Millennial consumers rule the luxury market – how are brands coping?

Twenty-five-year-old Alexandre Arnault took the helm of the 120-year-old Rimowa in January 2017. His announcement made headlines around the world. Why? Simply because Alexandre is the third descendant of Bernard Arnault, chairman of LVMH, the French fashion powerhouse. Passing the family’s sacred sceptre from father to son marked a significant generational transformation in the reign of luxury power.

Once installed, Arnault immediately refreshed and overhauled the German luggage maker. He introduced a slim new logo using a clean sans serif font, restructured the distribution network, and looked to improve the functionality and style of the products. These are not the actions of a man of privilege resting on his laurels. These are the crucial and timely steps taken by a shrewd young businessman who is mindful of the impact that youth has – from both brand strategy and consumer perspectives – on the ever-evolving luxury industry.

Millennials are the generation who were born between the early 1980s and the early 2000s. In China, millennials comprise two distinct major groups: those born after 1980 and those born after 1990, translated as balinghou and jiulinghou, respectively. B alinghou are more cautious and like to become trendsetters, while jiulinghou advocate individualism and tend to follow trends. Chinese millennials are referred to as “the single most important demographic on the planet today” by Goldman Sachs.

China’s annual spending last year was over 500 billion yuan (US$7.4 billion) and represents almost a third of the global luxury market, according to Mckinsey’s 2017 report. Millennials, who make up one-third of China’s total consumers, were responsible for an uptick in the Chinese market to 142 billion yuan in sales in 2017, about 20 per cent higher than the year before, based on a survey by Bain & Company.

How do brands compete and win a share of the billion-dollar business, especially as consumers today are a cohort famed for fickleness and low brand loyalty? Eight seconds is the alleged average attention span of a millennial.

It’s no surprise then, that it takes a young mind – or at least, one well-versed with the interests of youth – to tap into this crucial audience.

Just 26 years old this year, Arnault is the youngest CEO in luxury fashion. His most successful move so far was probably putting into place the cool collaborations he has relaunched with artist Olafur Eliasson, Fendi, M/M and cult streetwear brands Supreme and Off-White. A millennial himself, the young Arnault is making the century-old suitcase brand one of the most sought-after names among his peers.