Millennials will account for half of global luxury spending by 2025, predicts Boston Consulting Group. The challenge for luxury brands will be how to engage this generation that has grown up with digital technology, while still catering to older buyers of high-end goods.

Leah Anathan, chief marketing officer, Qubit

Leah Anathan, chief marketing officer, Qubit

There’s been plenty of talk about how millennials are killing the breakfast cereal market, casual dining, department stores, cable TV, etc. This has generated considerable backlash. And, while some of this is understandable, it also deserves some pushback, because millennials are actually “disruptors” in their own right.

This is also true when it comes to the luxury retail market. According to Boston Consulting Group (BCG), by 2025 the global luxury market will top $1.5 trillion and 50% of those luxury product buyers will belong to the Millennial Generation.

Millennials are a generation that has grown up with technology and they expect to quickly find products and services, with very little hassle or friction. The challenge for high-end brands is to accommodate all of their customers’ needs; appealing to millennials while at the same time making sure their ‘traditional’ VIPs are being catered to.

Digital will disrupt the entire luxury value chain and necessitate a holistic redesign of the technology ecosystem, with an emphasis on luxury experiences over products.

Re-creating the in-store shopping experience online is easier said than done, but there are many luxury retailers that are two-steps ahead of the game. Bain & Company’s new Global Personal Luxury Goods Market report confirms this, stating: “Digital will disrupt the entire luxury value chain and necessitate a holistic redesign of the technology ecosystem, with an emphasis on luxury experiences over products.”


Balancing online and offline retail

Striking the right balance between increasing traffic to physical stores and catering to a new generation of luxury shoppers is tricky, but not impossible. Brands that embrace this balance and nurture the digital experience will be better able to adapt their business models to the increasing number of younger shoppers that prefer to shop for their favorite luxury goods online. Data tells the story: by 2025, nearly one-fifth of personal luxury sales will take place online and the contribution of online luxury sales will triple, reaching $91 billion by 2025. (McKinsey, The Age of Digital Darwinism)

Rather than just creating a functional website that’s more of an online catalog than anything else, luxury companies must create a slick, on-brand digital experience that mirrors the in-store or runway experience. Some of the personalization methods that luxury brands are currently employing create a consistent experience between physical and digital stores by recognizing repeat customers when they return to their websites and tailoring the experience as if they just arrived in-store. For example:

  • On a first-name basis – Repeat luxury shoppers that are loyal to their favorite brands are treated like friends and family when they return to their local Gucci or Louis Vuitton store. It’s possible to mirror this online by addressing them on a first-name basis and remembering all of their past visits and purchases when they return to the website.
  • Customized Reminders – Luxury beauty brands can capture what their customers purchased last and remind them when it’s time to buy that night cream or vitamin C serum again. This not only jogs a customer’s memory, but also allows the customer to skip steps, or barriers to purchase.
  • Serving the right product recommendations – Shoppers like recommendations as long as what you’re recommending is relevant to them. Using customer journey data from what the shopper has purchased or put into their “basket” before, recommendations can be very specific and make customers feel welcome and understood.
  • Remembering their last purchase – Using data from past purchases can help a retailer to recommend the right size for an item of clothing that’s just been selected. This same data can also indicate what price range this shopper prefers, and their typical basket value.
    Armed with this information, savvy ecommerce teams can reorganize the products by price range, leaving items that are far below or above the shopper’s typical price point, at the bottom of the scroll. The experience is not unlike a sales assistant asking the basic question, ‘what price range were you looking to spend’ and promoting the products within that range.

Creating a brand-aligned experience online is just one-way luxury businesses can encourage repeat visits and increase customer loyalty. A recent Accenture report backs up this theory: their findings claim 91% of consumers are more likely to shop with brands that recognize, remember, and provide relevant offers and recommendations.

Luxury market challenges

Like the retail industry at large, luxury retail is facing its own set of special challenges. Bain reports the growth of luxury product revenues have flattened due to regional economic changes in the U.S., Europe and the Middle East, while sales in Mainland China, Japan, Indonesia, the Philippines and Vietnam are booming.


And, there are a myriad of other market forces luxury retailers will have to contend with, such as, global trends towards social responsibility and sustainability. Bain points to a major paradigm shift in consumption favoring access over ownership, giving rise to pre-owned luxury goods marketplaces like The RealReal and FashionPhile, and luxury rental companies like Rent-the-Runway.


As the entire retail and luxury market continues to transform, it’s clear that the winners will be those brands that can deliver customer-centric strategies which are aligned to the preferences of millennials.

The ability to embrace a new digital-first business model while maintaining the classic luxury experience is doable, and in fact, a necessity for success today.

Qubit provides personalization software to online retailers and brands.