards status and exclusivity. Traditionally, luxury brands have been associated with an opulent lifestyle. However, Gen Zers, unlike their predecessors, view luxury through a different lens. They value exclusivity, but not for its own sake. It's not about flaunting wealth; rather, it's about celebrating individuality and uniqueness and having an expression of their curated personal (digital) persona. To them, owning a product that is scarce and distinctive — and importantly — comes from a brand that is compatible with their values, holds more appeal than simply possessing an expensive label.
Thirdly, most luxury brands are falling short in their approach to sustainability and social responsibility, two areas that Gen Z consumers care deeply about. They are not satisfied with mere lip service or greenwashing; they demand concrete action and measurable impact. Simply put, Gen Zers expect brands to "walk the talk." Failure to do so leads to an erosion of trust, a priceless commodity that, once lost, is incredibly hard to regain.
Another point where luxury brands miss the mark is digital engagement. While many have established a digital presence, their online interactions often lack authenticity and are burdened with corporate lingo. Most brand audits I do reveal that often more than 90% of competitors, independent of the category, rather talk about themselves than provide clarity to their clients on what their precise value creation model looks like.
Gen Z expect genuine and transparent communication that uses their language and is addressed to them. They are not passive consumers of content but active participants, expecting to engage in meaningful conversations and co-create with their preferred brands. This is, in my opinion, the number one shortcoming for many of today’s brands: the inability to tell the brand story consistently and through the eyes of clients.
Lastly, luxury brands underestimate the power of personal storytelling. Gen Zers are more inclined to buy a brand that resonates with their personal narrative and aligns with their values. Simply put, they purchase values and experiences, not just products.
If luxury brands are to thrive in the Gen Z era, they must challenge their traditional ways of thinking and align themselves with the shifting paradigms. This means embracing diversity, appreciating the new interpretation of exclusivity, demonstrating genuine commitment to sustainability, engaging authentically in the digital space, and facilitating personal storytelling through brand storytelling.
The prize for getting this right is immense — a lifelong connection with a generation whose influence will only continue to grow. However, reaching them requires more than a tweaked marketing campaign; it demands a shift in the core ethos of a brand. The devil is in the detail, and it’s critical for luxury brands to pay extreme attention to these details. It’s the only way to create extreme value.
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.
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