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Score more jewellery sales by bridging the generation gap

The luxury retail market is dominated by two conflicting generations: Baby Boomers and Millennials. ANGELA TUFVESSON investigates which segment, if any, is more valuable to jewellers.

Marketers have long predicated a day when Australia’s $2 billion luxury-retail industry will be driven by the needs and preferences of two prominent and often conflicting generations: wealthy but ageing Baby Boomers and brash, consumer-centric and much-maligned Millennials.

Boomers have enjoyed greater financial freedom than any previous generation yet they have now passed their income-earning prime and are transitioning into retirement. Millennials, on the other hand, have decades of wealth accumulation ahead of them. Their thirst to feed curated identities is so pronounced that it signals a paradigm shift in future consumption patterns.

So which is the more valuable consumer group for luxury retailers? Or, is it best to target both Boomers and Millennials simultaneously? Jewellers who understand each generation, what they value and how they spend their money are best placed for success in what is an increasingly fragmented and dynamic retail environment.

Meet the generations

Favourable economic conditions after the end of World War II gave rise to a global baby boom that continued until the early 1960s. Fast forward three decades and the Boomers began to have families of their own, heralding the arrival of the Millennials – Generation Y, as they’re often known locally.

Now aged 52-70 and 22-36 respectively, Boomers and Millennials are the country’s two largest demographic groups in terms of population. According to Mark McCrindle, head of social research firm McCrindle, Australia is home to 5.17 million Boomers and 5.22 million Millennials.

When it comes to wealth, Boomers have benefited from unprecedented economic conditions and own more than half of Australia’s wealth despite comprising only one quarter of the population.

“The 25-34 age group have net wealth of $268,000, while the 55-64 age group have net wealth of $1.2 million dollars,” McCrindle says.

The tables are turned when looking at the area of income, with Millennials out-earning Boomers.

“The Millennials are earning more and increasing their earnings, and the Boomers are earning less and decreasing their earnings,” McCrindle explains.


“The Boomers are starting to ease out of full-time roles, while the Gen Ys are in their key wealth-accumulation years.”

What’s more, McCrindle research indicates the decades ahead are likely to see the biggest intergenerational wealth transfer in Australian history as the Boomers pass their wealth onto their next of kin – the Millennials.

The difference in value

Boomers and Millennials might be Australia’s largest spenders but there are few similarities in how and why they spend.

“For Baby Boomers it’s about quality, it’s about value and they’re prepared to pay more,” McCrindle says of the motivations behind luxury purchases. “They are very much influenced by traditional brands and a sense of quality and reputation that is associated with a brand.”

Social approval matters little for Boomers, explains Gill Walker, managing director of Evergreen communications agency, a firm specialising in mature-age consumers.

“As people get older they tend to buy things based on need or experience. Boomers might still buy luxury but it will be a luxury experience over a luxury item.”

For jewellery, Walker says this might involve visiting a famous diamond site or travelling to Western Australia to source pearls.

According to Sharon Graubard, founder of US-based trend forecasting firm MintModa, Boomers are adding to an existing collection of luxury goods.

“They are looking for more statement pieces and are still influenced by the status factor, the designer label, the pedigree,” she says.


Much of the fuss over Millennials centres on not-so-flattering observations – the media asserts regularly that this generation has never known economic hardship and is careless, narcissistic, lazy and disloyal; however, Brian Mitchell, co-founder of Millennial brand strategy specialist HOW&Y, believes Gen Y is changing the fundamental ways people consume.

“Occasionally a development occurs that not only changes the rules but changes the game,” Mitchell says. “Gen Y is a paradigm shift.”

Mitchell says that a focus on self-esteem, celebrity culture, social media and technological saturation are the driving forces behind the emergence of the Millennials. “Millennial lifestyle decisions are driven by values, not needs, and that is the most fundamental difference,” Mitchell comments.

“Products such as jewellery are vehicles for self-expression. As such, they’re at the nexus of two intrinsically-important Gen-Y values: image – how the world sees them – and identity – how they see themselves. This is the first generation in history to privilege image over identity.”

For Millennials, Mitchell continues, the notion of heritage is a negative unless it has the capacity to be turned into fun and quirkiness: “When it comes to the aesthetics of personal fashion, Gen Y is far more inclined than other generations to asymmetry and deliberate mismatching of items. They will buy brands but they will use them differently to the way Boomers use them. Whereas Boomers worship the brand and its heritage, Gen Y take the brand and heritage and add their own style and personality, often through quite whimsical presentation.”

Graubard agrees, explaining that Millennials look for an experience, the story behind their purchase and are more influenced by word of mouth when making luxury purchases. Brand value is not inherent in the brand; rather, it’s influenced by peers.

“Millennials look for authenticity, individuality and self-gifting,” Graubard says. 

“They are also looking for that brand experience they can share on social media. Millennials are more likely to see themselves as their own brand and seek items that will fit into their own curated identity.”

Interestingly, Goldman Sachs reports that Millennials are much more likely to be driven by price than Boomers.

The medium is the message

Such are the fundamental differences between Boomers and Millennials that it may seem impossible to target both consumer groups; however, the experts Jeweller consulted agree much can be gained from marketing to both segments.

“Younger people are a better target market for any luxury goods market than those who are 45 and older but you need to keep thinking about Baby Boomers because they have been such a large target market for so many years,” Unity Marketing founder Pam Danziger says. “Millennials have not yet reached their income peak and it won’t be until 10 years from now, about 2026, that we’re going to see a significant number of Millennials really making an impact on the luxury market.”

The trick is to use different strategies and media to reach each segment as it’s tricky to target both groups with the same approach.

“Targeting both of these markets is made easier by the fact that they frequent different media,” Mitchell explains. “It’s a question of targeting your messages to suit the target and appealing to them using different media and platforms.

Don’t sacrifice one market for the other; have a strategy for Boomers and a strategy for Millennials.”

One example of a dedicated Gen-Y strategy that retailers may be able to leverage is the recently launched ‘Real is Rare’ campaign, in which the Diamond Producers Association positions diamonds as the rare, precious and real connection that Millennials crave. The slogan has drawn comparisons with De Beers’ iconic ‘Diamonds are Forever’ campaign of the 1940s and seeks to make an authentic connection with a new generation of engagement ring consumers.

Likewise, UK-based jewellery retailer Taylor and Hart (previously Rare Pink), which specialises in custom-made engagement rings, conducts much of its communication with its Millennial customer base via mobile messaging app WhatsApp. Taylor and Hart CEO Nikolay Piriankov says his staff use the desktop version of the messaging app to share images and talk through the particulars of customers’ designs.

“We planned to communicate in the usual e-commerce ways but we soon realised that what people wanted was to communicate on their own terms,” Piriankov comments. “It’s really helpful for the customers because they can easily see the story of the communication.”

Piriankov says most of Taylor and Hart’s customers, who are typically aged 25-35, now prefer WhatsApp to phone calls but concedes that email remains the preferred medium for important information and order confirmation. He adds that WhatsApp is reserved for customers who choose to use the medium as their preferred form of contact with Taylor and Hart, and it’s never used for promotional purposes.

Both Piriankov and Danziger agree that despite Millennials’ digital native status – research by Synchrony Financial confirms Millennials are more likely than Boomers to use their mobile phone for interactive shopping tasks – they prefer to make luxury purchases in-store and use digital tools for research and post-sale communication rather than purchasing.

“There’s a lot of talk about how Millennials are digitally active and going to be making purchases online but it’s a risk when we talk about jewellery in particular,” Danziger states. “Maybe for fashion and costume jewellery but when it comes to fine jewellery there’s still an important component of touching, feeling and examining the jewellery pieces directly. So while Millennials are doing a lot of pre-shopping research online, to assume that they are going to make a good portion of their fine jewellery purchases online is a mistake.”

Crucially, Danziger doesn’t see Millennials changing their preference for in-store purchases in the near future.

When it comes to Boomers-specific marketing, it’s hard to look past the ‘advanced style’ phenomenon. As documented in photographer Ari Seth Cohen’s popular blog of the same name, the movement sports 95-year-old flamboyant nonagenarian Iris Apfel as its poster girl and is devoted to older Boomers who embody a unique, age-defying personal style. It’s led to brands better known for targeting young women like fashion label Saint Laurent teaming up with Joni Mitchell and beauty company L’Oreal with Twiggy and Helen Mirren.

Joni Mitchell
Joni Mitchell's Saint Laurent campaign
A Kate Spade campaign featuring Iris Apfel
A Kate Spade campaign featuring Iris Apfel

Research by Roy Morgan found Australian ‘advanced stylers’ are likely to be drawn to all-ages brands like David Jones, Myer and Target, which Danziger says is reflective of Boomers’ youthful consumer preferences.

“What we’ve seen in the marketplace is what’s good for Millennials also has a lot of appeal to Baby Boomers,” Danziger states, “but the reverse isn’t true – what appeals to Baby Boomers doesn’t necessarily appeal to Millennials. Boomers think of themselves as 25 years old; they feel youthful. If you want to err on the side of caution, make your store more Millennial friendly and you’ll probably find it’s a good space for Baby Boomers also.”

For retailers who’ve long targeted Boomers, McCrindle advises that it’s time to start looking to the future and the opportunities offered by younger demographics.

“Baby Boomers are moving past their working years so income is not there,” he says. “They’ve got some wealth and investments but they’re not in the wealth-accumulation phase any more. Plus, they’ve got what they need and they’re starting to think about lifestyle experiences and not just accumulating more.”

Graubard agrees: “Boomers will be become less important as they age out and Millennials will become even more important as they move forward in their careers. Millennials and Gen Z [born from 1995 onwards] represent the most influential demographic going forward.”

Ultimately, McCrindle says the ageing population is a plus for jewellers looking to build lasting relationships with customers over many years, regardless of the generation label: “We’ve got an ageing population because we’re living longer, and what that means for retailers is the lifetime value of consumers has never been greater because their active consumer years are longer. The value isn’t just focusing on each individual generation but retaining the generations and building long-term rapport.”

Jewellers who successfully tap into Millennial desires and adapt to the inevitable changes and challenges this segment will undergo over its lifetime look well positioned to navigate the generational differences with confidence and relative ease. Of course, this is also true of those who support the Boomers’ transition into the retirement years. The course is now set for bridging the generation gap.

The forgotten generations

Sandwiched between the Baby Boomers and Millennials, Generation X – aged 37-51 – are in their prime income generation years.

“The Gen X population is in the sweet spot right now at the highest levels of their income,” Unity Marketing’s Pam Danziger says. “They are the prime target market today of luxury brands but they are significantly smaller than Boomers and Millennials.”

Mark McCrindle, head of social research firm McCrindle, says Generation X has annual household earnings of about $20,000 more than Millennials and a household net worth of $573,000; however, their pre-paradigm shift consumption attitudes are similar to the Boomers.

“Gen X follow on from the Baby Boomers – they are financially conservative, avoid credit and are wired to save up and pay off their home loan,” he says.

Meanwhile, research examining Generation Z is very much in its infancy. McCrindle believes this generation – born from 1995 onwards – won’t have the same impact as the Millennials and may actually behave more like their Gen-X parents than their Millennial elder siblings.

“The pendulum is swinging back with Gen Z to being a little bit more conservative,” he says. “Gen Z know they need to compete, work pretty hard, get an education and so on. Home ownership is slipping out of reach so they’re going to have to work hard and save hard.

“We see that the Gen Zs are quite a conservative generation. While luxury and quality matter to them, they’re also savvy and astute and really looking to make the most of what they have. They’re likely to ease back on lifestyle and be a bit more pragmatic when it comes to finances.”

Millennials and Boomers may dominate the current consumer landscape but jewellery retailers who understand the forces that have helped shape Generations X and Z have much to gain as these demographics mature into luxury consumers.

 












ABOUT THE AUTHOR
Angela Tufvesson

Angela Tufvesson is a journalist with 10 years’ experience writing for many of Australia’s well-known consumer and trade magazines. She is a freelance contributor to Jeweller reporting on various aspects of the jewellery industry.









Monday, 18 June, 2018 07:41pm
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