Last weekend as my immediate family gathered from Melbourne, Nimbin (look it up), London and Los Angeles to celebrate my sister’s 30th birthday, we threw around some fun facts about the age milestone she was set to surmount.
Did you know, for example, you have to go back as far as 1993 to find the last time 30 years old was the average age of marriage for a British woman (it’s now 34.6) and all the way back to 1985 for a British man (now 37)?
Furthermore, can you guess the company whose chief executive officer (CEO) recently told me that 30 was the average age of his clientele? Not a household Silicon Valley brandname cranking out the latest tech product sensation but … Kering, the luxury goods titan which counts Gucci, Yves Saint Laurent and Balenciaga as among the iconic marques in its stable.
Note that I said “iconic” and not “classic” as these and other luxury brands have spotted a massive millennial-focused opportunity and are headed straight from the runway to take-off with it in a way which requires them to rethink their long-standing strategies.
The customer potential of the millennial (age 25 to 35) is much-hyped and for certain industries, such as luxury, deservedly so. The cohort has lower fixed expenditures on items such as children or housing combined with a desire to use some of the freed up cash on their appearance – whether in a bid to demonstrate individuality in a society in which we are relentlessly encouraged to “be ourselves” or simply to be perma-ready to pose in this unavoidable age of the selfie.
Although being desperately slow in the past with some strategic imperatives (e.g. digitalization) and despite sometimes pursuing fundamentally flawed business initiatives (e.g. democratization), some of the smarter “maisons” have now re-engineered their business models to capitalize on younger customers who in their eyes wear a virtual halo of dollar signs around their heads very prettily.
While much praise for Kering’s astonishing recent sales growth must go to its fresh batch of edgy creative directors, CEO Francois-Henri Pinault told me last month in Paris that continuity in its marques’ collections is the linchpin feature of the company’s new business model.
“We have a very long-term vision of the couture category and this is where you see with all these brands, the collections following each other, talking to the previous one, talking to the next one. It’s like chapters of the same book,” he explained.
The increasingly peripatetic nature of youthful lives today drives a hankering for some stability via identification with selected concepts and communities. And herein shows luxury’s grasp of another key millennial trend – stickiness once a like-minded community has been found. By demonstrating continuity from season to season, marques are able to create a consistent brand character, culture and image to encourage such loyalty rather than try to drum up new sales via yesteryear’s more “shock-and-awe” approach of deliberate departures from the previous season’s style.
Which is why the stock price potential of certain luxury companies could well outlive the formerly seasonal shelf-life of their collections, despite the fact the sector’s share price growth has outpaced the main market so far in 2017 with stocks such as LVMH (22.6 percent year-to-date), Richemont (26.8 percent) and Kering (43.3 percent) having already made substantial gains.
Balancing the opposing forces of heritage and innovation as well as creative and commercial tensions is not easy in an industry renowned for its easily-bruised egos.
Not every luxury company will therefore succeed – but the opportunity is there for those who put the right foot forward.
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