Back in June, my learned colleague Georgina looked at the resurgence of luxury. According to a Bain & Co spring luxury update back in the heady heights of summer, co-founded by Bain partner Federica Levato, the premium beauty industry sector was expected to post a 2 to 4 percent rise this year. However, Georgina posed a good question, will luxury adapt to the millennial consumer and all its demanding criteria in order to continue its steady pattern of growth?
Five months down the line from this informed blog post, have we seen any indicators to suggest that luxury has indeed wised up – are premium products still being sought out and have manufacturers and brands heeded the advice to diversify and adjust in order to secure the golden ticket of the millennial spending power? With Bain predicting that millennials and Gen Z consumers are due to make up 45 percent of the global personal luxury goods market by 2025, we’d like to think so.
And if L’Oréal’s recently released 2017 Q3 results are an indication of the market as a whole, then yes. Beating industry expectations, the French beauty giant has reported a steady stream of growth, thanks, in part, to the booming luxury division, which posted a double digit rise of 11.2 percent on a like-for-like basis. And with L’Oréal boasting millennial favourites such as Urban Decay and Diesel in its Luxe category, these latest results indicate that the industry has indeed been listening.
But let’s not stop there. There are many more refocusing and realigning in order to boost their prestige offerings. It was luxury sales that helped raise The Fragrance Shop’s year-end results for the year ending 31 March 2017, as announced mid-August. This boost was found to be due to ‘An expanding range of accessibly priced luxury fragrances,’ according to Sanjay Vadera, Chief Executive of the Fragrance Shop. Affordable luxury: a sure-fire way to tick the millennial box. And it seems Unilever was also considering its price points as a way to keep its finger in the pie, with its acquisition of Carver Korea in September said to be a way for the personal care giant to offer ‘luxury skin care products at attainable price points,’ in North Asia. Calvin Klein, and the Coty-owned Calvin Klein Fragrances, meanwhile unveiled a new worldwide print advertisement starring Actor Jake Gyllenhaal, which, while clearly costing a pretty penny to make, was expected to be justified by boosting the company’s revenues in the luxury segment by having a ‘contemporary’ take on ‘Eternity Calvin Klein’s longstanding ideas of romance, love, intimacy and commitment’. Ah ‘contemporary’ – a buzzword every millennial likes to adopt. Likewise luxury giant LVMH has looked to the digital world to reach out and adapt its practises to an evolving consumer, with Bernard Arnault, LVMH Chairman and CEO, stating, “The increasing digitalization of our activities furthermore reinforces the quality of the experience we bring to our customers.” And having recently reported a 15 percent rise for its first half of the current financial year, it’s a developing strategy that seems to be working.
I think it’s fair to say just from these few examples that the industry is getting wise and looking to leverage new tactics and policies to tick the millennial box. Levato’s words of wisdom, “Brands need to be customer obsessed and millennial minded,” clearly haven’t fallen on deaf ears.