Smartphones and social media are key for sales of luxury products to millennials

Attitudes are not what differentiate millennials, but rather their presence and use of social media.  These are some of the findings of a report headed “Luxury surrenders to Internet, the role of the millennial generation”, drawn up by IE Business School and Mastercard’s Observatory on the Premium Market and Premium and Prestige Products, with the collaboration of Condé Nast.

The role of social media is clearly a differentiating factor in the case of millennials who consume luxury products and services. According to the report, these millennials are capable not only of spreading the message, but also of constructing part of it. "Millennials generate their own content and non millennials are merely disseminators of official content. These facts have major implications for luxury firms, given that they mean that a company’s strategy may need to be modified,” says IE professor David Millán, who headed the report. “Hence we see that companies no longer have total control over their messages and content, given that millennials, by generating their own content in the purchasing process, influence the firm’s capacity to create its own messages.”

The smartphone phenomenon has accelerated the purchasing process

The smartphone is speeding up the purchasing process for every generation, but even more so for millennials. The smartphone is now an essential for luxury companies. There are three main reasons for this. First, because it grows levels of consumption, because the increase in online sales is related to convenience and the smartphone is the preferred device for going online and making purchases. “Millennials are directly linked to their smartphones, which they see as their main purchasing tool,” explains Eva Ruiz, director of Marketing at Mastercard Iberia. “That’s why at Mastercard we are working to constantly innovate in order to offer a smartphone payment experience that is safe, fast, and reliable. One example of this is Masterpass, which arrived in Spain last autumn. It is a digital payment solution that permits users to make purchases fast while enjoying the highest standards of security.”

The study also shows, however, that physical shops are still the cornerstone for luxury firms, serving to complement online purchasing.  "Value creation in the luxury sector is based on a combination and not on substituting online purchases for in-store shopping. This is where the true value of digitalizing business models lies," says Millan.

The report also shows how consumers value convenience and variety when shopping online, while the motivations that underlie in-store shopping are more related to the sales experience. “Generation X is still the biggest consumer of luxury goods. In a few years’ time the millennials will take over. They will be the first generation of digital natives. This study gives us key information about their behavior, their values, and their priorities. It provides a manual for brands who want to reach them", says María Eugenia Girón, executive director of the IE Business School and Mastercard Observatory of Premium and Prestige Products. “This backs up the belief that luxury firms have enormous potential when it comes to leveraging and integrating a sales strategy designed to conquer new digital spaces.”

Finally the report highlights that millennials’ attitudes to luxury goods do not constitute much of a change. Contrary to popular belief, the drivers of how they view of luxury goods and services do not appear to be very different to those of previous generations, being based squarely on a perception of quality.

About the study

The report “Luxury surrenders to Internet, the role of the millennials generation" was drawn up by the IE Mastercard Observatory on Premium and Prestige Products in collaboration with Conde Nast. It is based on a survey carried out among 4,000 pertinent consumers. The study was carried out by the luxury firm consultant and IE Business School professor of strategy David Millán Planelles.