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How Millennials Shop for Luxury and Watches


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In December 2015, Pluris Medias partnered with HEC Paris to conduct a study on millennial preferences when it came to luxury. A survey was created and sent to MBA students around the world to discover insights on digital habits, attitudes towards luxury, and openness to innovation in watches. The resulting data was analyzed and findings were shared with luxury industry professionals in Paris.

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How Millennials Shop for Luxury and Watches

  1. 1. Research Study: Authors: Anna Juenemann, Navin Mangalat, Ankit Punn, Helen Shih Contributors: Amalia Bejinaru, Bob Van den Brande, Alexandra West, Xiao Lan Yin How Millennials Shop for Luxury and Watches Photo credit: Skrekkøgle March, 2016 In partnership with: Olivier de Cointet, Founder-President at Pluris 0
  2. 2. WHAT DOES LUXURY MEAN TO MILLENNIALS IN THE DIGITAL WORLD? Initial benchmarking research on millennials and luxury showed the following recurring trends… Photos: Vogue Paris 1
  3. 3. UCI Trend Lab, February 2015 millennials want experiences, not things would rather spend money on a desirable experience rather than buying a desirable object 78% 2
  4. 4. activity is happening on mobile devices Comscore, 2015 of millennials are no longer using desktop computers to go online 1/5th the rate of growth of mobile-only users versus the growth of internet users 9x 3
  5. 5. BCG Perspectives, 2014 Elite Daily, October 2015 millennials expect content, connection, and interaction expect to read content from brands before they make purchases 58% regard authenticity as more important than the content itself when consuming news 43% post product reviews 39% 4
  6. 6. *McKinsey Digital Inside, July 2015 **McKinsey Luxury Shopping in the Digital Age, May 2014 digital is a MUST-HAVE in the luxury client decision cycle are in some way influenced by consumers’ digital experience** (online research of an item, social media buzz, etc.) 40% online sales of luxury goods by 2025 *From 6% in 2015 to 18% in 2025 €70B 55
  7. 7. Albatross survey, February 2015 the watch industry is being disrupted of luxury consumers preferred the Apple watch to a luxury watch 27% considered the Apple watch as a potential substitute for a luxury watch 15% 6
  8. 8. THE HEC PARIS & PLURIS 2016 GLOBAL MBA LUXURY, WATCHES, AND DIGITAL STUDY In January 2016, a survey was created and sent to MBA students around the world to discover insights on digital habits, attitudes towards luxury, and openness to innovation in watches. 7
  9. 9. SURVEY FOCUS: MBA’s as MILLENNIAL HENRYs (High Earning Not Rich Yet) School/ Criteria Weighted Salary (U$S) Harvard 179,910 IESE 144,992 CEIBS 149,504 HEC 129,544 Tuck 153,896 Michigan 144,159 Bocconi 121,100 Manchester 115,763 RSM 103,626 Average 138,055 MBA Salaries Source: Financial Times global MBA rankings 2015 8 Millennials HENRYs MBA’s “HENRY’s are the gatekeepers to the luxury market” 45% of luxury consumers are represented by millennials* HENRY: “High earning professionals and entrepreneurs running households with annual incomes between $100k-$250k. Increasingly, these numbers include millennials.” – Fortune magazine, Digiday Generation Birth Year Gen X 1960’s-1980’s Gen Y “Millennials” 1980’s-2000’s Gen Z 2000’s-now Generations *Shullman Resource Center
  10. 10. Cultural Identification: “Which country’s culture and values do you most identify with?” 10% 19% 38% 10% 27% North and Central Americas South America Middle East and Africa Europe Asia 9 Survey Sample Stats: 300 Surveys completed 26+ Business schools 52 Student nationalities 82% Aged 27-35 yrs old 40% Females 60% Males
  11. 11. III. SPECIAL FOCUS ON WATCHES AND INNOVATION Testing current campaigns Vetting new ideas Checking price elasticity What values are important to HENRYs? What is the HENRY attitude towards luxury? I. DEFINING LUXURY AND PERSONAL VALUES II. DIGITAL BEHAVIOR WHEN IT COMES TO LUXURY Online vs. Offline shopping Expectations of mobile apps Social interaction with lux brands III. SPECIAL FOCUS ON WATCHES AND INNOVATION Testing current campaigns Vetting new ideas Checking price elasticity The survey is structured into 3 parts: 1010
  12. 12. SURVEY INSIGHTS Further references to “HENRYs” refers to the survey sample
  13. 13. LUXURY MATTERS TO HENRYs Initial studies led us to believe that millennials view luxury goods as “overpriced and unaffordable” and as “showing off.” However, our HENRYs surveyed agree that luxury is important to them. LUXURY ATTITUDE INFLUENCES ACTION: The 66% total percentage of people who agreed that “luxury is very important to me” and “luxury matters to me” were more likely to have: Illustration: Floyd Grey …preferred a luxury watch over an Apple watch …downloaded a luxury brand’s mobile app …recently purchased a luxury item 57% AGREE: “Luxury matters to me. I sometimes look for it and am aware of brands.” 12
  14. 14. LUXURY SIGNIFIES FASHION, SUCCESS, AND PRIVILEGE However, luxury is not free from judgment. Context is important when it comes to luxury. In the “other” category, several said “it depends”: “It depends. For someone, it represents elegance; for others, just show off.” “Depends on the luxury product and the context it’s worn in.” “Depends on how he/she wears the brand. Could be something between show off or fashionable.” Others were much more vocal about their distaste for luxury, viewing those who participated in luxury as: “Insecure.” “Boring.” “Nouveau riche.” “Possibly tasteless.” “Needs luxury things to fill an inner empty.” Fashionable 26% Successful 25% Privileged 23% Show off 13% Conservative 4% Not Original 4% Other 4% When you see someone wearing or using a luxury product, what do you think of him/her? 13
  15. 15. HENRYs follow the same values as the general millennial population Reports show that millennials value the following traits: authenticity, eco-friendliness, and craftsmanship. We asked would you rather… AUTHENTICSAFE, RELIABLE or…stay in a 4-star hotel …stay in an AirBNB lux apt or villa 45% 55% SPORTYECO-FRIENDLY …drive a Tesla model S …drive a BMW 5-series 55% 45%or or TRADITION + TECHHIGH TECH …wear a smartwatch by Apple …wear a smartwatch by a luxury watchmaker 50% 50% or …wear an Apple Watch …wear a traditional luxury watchCRAFTSMANSHIPHIGH-TECH 25% 75% 14 Cultural Difference: In South America, this preference was 30% Apple watch, 70% smartwatch by a luxury watchmaker
  16. 16. Brick & Mortar isn’t dead The experience of shopping draws HENRYs in-store… Of the 90% who made their most recent purchase offline, 30% had purchased a luxury item online in the past 65% Recently purchased a luxury good or service 48% Wanted to see and try on the product 16% Needed more information, the online photos/descriptions were not sufficient 12% Concerned with counterfeit goods 90% Made their most recent purchase OFFLINE 10% Made their most recent purchase ONLINE “Intimidating and scrutinizing store atmosphere.” 32% Purchased online to save time 32% Purchased online to find the best price “Shopping experience in a shop is also a part of ‘luxury.’ I don’t want to miss it.” 18% N. & C. Americas Made their most recent purchase online Cultural difference: …But e-commerce has its own role HENRYs who shop luxury online have different priorities than offline shoppers – convenience. 54% N. & C. Americas Recently purchased a luxury good/service Cultural difference:In your definition of luxury, have you purchased a luxury good in the past 2yrs? 15
  17. 17. While store experience is clearly important to HENRYs, it sometimes falls short of expectations Top brands mentioned: Apple Burberry 12 mentions Chanel Hermes Louis Vuitton 7 mentions BMW Prada 6 mentions Do you consider Apple a luxury brand? MBAs clearly do! 65% Recently purchased a luxury good or service In your definition of luxury, have you purchased a luxury good in the past 2yrs? What did you think about the overall customer service in your last luxury purchase? 42% “Excellent! I would definitely go back and tell friends/family.” 50% “Good, but nothing special.” 16
  18. 18. HENRYs demand benefits from branded mobile apps They expect not only “hygiene” items like an up to date product catalog and store finders, but also loyalty benefits and access to exclusive products BENCHMARK: In another study, only 4% of past participants had downloaded a luxury brand’s mobile app in the past year. - Digital luxury experience 2013 [McKinsey] 15% YES What do you appreciate the most in the luxury brand’s mobile app? What would convince you to download a luxury brand’s mobile app? Have you downloaded a luxury brand’s mobile app in the previous year? 85% NO · Exclusive offers to loyal customers · Detailed and up to date product catalog · Language customization / info on store location · Access to exclusive or limited edition products · Exclusive offers to loyal customers · Invitations to special events near you · Access to exclusive or limited edition products 17
  19. 19. SOCIAL ENGAGEMENT: Not all HENRYs thinks like fashion bloggers HENRYs prefer not to broadcast their latest luxury purchases, seeing it as “showing off” 62% Report NOT engaging online with luxury brands regarding their last purchase 10% Share a unique experience with the brand 11% Share a picture of themselves wearing or using the product “Sharing such is a horrible show-off.” “I believe that it is personal and should not be advertised blatantly.” Images: Instagram @songofstyle “How do you engage online with luxury brands?” 23% Share a picture of themselves wearing or using the product Cultural difference: Asian respondents said - 18
  20. 20. WATCHES
  21. 21. 26% 25% 23% 13% 4% 4% 4% 21% 32% 23% 11% 7% 2% 4% Fashionable Successful Privileged background Show-off Conservative/ Traditional Not Original Other Wearing or using a luxury product Wearing or using a luxury watch 20 For HENRYs, luxury watches signal success. One must consider the millennial definition of success. “Success for [gen Y] is a transition from climbing the ladder of unfulfilling societal expectations and consumerism to blazing a trail with a life guided by a holistic focus on well-being, community and sustainability.” -Umair Haque, author and economist What do you think of someone when you see him or her…
  22. 22. A luxury watch is no longer defined by its price, Swiss heritage, or longevity. Respect for craftsmanship remains the same. “Smartwatch as luxury” is a polarizing subject. “A LUXURY WATCH MUST BE MADE IN SWITZERLAND” “PRICE MAKES A WATCH A LUXURY PRODUCT” “A SMARTWATCH FROM A TECH COMPANY CAN BE A LUXURY PRODUCT” “PASSING MY WATCH ONTO THE NEXT GENERATION IS IMPORTANT” “CRAFTSMANSHIP IS WHAT SETS ASIDE A LUXURY WATCH FROM A NORMAL WATCH” DISAGREE NEUTRAL AGREE 27% 12% 24% 43% 18% 35% 21% 26%53% 67% 18% 15% 21% 40%38% 32%29% 39% 16% 76% 8 % 21
  23. 23. While HENRYs are active luxury shoppers, there is an opportunity to turn window-shoppers and non-shoppers of watches into future clients 34% Window-Shopping 30% I never or rarely visit one 18% To try on and decide if I want to buy 12% With the intention to buy 5% For the shopping experience Why have you never or rarely visited a watch point of sale? 64% Not interested in luxury watches 14% Other 11% Intimidating store atmosphere 7% Prefer multi-brand store Why are you visiting a luxury watch retail store or point of sale? 5% Prefer to shop online 22
  24. 24. The HENRY path to purchase is fragmented, but ultimately they prefer the official brick and mortar store as their strongest preference for place of final purchase. 23 36% Online sources 31% Physical store 25% Word of mouth, friends 1. Official brick & mortar store Imagine that you are in the market for a watch. Where would you consider looking for information before making a purchase? 19% Search Engines 19% Watch brand site 17% Product reviews 14% Blogs 7% Social Media 2. Official online store 3. Physical department store 4. Travel to a store in another country 5. Online multi-brand store 6. Other (duty free, ask a relative…) After you narrow down your options, where do you prefer to make the purchase of the luxury watch?... Ranking:
  25. 25. Existing business models in fashion and luxury were tested for watches. HENRYs were most excited about the options that offered them customization and value for money. SHOW- ROOMING 3D CUSTOMIZED WATCH PRE-OWNED WATCH MARKETPLACE MONO-BRAND LOYALTY CLUB MULTI-BRAND RENTAL CLUB Visiting a physical showroom with staff but making the final purchase with full customization online Visiting a 3D printing workshop to customize a watch design Using a dedicated online marketplace for gently used luxury timepieces 47% 40% 37% 31% 30% Joining an online loyalty club for one brand. The brand can track my info and offer me special events or timepieces Joining an exclusive watch club, where I can rotate/rent special timepieces from multiple brands Percentage of people who agreed they would be “likely” and “very likely” to try one of these services: 24 i.e.: Blue Nile, Cezanne, Bonobos i.e.: NIKEiD i.e.: Vestiaire Collective, The RealReal i.e.: Sephora Beauty Insider Program i.e.: Rent the Runway, Bag Borrow or Steal
  26. 26. When it comes to prices, HENRYs current comfort zone is currently far under the starting price of luxury watches 25
  27. 27. When it comes to prices, HENRYs current comfort zone is currently far under the starting price of luxury watches 26 Range of Acceptable Prices $1,006 - $2,073 Point of Marginal Cheapness The price where the percent of respondents who think it is “too cheap” is the same as the percent of respondents who think it is “getting expensive”. $1,006 1 Point of Marginal Expensiveness The price where the percent of respondents who think it is “too expensive” is the same as the percent of respondents who think it is “a bargain”. $2,073 2 Indifference Price Point The price where the percent of respondents who think it is “getting expensive” is equal to the percent of respondents who think it is “a bargain”. $1,507 3 The price where the percent of respondents who think it is “too expensive” is the same as the percent of respondents who think it is “too cheap”. Optimal Price Point $1,250 4 1 2 3 4
  28. 28. HENRYs are willing to pay extra for smartwatch functionalities in the classic look of a watch model. Imagine that a traditional watch company is introducing a new watch that has the looks of a classic model, but the functionalities of a smartwatch. “I think luxury watches are for show-offs. I can at least see a little more logic in a digital watch with many features.” 27 11% 19% 24% 37% 10% Willing to pay a high premium Willing to pay a small premium Would want to pay the same price Would want to pay less Would want want to pay considerably less How much would you be willing to pay for the smartwatch in comparison to a normal luxury watch?
  30. 30. EVOLVE RETAIL EXPERIENCE TO OMNICHANNEL • 50% consider the in-store experience to be only good • HENRYs consider Apple to be a luxury brand (12 mentions) • 78% would rather spend on an experience than on a product • Store is still the #1 preferred place to purchase • 47% are likely to try show rooming • 31% would join an online loyalty club Provide a unique, more tangible experience in stores Identify key brand values according to customers to create stronger digital engagement • 15% downloaded a luxury app • 10% bought luxury items online • 1/5 access the Internet only through their mobile phones • 62% don’t engage online with luxury brands Create complementarities between online and offline 29
  31. 31. Enable interaction between HENRYs ENGAGE & COMMUNICATE TO HENRYS BASED ON THEIR HABITS & PREFERENCES Generate brand content and invest in search engines Interact with HENRYs through responsive online channels Communicate according to HENRY values, not only yours • 40% search online for information • 16% of offline purchasers did not find the needed info online • 58% expect to see brand-generated content online • 32% associate luxury watches with "Success“ • 67% don’t think luxury watches must be made in Switzerland • Look for “exclusive” options to download an app; they want to have the attention of the brand • 20% only access the Internet through their mobile phone • 40% are influenced in some way by their digital experience • 39% post product reviews • 25% of HENRYs rely on friends/peers advice when searching for a luxury watch 30
  32. 32. Offer entry products suitably priced for HENRYs OFFER ENTRY LEVEL ITEM FOR HENRYS • Optimum starting price for luxury watches is $1,250 • +30% disagree that it is the price of watch that determines it is a luxury item • Look for value for money items: the relative value in cost-per- use are important • 37% would be willing to pay a small premium for a smartwatch with a luxury/classic look • 10% would pay a high premium • 34% only window-shop • 19% are not interested in luxury watches Advertise "smart" functions as premium Widen sales to attract HENRYs Smartwatches – the new entry-level product Smartwatches today are on-trend and fit the price range 31
  33. 33. EDUCATE HENRYs Educate HENRYs on craftsmanship and value • Craftmanship defines a luxury watch for HENRYs • 23% associate luxury watches with privilege • 24% associate it with negative values • 62% do not engage online with luxury brands • 10% share a unique experience with the brand Involve HENRYs through "shareable" brand-experiences 32
  34. 34. BRAND CHECKLIST IS YOUR BRAND CONSIDERING THE FOLLOWING STRATEGIC ASPECTS TO ADDRESS HENRYS EXPECTATIONS?  High organic search ranking  Regularly published branded content  Mobile-friendly online experience  E-Commerce destination with detailed descriptions, multiple photos, & product reviews  Communications messaging around craftsmanship or success  A hands-on in-store experience that “wows”  HENRY-friendly “entry” level item that shows value for money  Unique brand experiences that HENRYs can share via social media 33
  35. 35. For further questions about the study, please contact: Olivier de Cointent: Ankit Punn: Anna Juenemann: Navin Mangalat: Helen Shih: