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How Gen Z Influencers Are Shaping Luxury Brand Futures

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What possible impact could a teenaged boy have on the fortunes of luxury brands like Gucci (NYSE: GUC), Rolex, and Burberry (NYSE: BRBY)? As I recently learned firsthand, more than you might imagine.

I was packing for a recent business trip when my 15-year-old son appeared in the bedroom doorway, leaned against the jamb, and asked, “Dad, what are you going to be flexin’ in New York?”

“Flexing? You mean going to the gym?”

“No! You know, like how about wearing your GMT Master Batman Rolex? Or get a Gucci belt. Get your flex on, Dad!”

The term was new to me but not to my Gen Z progeny. It appears in rap lyrics and YouTube videos of performers boasting, fanning wads of cash, and other demonstrations of prosperity or bravado. Interesting to know, but not nearly as interesting as the fact that my teenager is embracing the luxury brand ethos and wants to share it, to influence me.

As a provider to retailers of predictive analytics and other tools, this was a fascinating bit of accidental research, the kind that is invisible to data crunching, focus groups, and trend lines. I had the bit of curiosity in my teeth. Not long after, I was at an industry event in Las Vegas and ran into a Wall Street analyst I know. The first things I noticed were his Gucci slip-on loafers, his Gucci blazer, and his designer belt.

Soon after that display of flexing, I had dinner with a twenty-something business news reporter. At one point I asked her, “If I gave you a million dollars to spend on clothes and such, would your first instinct be to spend it on well-known brands?”

Without hesitation, she said, “Absolutely.”

The final bit of evidence that we’re in an uptick in the luxury brand cycle is that after years of “de-branding” that accelerated during the Great Recession, companies like Burberry are re-flexing their brands. For $790, Burberry will sell you a loose-fitting cotton shirt with leather trim and the name “BURBERRY” printed in huge red letters across the chest.

What’s happening here may be as significant as what happened during the late 1970s and into the 1980s, when young urban professionals became Yuppies, drove BMWs, and—in urban centers like New York—shopped at Ralph Lauren (NYSE: RL). Now, as then, young people are putting a high value on status. As a result, Generation Z has become a target for marketers who are aiming via social media at what would seem to be unlikely influencers.

In a feature article last fall—“Meet the 9-Year-Old Telling You What To Wear”—the Wall Street Journal profiled such a child, a fourth-grade fashionista named simply Giana (her last name is never used).  Giana has an artistic streak, models a line of “streetwear looks,” and posts her photos and likes for more than 20,000 followers on Instagram. She has been recruited by brands like Nike (NYSE: NKE), which is collaborating with her on a line of shoes.

This is a very different world from the one in which most of us came of age. Youngsters like my son are in the first generation that grew up with the Internet, cell phones, etc., and are much savvier than their parents about social media. A chosen few are being recruited by marketers to reach the roughly 67 million Americans who were born between the late 1990s and a few years ago, a group which directly or through parents is estimated to have nearly $45 billion in purchasing power.

More profoundly, it is established social science that affinities developed during childhood are enduring. Baby Boomer boys will recall that Dad’s favorite gas station gave away or sold branded toys, such as miniature gas stations or tanker trucks. When those kids grew up they bought the brand of gas that Dad bought. Gen Z and the brands they are flexing today are shaping the future in a way that’s never before been possible.

There’s another element to this phenomenon that social scientists say we haven’t experienced since the Great Depression. Writing in the Wall Street Journal last September, Janet Adamy, who writes about demographics, observed that the 17 million members of Generation Z who are now adults and starting to enter the workforce, “came of age during recessions, financial crises, war, terror threats, school shootings and under the constant glare of technology and social media.” Adamy suggests that, compared with older population cohorts, they are “more industrious and driven by money,” and thus more attracted to traditional high status, high-perceived-value brands.

In a recent conversation with Milton Pedraza, CEO of the Luxury Institute, a research and business solutions firm, he agreed that, “Luxury and prestige logos are back with a vengeance. In today’s luxury world, brand influencer power is often reversed, with connoisseur teens guiding their parents as to which brands are hot, and which ones are not. Whether or not luxury brand stewards realize it, the influential power of Gen Z spans categories and generations”.

Brand managers should be paying close attention to the youngest generation now so that when these influencers become customers and decide to “flex,” the products they fancy are on store shelves or ready to ship. For Gen Z, it will be more important to have the items they want to buy in stock than it is for Millennials and older generations to be offered items that surprise and delight. Where other generations want to stand out, Gen Z consumers tend to want to fit in.

For marketers, trial and error is a risky, inefficient strategy for determining how best to serve this unique market the way it is used to—better and faster. Instead, brand managers need to become more savvy and nimble about leveraging technology and predictive data. There are a number of companies that can help solve this “voice of the customer” challenge. To be competitive in the future, luxury brand executives should be tapping into these predictive resources today.