Personalization & the Millennial Effect
The Luxury of Personalisation - The rapid changes in consumer culture affect all aspects of retail, especially luxury brands. With a constant increase of product and service choices, personalisation has become strategically important, as it plays on consumer sentiment and forms a crucial part of the experiential services associated with luxury.
But what exactly does it mean to personalise? Many view personalisation and customization as the same thing. However, they are distinctively different processes. Customization allows consumers to create their own, unique product according to their particular tastes and needs. So think patterns, colours and fabric choice, to create your own look. Personalization, on the other hand, is a marketing strategy that aims to create personalized, or ‘one-to-one’ communication with a single consumer or consumer segment. To personalise is to create a customer-centric experience in which they feel wanted and valued. Whether it is in a physical store or through social media channels, showing interest in customers ultimately creates loyalty. Many brands recognize that a big part of winning customer loyalty is through personalisation. So by segmenting shoppers, they are able to offer them the products they want, when and how they want them.
There are plenty of luxury brands with a strong brand following in Asia, and while they all have their own appeal, they are still a part of a crowded marketplace that is seeing an increase in cost per acquisition. These luxury retailers must still get the most out of each individual customer and with personalization capable of boosting sales 6-10%, it's an effective way to secure higher spending and keep consumers coming back. To engage with a brand in a unique and personal way is now seen as the ultimate luxury.
The Millennial effect
By 2025, Bain & Co projects that Millennials and Generation Z will account for 45% of the global personal luxury goods market. While this does present great opportunities, brands now have to think about how to engage this demographic, as millennials think and shop differently from previous generations. Millennials typically value experiences over things, which has translated to the shopping experience.
While high-quality materials and impeccable design was enough to distinguish luxury brands in the past, the advert of social media and the increasing affluence and influence of the millennial customer has led to a greater focus on individual expression. From shoes to bags, luxury brand marketing concentrates more on the consumer than the product, who they are and how they think.
Fashion Brands like Gucci, Louis Vuitton and Burberry to name a few all offer personalisation services and gives their customers more deciding power in creating the look and feel of the product they are buying. For example, to Mr Marco Bizzarri, chief executive of Gucci, personalisation is "the necessary next step" to cater to the demands of its millennial consumers who nearly make up 50% of its global business.
Millennials are not passive shoppers. They choose to create, curate and overall be immersed in their retail experiences.
Personalising the Digital
Social Media has been a great tool for brands to capitalise on reaching its millennial demographic. Brands now partner with users and influencers to create content through the use of social campaigns and hashtags. Burberry’s “Art of the Trench” is a good example. Burberry gave its customers the chance to showcase their own style by uploading pictures of themselves in their Burberry trench coats and then reposting and tagging user handles on social platforms. Bulgari’s social media campaign with “save the children” through the hashtag #seemywish also saw immense success with social media users. Interacting with customers through social media platforms like Instagram, WeChat in China creates a unique social experience that allows shoppers to develop a sense of ownership of the brand. Personalized digital experiences aren’t new but its impact is felt most today especially through the millennial demographic.
Providing a personalised shopping experience should not be seen as a passing trend but a necessity for luxury branding and retail. Although personalisation was brought to the forefront of luxury retail with the “millennial effect” it is here to stay.