This article is part of Style’s luxury column. The pandemic has disrupted the luxury industry like never before. However, there is a much deeper shift that many brands still underestimate. It’s led by Gen Z consumers – those under 25. “They don’t buy us yet, why should we care”, “They don’t have the money”, “They have still other preferences, in a few years they will purchase our products”, “They are weird.” The list of reductive, foolish misconceptions I’ve overheard goes on and on. This attitude of many managers will cost them their future. When managers think this way, they will be out of business soon. I predict many categories will undergo a dramatic change, and even be irrelevant in their current form. The reason is a different preference structure of young affluent consumers. And a different approach to brands. Are luxury brands doing enough for Lunar New Year? If you run a luxury art gallery, a luxury hotel, a luxury restaurant, a luxury fashion brand or a luxury car company, you will need to rethink everything urgently. All other categories need to reinvent too. Let’s start with luxury galleries. For more than a century, galleries were the gatekeepers of fine art . They were the “make or break” for artists. If they believed in an artist and featured him or her, fame and fortune was guaranteed. They were the brand builders in the art world. Fast forward to 2021, and the revenue of a large number of art galleries has dropped significantly according to industry insiders. The only segment that still experiences some demand are the very few collectible art pieces worth over a million US dollars that are bought merely for investments and anticipated value gains, and for entry level art for a couple of hundred dollars. Covid-19 tore up the global fashion calendar forever: seasonal collections are a thing of the past The business model of selling has barely changed over decades. Art is shown in a showroom or at fancy events like Art Basel, the galleries act as an interface between the artist and the customer, and they take a cut of 30 to 70 per cent. As a result, when a customer buys art, they pay to a large extend not for the painting, but for the gallery. This is a bad deal for the buyer, as the artwork would have to appreciate dramatically to have any gain from the investment over time. Those who have ever visited a fancy gallery, whether in London, New York, Chicago, Shanghai or Monaco, has often been confronted with arrogant behaviour, indifferent service, and been left uncertain of buying at a fair rate. I remember my visit at the last Art Basel in Hong Kong and was shocked by how indifferent and detached most gallerists there were. This business model worked as long as galleries could build what I call a local monopoly. Since they were representing certain artists in a certain location, the model worked despite a lack of service and transparency. But the model has no future. Because there is no value creation. When your name becomes the ultimate luxury: why brands should learn to be less transactional New Gen Z consumers change everything. Digital disrupters like ArtLife have put a significant dent in the market, allowing to directly buy and sell art, cutting out the gallery. Their business model works perfectly for the new digital native generation who does their homework before buying. No other generation is so super-empowered like Gen Zers, scrutinising the value that brands provide, and only associating themselves with brands that represent similar values than they have. If a luxury brand – in this case a luxury art gallery – does not provide an exceptional branded experience, there is no reason to visit. Using social media, many contemporary artists already build their own following, hence the “middlemen” won’t be needed any more unless they reinvent their value creation model. Similar to the fine art market, many other categories will experience a massive disruption. The luxury car market was dominated for decades by a handful of brands. Once they stopped innovating and instead focused on refinements and “more of the same” with ever-expanding portfolios from entry level to high-end vehicles, the brand differentiation vanished, brand equity eroded, and showroom experiences became completely exchangeable. It’s not a surprise that brands like Nio , Tesla and Lucid are skyrocketing in brand valuation, while the old leaders may not be around much longer if they don’t change their existing model drastically. Their downfall is not only a result of coming late to the electric and self-driving party, but also in neglecting what young affluent luxury consumers want. I frequently visited the most influential car shows around the world, from Geneva to Seoul, from Tokyo to Los Angeles, and in recent years I noticed that the luxury brands often had the least luxurious presentations. It was a sign of neglecting consumer trends. BMW, Mercedes and Audi can’t keep up with Tesla or Nio – so how can they reinvent their brands? Most hotel, restaurant and hospitality brands are still operating with baby boomers and Gen Xers in mind, and try to impress merely through real estate and aesthetics. However, Gen Zers look for experiences. Not just experiences, but highly differentiated, branded and inspiring experiences. When was the last time you got a lasting and exciting memory through a hotel stay? When was the last time you were blown away by the service to a point where you felt it was magical, curated in every moment, personal and touching? This is what Gen Z is looking for. Brands that don’t provide this have no future. What does the Year of the Ox mean for luxury markets in China and beyond? To attract Gen Z is not about trying to be “young at all costs”. Many brands that tried, failed. Gen Zers are not looking for brands that try hard to be young, because it is not authentic. They want fashion brands that enter into a dialogue with them, inspire them and provide cultural context. Luxury leather brand MCM, since its re-emergence after being taken over by a Korean company, has been just such a recent disrupter, and the share of MCM bags among visitors to any event with young affluent celebrities in China will probably amount to 20-30 per cent of people using MCM bags: a warning sign for more traditional luxury brands that have difficulties of appealing to the young and rich. Next time anyone tells you that Gen Zers don’t buy their luxury brand, ask them whether maybe their brand is already irrelevant to them. One trait of Gen Zers is that they don’t care how big a brand is or how much heritage it has. They just care for inspiration and relevance. If you don’t provide it, they move on. Hence, when you think about their strategy: it’s about them, not us. They couldn’t care less, unless you create a desire. It’s a new dawn. Want more stories like this? Sign up here . Follow STYLE on Facebook , Instagram , YouTube and Twitter .