What Luxury DTC Brands Need to Know About Millennial and Gen Z Shoppers

A photo of a millennial woman

Luxury brands have embraced ecommerce and brought their prestige and buying experiences to online stores. As more Millennials and Gen Z shoppers come into their peak purchasing power, luxury brands have an opportunity to capitalise on this growing wealth.

However, these younger generations have unique and specific buying preferences. Luxury DTC brands need to understand these preferences and adapt in order to provide the ecommerce experience that these generations expect. From sustainability to personalisation and social media influence, here is what luxury brands need to know about reaching and delighting Millennial and Gen Z shoppers.

Who Are Millennial and Gen Z Luxury Shoppers?

Millennials and Gen Z are known for accelerating disruption in B2C buying trends. But who are Millennial and Gen Z luxury shoppers? Millennials are those born between approximately 1980 and 1996; Gen Z shoppers were born in 1997 and onward. Although the Millennial generation is typically known as a spendthrift generation that is slow to reach the traditional milestones for family and career development, they are now coming into significant purchasing power.

According to recent data, Millennials represent only about 32% of spending in the personal luxury market. But by 2025, the generation will make up 50% of the total market. Even more staggering, nearly 130% of market growth will be attributed to the Millennial generation in the next seven years.

Gen Z is still a smaller slice of the market at 4%. But even with a relatively small footprint, their preferences and demands of luxury brands are making waves.

Untangling Millennial and Gen Z Shopping Preferences

A millennial or gen Z woman looks skyward in a bamboo forest

For now, Gen Z and Millennials share many of the same preferences. However, Gen Z continues to accelerate trends embraced by Millennials, and soon the two generations will become the lion’s share of the luxury market.

These younger generations have several unique and distinct shopping preferences that brands should understand:

  • Both generations value sustainability and expect brands will consider the entire lifecycle of the products they create.
  • The purchasing experience is just as important as the product.
  • Second-hand purchases are no longer stigmatised but have become a legitimate and desired way to get a quality item for a better price.
  • Social media is crucial to how Millennial and Gen Z shoppers interact with brands, discover trends, and evaluate purchases.

And these trends are not limited to Millennials and Gen Z shoppers. Their preferences continue to influence older generations. This means that luxury brands should cater to younger buyers sooner rather than later to avoid missing out on the significant growth opportunities coming by the year 2035.

Fast Fashion Is Out; Sustainability Is In

A recent poll found that American teenagers are deeply concerned about a looming climate crisis. Around 57% said climate change made them feel scared, and 52% expressed anger. Only 29% of respondents said they felt optimistic. As a result, younger shoppers think consciously about how their purchases impact the environment.

Gen Z, in particular, has taken up thrifting. Second-hand marketplaces like Depop and Poshmark allow shoppers to find quality used goods, even if they are on a budget. And some brands are taking note — Levi and Eileen Fisher offer return programs and collections that keep good garments in circulation. Instead of allowing third-party marketplaces to take all the revenue from the second-hand market, brands can be greener while maintaining profits.

Additionally, other values come into play when Millennials and Gen Z look to make a purchase. As a diverse and progressive generation, they want to ensure that their clothing is made with sustainable materials and fair labour practices. In a nutshell, younger generations want to associate with brands that share their values and earnestness for sustainable practices. Brands that do not ascribe to and live by these values may not capitalise on the social clout and loyalty from shoppers that feel proud to buy their products because of what they represent.

Personalisation, but Keep It Transparent

Millennials highly value experiences. They expect brands to know who they are and tailor their shopping experience accordingly. This means they know that brands will collect data about them and their shopping habits. Transparent data collection provides brands the opportunity to analyse that data and then create a rich buying experience. In fact, personalisation is a necessity for luxury brands. Buyers want the experience to match the kind of money they spend.

For many consumers, this means that even if they are buying from a powerhouse luxury brand, the experience should still feel somewhat intimate and local. Currency and marketing material should be localised and sensitive to geographic regions. Once a purchase is complete, shoppers want to continue to feel connected to the brand and, in turn, be rewarded for their loyalty.

But data collection is not limitless. Younger generations appreciate personalised marketing, but they want to know that their data is secure. Brands can maintain trust by being transparent about data collection.

Younger generations continue to grow in influence, and with that comes new opportunities and challenges for luxury brands. Continuing to offer unparalleled personalisation and exceptional customer experiences will be crucial going forward. Brands also need to reaffirm their dedication to sustainability and view it as a key part of their identity.

Acting on Impulse

Among US demographics, Gen Z is the most likely generation to make an impulse purchase. This age group is more driven to make a purchase based on trendiness and trends are more accessible due to social media. Ecommerce, of course, provides instant access to the latest trends further enabling Gen Z’s impulse shopping.

While retailers optimise physical stores to increase impulse purchases, more than half of survey respondents say they have made an impulse purchase online. As with marketing and special offers, ecommerce merchandising must be personalised to customer-intent. Product-group merchandising does not take customer-intent into account. Whereas intent-merchandising allows brands to show their high-end shoppers items of interest as well as can’t-miss products that the customer is most likely to buy on impulse.

Offering on-trend merchandise or items in categories that shoppers are most likely to purchase spontaneously lets luxury brands capitalise on the customer’s frame of mind and encourages additional purchasing.

Customer-intent personalisation is the future of successful ecommerce expansion and growth. Talk to an ESW ecommerce expert to learn how smart product lifecycle management strategies can reduce inventory while retaining margin and brand reputation.