Millennials are Changing the Face of Luxury Ecommerce

Editor's Note: This post was originally published in July 2018 and has been updated for accuracy and comprehensiveness.

According to Statista’s Luxury Goods Report, online luxury sales are “projected to grow at twice the market rate and capture 18% of all sales revenue by 2023.” While luxury consumers get convenience from ecommerce, retail stores aren’t going anywhere.

Add the demands of millennial shoppers to the mix, and you’ll see big changes are coming. After all, millennials (aged 23 to 36) are well into their careers and reaching their peak spending age. An upcoming life event, such as a party or wedding, is a major trigger to motivate millennials to buy luxury items. Since millennials are waiting longer before starting families, they can more easily cash in on their growing spending power.

Where can luxury fashion ecommerce brands place their bets to drive sales among this demographic? This post highlights how you can position your luxury brand for success among millennials.

1. Millennials and luxury ecommerce
2. Luxury brands targeting millennials with streetwear
3. Storytelling is good luxury marketing
4. Personalization in luxury ecommerce
5. Digital-first luxury brands have an advantage
6. Traditional luxury brands need to adapt

1. Millennials and luxury ecommerce

Exclusivity, quality, and high-end craftsmanship used to be the key differentiators for luxury fashion labels. But they’re not enough to impress millennials. “To win with millennial consumers, brands need to understand what they value—personal satisfaction and purpose,” says Diane Primo, Intralink Global’s CEO.

Forbes reports millennials aren’t just the most powerful consumers right now; “millennials and Generation Z account for nearly 50% of Gucci’s total sales.”

Betting on millennials was a smart move for Gucci—it shifted its brand promise early on with Gucci Equilibrium, a new purpose-driven, eco-friendly initiative. The new microsite highlights Gucci’s involvement in social and environmental initiatives. 

“This effort grants Gucci the authenticity, transparency and, most importantly, accountability that consumers seek,” says Primo.

To truly resonate with millennials, luxury fashion brands must also rethink distribution channels and product offerings. They’ve got to focus on what millennials are most likely to buy—right now, it’s casual streetwear.

2. Luxury brands targeting millennials with streetwear

“By blending urban and streetwear into their collections, traditional luxury fashion brands can recruit a customer base among millennials and stay relevant in a dressed-down future,” Statista reports.

According to Statista’s 2019 luxury report: “millennial consumers value the gain in freedom casual outfits offer. Having grown up in hoodies and sneakers made by sports and streetwear brands they are unlikely to give up the acquired relaxed understatement these casual outfits provide.”

Fast fashion brands like H&M have collaborated with big name streetwear fashion designers for years to drive sales online and in-store. Now, luxury brands have jumped on the bandwagon. Cross-collaborations are a growing trend for luxury designers as they seek out streetwear brands to help them gain credibility among millennial shoppers.

Louis Vuitton is ahead of the game on this—having recently collaborated with the streetwear brand Supreme to target millennials.

Even sneaker brand Vans is getting into the luxury game to compete. Vans released six versions of its classic sneakers through a collaboration with the recently-deceased designer Karl Lagerfeld, who was the creative director for Chanel and Fendi.

It’s important to note that streetwear and luxury collaborations are only powerful if millennials know about your promotion. Frequent online luxury millennial shoppers expect to see:

• Online ads
• A strong brand web presence
• An inspiring story or narrative behind the brand

Let’s turn our attention now to selling your inspiring luxury fashion story to millennials.

3. Storytelling is good luxury marketing

Social media is the leading way millennials discover new products—and you can help them love your brand by engaging with them in a meaningful way. It’s especially critical during their discovery phase of your brand.

To boost engagement, you must create stories that resonate and motivate them to like your posts and respond through comments.

On the other side of engagement, you should be responsive to direct messages or comments. Take advantage of the opportunity to show off your brand personality—be helpful, and highlight your appreciation for their business. 

Burberry has poured a lot of money into its digital media campaigns, enlisting Oscar-winning filmmaker Asif Kapadia to shoot a microfilm, The Tale of Thomas Burberry, for the holidays. Lily James, Domhnall Gleeson, and Sienna Miller also starred in the film. 

The film depicts the 160-year-old history of the brand—showcasing its personality in the entrepreneurship, innovation, and personal struggles of Burberry’s founder. It demonstrates how Burberry went from being a small-town apprentice at a local draper’s shop in the late 1880s to the designer of a patented fabric used by polar explorers in 1911 and 1914. 

The video also illustrates the evolution of his brand, and weaves in (pun intended) his personal life story—with his rocky romantic relationships to add an emotional twist to the plot.

Fans loved it. The video struck a chord with viewers, many of whom requested the ad to be turned into a real film in the YouTube comments. The video also has more than 15 million views and 24,000 likes since it was posted. Now that’s engagement!

Storytelling should happen inside brick-and-mortar stores, too. Last year, Gucci unveiled a new concept store in New York to create a more accessible, meaningful, and millennial-friendly shopping experience. No more security guards or “cold undertones” of its usual store. When shoppers enter the new space, they’re greeted by ambassadors, trained to tell the Gucci story.

The shopping experience includes “plush sofas and a multisensory screening room with 3D technology that offers documentaries and AR applications.” The store design and fashions have a heavy streetwear focus and feel, too. As described above, if you re-design luxury retail stores for millennials, you’ll not only to tell a strong brand story, but should perfect the experience across multiple channels. Let’s discuss this strategy next.

4. Personalization in luxury ecommerce

A Euclid study revealed, “almost half (48%) of millennials shop in-store a least once per week.” But those in-person shopping sessions don’t always lead to the checkout counter. Instead, they spur online buying. 

Luxury brands must, therefore, boost their ecommerce investments to offer a seamless multi-channel shopping experience. One of the best ways to stand doesn’t sound revolutionary but makes all the difference—it’s offering fast and free shipping. That’s because unexpected shipping costs are one of the main reasons people abandon their shopping cart.

With Amazon and Walmart offering same-day delivery in many markets, some high-end ecommerce stores have followed suit. Louis Vuitton offers complimentary delivery or the ability to pick-up or return items in-store, and duties are waived for international orders. Same-day delivery to select zip codes can be as affordable as $40. 

Fast shipping and easy store returns are just a few ways to offer excellent customer service to millennial luxury fashion shoppers. How do you translate the in-store experience that Gucci is testing into an online experience? That’s where ecommerce personalization comes into play.

Luxury ecommerce personalization 

Luxury shoppers are used to getting special, individualized treatment in high-end stores. They’re treated like a VIP, with access to private personal shoppers and exclusive shopping events. Some stores also offer to come to you for last-minute fashion emergencies (e.g., they’ll bring personalized selections from the store to you in a truck). It’s another reason why millennials like to visit a store first. With innovations like artificial intelligence and machine learning, though, they can get a similar personalized experience online.

Custom-tailored shopping experiences “just for you”

High-end retailer Nordstrom has invested heavily in ecommerce to cater to millennial consumers’ changing tastes. It’s certainly paid off—30% of the retailer’s total sales in 2017 came online, digital growth has continued to surge. In line with Gucci’s strategy, Nordstrom also now features streetwear clothing front and center on its designer landing pages.

Naturally, its website and app offer detailed reviews, helpful information about sizing and fit, and styling suggestions. But it steps up the shopping experience by giving consumers the option to browse through curated products “just for you” after taking a short quiz about their tastes and style. Shopping in your local currency In an increasingly global ecommerce market, casual luxury brand Rebecca Minkoff personalizes its global experience with IP geolocation. It’s a smart strategy because unexpected costs like exchange rates can heavily impact a customer’s likelihood to abandon their cart.

The ecommerce site updates currencies automatically in more than 100 countries and over 70 currencies. That way, customers know exactly what they’ll pay before they click “add to cart.” Shoppers can also select their preferred location and currency:

Most of the brands we’ve discussed so far were born in a retail environment. Now, they have to compete with the influx of digital-first luxury fashion brands. Let’s take a look at some of the contenders fighting for millennial market share.

5. Digital-first luxury brands have an advantage

Digitally native luxury fashion brands are those that were founded online. These businesses have the benefit of having already captured the hearts and minds of millennial shoppers. And they’re experimenting into the physical retail space. 

Mr. Porter

Mr. Porter is the brother site of Net-A-Porter. It caters to men’s fashion and lifestyle luxury brands, which is another growing luxury customer base. Like Net-A-Porter, Mr. Porter offers premium multi-channel assistance in select cities to its top customers, known as EIPs (or extremely important people). The service includes at-home shopping consultations, and a “You try, we wait” delivery service. Non-EIPs can access 24/7 customer care or fashion consultation by phone, email, or live chat.

For those shopping on its app, carts and wish lists are automatically synced with Mr. Porter’s online accounts. It’s a seamless on-the-go shopping experience.

Customers don’t have to request VIP treatment to receive it. Ecommerce automation can help you set up an always-on VIP experience by identifying and segmenting important shoppers with a back-end workflows. Show some love to your big spenders—get your customer service team to give them special attention, like sending your VIPs handwritten notes.

Luxury fashion retail stores beware. Ecommerce can offer an equally engaging customer experience with the right tools. and the technology is getting better every day.

Traditional luxury brands need to adapt

To grow online, traditional luxury brands need to adapt and embrace the millennial shopping trends we’ve outlined. For traditional businesses, hope isn’t lost—Gucci has proven that the ecommerce opportunity is there. But old luxury brand promises and value systems won’t survive long-term.

Taking a page from the streetwear brands, luxury fashion businesses must embrace social and environmental responsibility. Adapt their product offerings for a growing customer base, and provide more experiential online shopping options.

These combined tactics will help you future-proof your luxury fashion business and win with ecommerce.