The Young and the Excess: What Jewelers Need to Know About Millennials



How ­(the ­often ­misunderstood) ­millennials ­relate to ­luxury, ­­consumption, spending, and the retail ­experience

Millennials have been described as narcissistic and entitled; wimps raised by helicopter parents; trophy kids who receive rewards not just for winning but simply for participating in an event; and a group that lives in a digital world instead of a real one. They’ve also been called the boomerang, or Peter Pan, generation for delaying some rites of passage into adulthood. Many of-age millennials with jobs still live with their parents. And, because they have the family to fall back on, they can quit those jobs on a whim.

“They are the most misunderstood generation that has ever existed,” says Jamie Gutfreund, chief marketing officer for Noise/The Intelligence Group, publishers of the Cassandra Report, which provides forecasts and insights on the youth market.

Gen Y is the most technologically savvy and educated generation to date. They are the first global generation—a group equally affected by news abroad and at home; they embrace other cultures, crave travel, and search for authentic experiences rather than material gains.

Millennials are no strangers to renting, from gowns to jewels. For $392 per week ($1,412/month) at Haute Vault, you can rent these Oscar de la Renta blue diamond and blue topaz drops.

They are notorious browsers, they shop anywhere and anytime, and they interact with brands—sometimes on a daily basis. Yet items sit in their online shopping carts; they don’t seem to need the validation of a purchase.

If they are “faux-sumers,” as retailers and marketers have called them—the boomers’ sons and daughters, born between the early 1980s and about 2000—are also seen as the holy grail of future spending. The numbers are promising: Numbering 80 million in the United States alone, they are the largest generation since their parents’. And, when they reach their peak in 2020, they are projected to spend $1.4 trillion annually, or 30 percent of total retail sales, according to a survey by business consulting firm Accenture.

Millennials continue to evolve, and particularly so in the luxury segment.

Unlike previous generations that gravitated to the “it” bag or brand-name object, millennials generally view luxury as something they do for themselves, not to impress others. Among millennials, 72 percent say luxury is about quality, according to Gutfreund, while 41 percent say that luxury is not about the object, but about the endurance of the object. “After the recession, they got used to not needing a bunch of stuff,” she says. “They are contending with fewer jobs and a higher student debt than any previous generation, and they have yet to build credit history. If you pin a Bulgari [piece on ­Pinterest], you’re in the know. You don’t necessarily have to buy it.”

This de la Renta champagne quartz, yellow sapphire, and diamond cocktail ring rents for $510 per week ($1,836/month). Each piece retails for about $9,800.

Millennials have a quirky relationship to ownership. When making a decision to purchase a big-ticket item, they give a lot of thought to its resale value. About a third of those surveyed by the Cassandra Report in 2013 said they had sold big-ticket items on sites like Craigslist within a six-month period. Almost half of them expressed an interest in renting high-end goods they need for an occasion, rather than paying full price to own them. They also think long-term, however, and are willing to spend more on investment pieces than on fast fashion or costume jewelry.

“Luxury is relative to their income bracket,” says Gutfreund. “A pair of Dior double-sided earrings in the mid-$400s is a luxury item for many millennials. It’s got great resale value, is a classic, and makes a statement.”

While a good share of millennials have yet to reach their peak career-wise (the oldest are 35), a number of them are gaining wealth quickly. This has been one of the biggest revelations to Milton Pedraza, CEO of the New York City–based Luxury Institute. “We are seeing a wealth barbell effect,” he says, adding that some wealthy millennials are extremely young and tend to work in Silicon Valley and Silicon Alley, in financial services, and in the media. They are also beginning to inherit baby boomer wealth. “The wealthy are coming up faster and requiring luxury goods and services faster than expected,” Pedraza says. “We expected more of an evolution.”

LVMH brand Kenzo (a Gen Y fave) opened the doors to its Paris workshop in summer 2013, giving select consumers a peek into its inner workings. (photo: Hero Images Inc./Alamy)

To millennials, a label matters—but not just for the label’s sake. They carefully consider brand reputation as well as their peers’ experiences with the brand. They also look for transparency, demand authenticity and ethical business practices, and respond particularly well when brands can tell a story or relate an item’s provenance.

Last summer, LVMH threw open the doors to its private workshops in France, Italy, and Spain for the second edition of “Les Journées Particulières,” an invitation to the general public to see how the brand’s luxury items are made. The initiative was a phenomenal success, particularly with younger consumers, drawing a total of 120,000 visitors over the course of one weekend.

While millennials want to hear a brand’s story, they also expect to be heard. Sometimes called “venture consumers,” millennials want to contribute both creatively and financially to brands they believe in. And this is true not only for small brands but for international brands as well.

“They think of themselves as consultants,” says Pedraza. “It’s not a one-way conversation. As a result, we’re seeing that millennials are far more willing to share data with you.”

Millennials look for ways to have a say in what a brand makes or does. Therefore, they have high expectations from brands. They don’t consider an email from a brand to be spam as long as it is relevant—which puts the onus on brands and retailers to do the analytical work to customize offers.

“If they’re going to spend their money on a product, they’re investing in the brand,” says Gutfreund. “They want to be treated like a shareholder, and they have a stake in the outcome.”

Gabriel & Co., a fine jewelry house in New York City, is helping independent retailers keep up with Gen Y’s digital tendencies with a host of initiatives, including its new Engaged eShop, proprietary software that can be embedded within a retailer’s website.

Even if they’re not buying it, they’re coveting—and pinning—it. This Bulgari amethyst, rubellite, and diamond necklace ($79,000; bulgari.com) represents the ultimate aspiration jewel.

The software allows users to search the brand’s inventory by materials, styles, and collection; offers 360-degree views of products; and provides real-time pricing info. Using eShop, retailers can offer their customers a complete online shopping experience without the need or expense of carrying physical inventory in the store.

“We had to fight and to give the power back to the retailer,” says founder and CEO Jack Gabriel. “It’s very powerful to combine brick-and-­mortar with a professional website. [A program like eShop] would require hundreds of thousands of dollars in investment.”

Businesses that reach millennials through multiple channels—brick-and-mortar, online, and mobile—will be the most effective. Just keep in mind that transparency works both ways. “They have an enforcement system on Facebook and YouTube—you’ll be famous very quickly if you screw the millennials,” says Pedraza. “You need to deliver what you promise.”

As technology increases our social isolation, this generation responds extremely well to personal contact at the brick-and-mortar level. Baby boomers do research online and then go to a physical retail presence to buy the item. Millennials do the reverse. They will head to a store for an experience—for example, Urban Outfitters flagship in New York City has made shopping fun for millennials by populating the store with chatty salespeople, and adding places to peruse retro cameras and a photo booth that lets them post images on Instagram. But don’t be surprised if they walk out of a store and purchase the goods online.

“Fundamentally human needs have not changed,” Pedraza says. “The way people go after them has changed. Human beings matter a lot, and relationships matter more than ever.”

 

How and Gen Y

Capture the millennial consumer in five easy steps:

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1. Tell your story, and be authentic and transparent.

2. Create a unique brick-and-mortar experience; ensure that it is sensory and relevant. 

3. Provide plenty of information (in fine jewelry, there’s tremendous room in for education) and avenues for feedback; you will be rewarded with vast amounts of consumer data.  

4. Do the analytical work to personalize offers and services.

5. Build relationships and foster person-to-person contact.