Luxury buyers are getting younger, not only in Korea but around the world.
According to a report by Bain & Company, the proportion of luxury consumers born in the late 1990s and 2000s, otherwise known as Gen Z, doubled last year to 17%. , up 9 percentage points from 2019. Millennials, those born in the 80s and mid-90s, made up almost half of the global total at 46%, up 12 percentage points from compared to the previous year.
The consulting firm estimated that by 2025, seven in ten luxury buyers will be under 40.
In order to better understand their growing consumer base, luxury brands are adapting a concept called “persona” to better visualize their customers, instead of categorizing their customers with broad demographics such as age and gender.
When creating a persona, the company creates a fictional character representing its target customers, combining multiple identity factors such as gender, age, nationality, economic status, and hobby.
“The new generations are extremely diverse in their makeup,” said Claudia D’Arpizio, partner at Bain & Company, in an interview with the Fashion Network media outlet, explaining that the personalities of key target consumers are now completely different from that of the past. .
So, what exactly is a persona in the luxury market?
“We concluded at our year-end meeting that the luxury industry cannot survive without the younger generation, the internet and a progressive brand identity,” said an industry insider for one brand. French luxury operating in Korea, which wished to remain anonymous.
The “younger generation” refers to people in their late teens through their thirties, while “Internet” here means the digital experience on both online and offline market platforms. “Progressive brand identity” includes the corporate image of respecting the environment, accepting diversity and upholding ethical business practices.
The Bain & Company report suggested that the most notable buyers included “Urban Chinese Youth,” “American New Generation” and “Equality Warriors” in the Generation category; “Historically excluded” and “women [from the mid-income class]»In terms of culture; and “Chinese female leader” and “high tech value” for the social aspect.
However, these categories are not mutually exclusive, as a person can have more than one character.
Kim Nan-do, professor of consumer studies at Seoul National University, described the multi-persona as “a multi-level identity created by putting different characters in different situations, similar to changing masks.”
Understanding this character is essential to understanding the recent evolution of the luxury consumer demographics.
People adopt different characters depending on the situation, often to leave some impression on others. In the 19th century, for example, British families used to place their fanciest pieces of furniture near windows where neighbors could peek, and the phrase “Sunday best” refers to the best clothes in the house. a person worn on special occasions like going to church on Sunday.
Persona has recently become much more diverse. In addition, the trend towards ‘revenge spending’ – impulsive spending motivated by the frustration of missed opportunities due to Covid-19 -, the flood of information online, the expansion of second-hand luxury platforms and the Growing tendency to shop for personal satisfaction has led to the increasing demand for luxury goods. Some people even buy luxury items on the Metaverse to express their luxurious personality online.
Consequently, the luxury industry is diversifying its price range in order to meet the different needs of a now larger clientele.
The traditional segmentation of the luxury goods market, where there was a clear distinction between relatively affordable products and absolute luxuries, is no longer true in today’s market. For example, French luxury brand Hermès began offering relatively more affordable scarves, jewelry, and accessories at prices below 1 million won ($ 830).
“While traditional luxury goods were reserved for the wealthy few, and middle-income people preferred affordable and convenient products, now even teens and young people at the start of their careers are target customers for luxury brands ”Jeon Mi-young, researcher at Seoul National University’s Consumer Trend Center, said.
Jeon described the phenomenon as the “democratization of luxury”.
“Even the most prestigious brands will not be able to survive if they are slow to understand the diverse and complex personalities of people. ”
BY LEE SO-AH [[email protected]]