Gen Z is changing how and where luxury fashion is bought. Will gaming be the new frontier where luxury e-commerce brands reach them?
Gen Z, those born between 1997 and 2012, is currently the youngest shopping demographic but are already wielding their spending power and changing the face of a potentially surprising category, given their youth – Luxury. With a collective buying power of US$150 billion and growing, luxury brands would be wise to understand and engage this demographic.
In a recent survey, ESW found that 63% of respondents aged 18-34 purchased luxury goods in the past six months, and 27% of those made their luxury purchase from a country outside their own, showing luxury brands that Gen Z is a viable and growing market for cross-border e-commerce brands.
Gen Z and Luxury
Millennials and Gen Z together accounted for 32% of all luxury sales in 2017, a figure which is expected to increase to 45% by 2025. While Gen Z currently accounts for 8% (2021) it’s a rapidly growing share.
Sarah Willersdorf, partner and managing director at BCG, said in a 2020 report about the opportunity Gen Z represents, “Today Gen-Z represents only about 4% [in 2020] of the true-luxury market, but we can’t underestimate them because of their low-purchase rate… they have a powerful influence in the market and have a different set of values and ideals than even the Millennials.”
Luxury apparel, Gen Z and games
Thanks to games such as Nintendo’s Animal Crossing, luxury fashion has moved even further into the digital realm. The game allows players to assume the role of a character who arrives on a deserted island and partakes in everyday activities like fishing, planting trees, and building a house. It lets users customize every aspect including clothes and before long, savvy fashionistas were recreating designer looks for their characters.
Noticing this, fashion designers soon jumped on board. One of the first was New York designer Sandy Liang who hosted a virtual pop-up on her Animal Crossing island where users could download recreations of her SS20 and FW20 collections. Soon other designers such as Marc Jacobs and Valentino had jumped on board.
Payments app Klarna announced a partnership with stylist and DJ Micah Mahinay to bring a live shopping experience to the game by launching a competition where a limited number of users can win their ten favorite streetwear pieces to wear in the game. However, in a real-life twist, gamers can actually win the pieces by posting a photo of the experience on Instagram. According to David Sykes, Head of US at Klarna,
“With the growth of e-commerce, the fashion industry is increasingly leveraging experiential technologies such as virtual events and gamification to reach new audiences and drive business growth.”
WeChat, the messaging and social media app, is also getting on the trend by creating characters dressed in Burberry Summer Monogram pieces for its B Surf We Chat Mini game. WeChat games are hugely popular in China where the app originated. In 2020, some 500 million monthly active users played WeChat mini-games (half of all users).
Gucci has partnered with app Zepeto allowing users to dress their avatars in Gucci’s latest collections, in a move designed to increase brand reach. The brand has dabbled in innovative technological opportunities before, such as a partnership in 2018 with app Genies, which allowed avatars to be dressed in luxury apparel.
Gucci and The North Face have also launched pieces from their collections on Pokémon GO where players are able to dress their avatars in shirts, hats, and backpacks and is available at 100 PokéStops around the world, including Gucci flagships and pop up stores where players can shop the collection in real life.
With the games market worth US$174.9 billion in 2020, and users spending US$36.6 billion on in-app purchases it’s obvious that this is a trend that isn’t going away any time soon.
What does the bridging of fashion and gaming mean for luxury e-commerce brands?
Looking to the future, it’s clear that new generations and the development of new technologies are going to change the way people shop, as well as how brands can reach potential shoppers and respond best to their needs. For luxury brands, focusing on this cross-over between technology and youth will be key to reaching a growing demographic primed to shop.
Katherine Cremer, Research Analyst, ShopX team, ESW, said,
“Gaming as a type of experiential marketing is where luxury brands should be focusing their future efforts on to capture the next generation of shoppers – Gen Z.”
Staying on top of trends is essential for luxury brands, which were in many cases slower to move online and embrace digital, particularly as it can be difficult to assess what is a passing trend and what is here to stay. Gaming, and the particular opportunities it presents, is one trend that Luxury is already at the forefront of, but that engagement will need to continue evolving in lock-step with the industry. Embracing social commerce and mobile accessibility is key to being able to pivot in response to new innovations and hit the ground running, as well as appealing to Gen Z – the future of luxury.