Millennial Spending Habits are Redefining the Luxury Industry

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In the 1980s, conscious consumption was the buzzword when it came to luxury goods. During this time, global brands like Tiffany and Co., Cartier, Louis Vuitton, and Christian Dior were all the rage. 

Today, however, things have changed drastically. This shift is thanks to the current generationís more socially aware spending habits and the drive towards sustainable and ethical production of both goods and services.

Currently, Millennials and Generation Z make up 85% of all sales for luxury goods worldwide. However, this comes with a serious catch. They are more likely to buy from brands whose ethical stances are aligned with their personal values. As a result, many of today’s luxury brands are racing to evolve in keeping with the push towards sustainability and ethical production.

The tale of the tape

A recent study from data gathering company Nielsen shows that 73% of the Millennials surveyed would be willing to spend more on products made by brands that are either socially relevant or adhere to ethical production practices. 

Likewise, 81% of the Millennials surveyed also expect transparency from the brands they buy from and speak openly regarding sustainability and social responsibility initiatives.

But this poses a challenge to existing brands: they need to evolve considerably to keep up with the push towards ethical and sustainable luxury. Indeed, the concept of philanthropic luxury retail is gaining sway as consumers expect upscale brands to show that they care for the environment and for the people who craft their goods for them.

Pivoting towards sustainability

Many luxury brands now need to consider embracing the wave of change to present themselves as thoroughly sustainable establishments. The genuine implementation of environment-friendly business models is key here. It needs to start from the ground up as opposed to a spur-of-the-moment initiative.

Take, for example, how Tiffanyís has pivoted from the entire “blood diamondĒ scenario. Indeed, the jewelry company currently upholds a zero-tolerance policy against buying diamonds and other gemstones from conflict-riddled nations with serious human rights issues. 

Likewise, the company is also raising awareness regarding responsible mining. One of their key philanthropic initiatives has to do with reef conservation.

In these electronically connected times, even the most well-established luxury brands need to change the ways by which they think and operate. Transparency regarding their purchasing and production practices will play a key role here. 

In addition, brands need to draw the admiration (and loyalty) of younger, more dynamic markets, particularly those whose purchasing decisions are defined by their values, concern for the earth, and the welfare of others.