LUXURY MILLENNIAL SHOPPERS. Trends & Insights to Reach Luxury Millennial Consumers

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1 LUXURY MILLENNIAL SHOPPERS Trends & Insights to Reach Luxury Millennial Consumers

2 As consumer behaviors shift towards a more digital, social and experiential economy, so does the luxury industry. Both emerging and established luxury brands are constantly working to reinvent themselves, connect digitally and capture the heart of the next luxury consumer. Millennials are still willing to spend money on things they care about but they find greater value in experiences, lifestyle enhancement, positive impact and social media currency, rather than in physical products themselves. The luxury brands that understand this mindset shift and shape their brand by these new rules are winning over the next generation of big spenders. Let s break down the numbers behind today s major players, and next generation of luxury leaders.

3 Top Luxury Brands: Online Market Share Website Visit Share Michael Kors 23.60% Ralph Lauren 21.84% Top Luxury Brands Today In terms of online market share, Michael Kors, Ralph Lauren and Coach reign supreme; the three of them take 63.5% of the share of online visits to the luxury apparel industry. Louise Vuitton, Gucci and Chanel are the next major set of luxury players. Coach Louis Vuitton * Gucci Chanel Dior Hermès * Salvator Ferragamo Christian Louboutin * Yves St Laurent 18.06% 9.25% 6.10% 5.23% 1.79% 1.67% 1.62% 1.46% 1.37% * Versace 1.36% Prada 1.32% * Tom Ford 1.29% Marc Jacobs 1.01% Giorgio Armani 0.99% Burberry 0.86% Jimmy Choo 0.66% Dolce & Gabbana 0.53% * Top Millennial brands - see next page

4 Highest Percentage of Millennial Audiences Top Luxury Millennial Brands This chart ranks top luxury brands based on the percentage of their audience that is years old. Several luxury brands that fell in the middle of the pack for online market share, such as Versace, Tom Ford and Yves Saint Laurent, emerge with the largest proportion of Millennials in their audience. Website Versace Tom Ford Yves St Laurent Gucci Salvator Ferragamo Christian Louboutin Marc Jacobs Giorgio Armani % Millennial Traffic 45% 41% 41% 40% 39% 39% 38% 38% An important distinction... Although Versace s audience consists of 45% Millennials, they remain a relatively small brand. Therefore Versace s year old audience only represents 1.8% of the available Millennial luxury market whereas a brand like Gucci (who has a 40% Millennial audience) captures 7.15% of the available Millennial market, simply by being a larger brand. Dior Louis Vuitton Dolce & Gabbana Prada Michael Kors Coach Ralph Lauren Chanel Jimmy Choo Burberry 38% 37% 36% 36% 34% 32% 32% 32% 32% 30% Hermès 28%

5 Millennial Market Share Over Time Let s explore how the top five Millennial luxury brands fared at engaging year old luxury consumers over the course of a year in How did events, sponsorships and social media affect their ability to capture a larger market share of youthful consumers? 2016 Visit Share Top Millennial Brands 70% Tom Ford Salvatore Ferragamo Versace Yves Saint Laurent Gucci 56% Millennial Visit Share 42% 28% 14% 0% January February March April May June July August September October November December As you can see, Gucci pulls a huge share of luxury Millennials, simply by being an older, larger company. Gucci has always maintained a youthful, edgy approach to high fashion, renowned for their progressive embrace of gender fluidity and androgyny, bold granny chic florals and Instagram-exclusive model interviews. However, it is interesting to note that Gucci struggles maintain their majority Millennial market share during the holiday season. Meanwhile Versace the luxury brand with the highest percentage of year olds in their audience saw a record jump in Millennial market share around June of 2016, when superstars Gigi Hadid and Karlie Kloss modeled for Versace s fall campaign. A few months later the youthful Versus Versace line announced their recruitment of Gigi s popstar boyfriend, Zayn Malik. Versace does an outstanding job leveraging megastars that young people idolize, and connecting with Millennials through racy videos, celebrity-laden social media content and digital experiences; Versace has similar traffic volume to Tom Ford, Yves Saint Laurent and Salvatore Ferragamo, and yet has more Instagram followers than all three combined.

6 Not All Millennials Are Created Equal Of course, it s worth remembering that Millennial encompasses a vast, diverse population year olds include young teenagers in high school, as well as 34 year old career moms. How do age demographics differ amongst top luxury brands? Versace s audience skews heavily Millennial, but on the older side; they are 47% more likely than average population to be older Millennials (aged 25-34), and 32% more likely to be younger Millennials aged Versace attracts younger Gen X consumers as well, as they are 23% more likely to be aged Versace Age Index * +47% +32% +23% % -36% -45% * What is Index? To learn more click here.

7 Although their Millennial index is not as high as Versace s, Gucci skews youngest first. The Gucci audience is most likely to be years old, followed by year olds and a very small over-index for year olds. The largest segment by far is year old women, who are 58% more likely than the average consumer to visit Gucci.com. Gucci Age Index +31% +27% +6% % -12% -36%

8 Compare the previous two brands to Michael Kors, the largest luxury brand with nearly a quarter of the entire digital luxury market share. Michael Kors is doing well with older Millennials, but noticeably failing to reach year olds. Young Millennials are less likely to engage with Michael Kors than senior citizens are, which does not bode well for the future of their brand. Michael Kors Age Index +20% +17% +3% % -10% -18%

9 Old vs. New Luxury Attitudes Older vs. younger Millennial consumers also think and feel differently about the value of physical products, particularly designer products. For example, younger Millennials (18-24 year olds) are 38% more likely than the average person to agree that wearing a designer label improves a person s image. Meanwhile, older Millennials are only 2% more likely than average to agree with this notion. From there, agreement dwindles by age, meaning older consumers are less likely to perceive a designer label as carrying inherent social capital. These distinctions manifest in the attitudes of particular brand audiences as well. The Versace audience (which is the most Millennial) is 38% more likely than the average person to agree that a designer label improves a person s image. The Gucci audience, which also skews Millennial, is 25% more likely to agree. Although Michael Kors has the largest luxury market share, their audience is surprisingly less likely to be invested in the importance of designer labels. A designer label improves a person s image 38% 25% 4% more likely to agree more likely to agree more likely to disagree

10 This Millennial lag has not caught up with brands like Michael Kors, Ralph Lauren or Coach quite yet; their share of year olds may be relatively small, but their luxury market share still looms large. However, there are hints that edgier, more Instagram-savvy brands are captivatig the next generation of luxury shoppers. Michael Kors has only been around since the 1980 s yet appears to have stagnated its hold on young consumers. Meanwhile Gucci has been around for nearly a century, but manages to reinvent itself by pushing the boundaries of experimental, unapologetic fashion and digital marketing. The fact is, Millennials care more about what luxury goods say about them than the products themselves. Luxury consumerism is about making a statement, creating an experience, building social capital and making an emotional connection to celebrities. To buy a Versace dress that Gigi Hadid wore is to feel part of her world, connected to something more glamorous and opulent than ordinary life (and of course, to capture your abundance on social media). Source: Data in this report was pulled using Hitwise s CI & AudienceView tool, based on visitors to top luxury brand websites. Top luxury brand visit share and Millennial visit share lists pulled over the month of December, Millennial visit share graph charted over the year of Age demographics and attitudes pulled over a 4-week period ending 2/18/2017.

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