Opinion / 4 ways millennials and Gen Z customers are shaping the future of luxury retail – and how A-listers like Bella Hadid are lending a hand

As young customers redefine luxury market rules in China and in other regions, the retail experience not only has to be “luxurious”, but it also needs to appeal to younger generations to create hype around their products. Recent store audits of leading luxury brands in the US and Asia show a significant gap in several categories in delivering a luxury experience.

Brands need to make their retail spaces Instagramable, shareable and relevant to attract young consumers who live their lives using social media apps. Relating to younger customers allows luxury brands to be relevant to a broader audience.

What works and what does not?

It is important not to fall into the trap of engaging in concepts that depart significantly from the brand’s DNA. This strategy will not work.

As an example, a leading European luxury car brand opened a concept store (which serves as a restaurant and bar) in Hong Kong about two years ago. The aim was to attract younger customers to the brand who otherwise would not go to the classic showroom. While the objective makes strategic sense, the execution seemed to fall short. The space feels disconnected from the overall brand: it is not Instagramable and there is no immersive, shareable experience that is created. In short, it does not feel authentic. Lack of authenticity is the cardinal mistake in creating the store of the future. It was simply not relevant for the affluent Generation Zers and young millennials the luxury brand tried to target.

Once in a while, we see newcomers succeed at this, brands that have been built from scratch to appeal to Gen Zers. The price premiums that those brands achieve in their categories can be remarkable, which shows that generating a relevant experience for young affluent customers pays out.

Here are some examples:

Kith Treats

Why would a luxury clothing and sneaker retailer care about ice cream, and what does Bella Hadid have to do with it? While ice cream would normally not be welcome in a luxury retailer, Kith does everything differently.

At the Kith flagship location, a small dessert shop is located on the third floor. These treats are aesthetically appealing and conveniently located in the store, creating an attractive shopping experience for consumers who are visually led and with shorter attention spans.