How to unlock Gen Z's luxury spending power

In 60 seconds…

• If luxury brands are able to capture Gen Z consumers’ attention now, they’ll capture their spending way into the future as they climb the salary ladder. 
• Whoever you are, TikTok is an absolute must for those wanting to capture Gen Z’s spend. 
• Creators boost luxury brands’ popularity by introducing them to younger, more diverse audiences.

To win over the hearts and minds of Gen Z, brands need to adapt and develop their strategies and messaging. Those are just facts, people.  

And guess what, luxury brands. You’re no exception.

In 2024, we’re starting to see luxury brands move away from ‘traditional’ branding and embrace the values most important to Gen Z. But what’s the secret to success?

In this blog, we dive into the world of Gen Z’s spending habits, share how luxury brands can capture the attention of Gen Z, and share a winning case study to spark some juicy inspiration. 

Why should luxury brands want to market to Gen Z?

Here are two pretty clear facts. 

One: luxury brands are known for stocking high-ticket items. 

Two: money is tight for everyone right now. 

As a luxury brand, you might think these two statements are working against one another. However, you’d be mistaken. 

Here’s a stat to startle you: by 2023, it’s predicted that Gen Z will account for 40% of the global luxury goods market. 

Yep: Gen Z and luxury brands go hand in hand – and this presents a goldmine of opportunities

If luxury brands are able to capture Gen Z consumers’ attention now, they’ll capture their spending way into the future as they climb the salary ladder. 

Gen Z’s spending habits 

So, luxury brands. Do these questions sound familiar?: 

What impact does the cost-of-living have on Gen Z’s relationship with the luxury sector? 

What’s more important to Gen Z: high quality or low prices? 

Do they prefer to save or splurge?

With brands like Pretty Little Thing and H&M still continuing to be a hit thanks to their low prices, fast fashion (and fastish fashion) still firmly has a place in Gen Z culture. And, to be honest, it’ll probably always be that way. After all, this is a generation growing up in a cost-of-living crisis: they’re after bargains. 

But, news flash: Gen Z isn’t a monolith. For many, there’s still a strong desire to shop, particularly when it comes to luxury items. In fact, Pion research has revealed that in 2023, average basket spend within the luxury fashion sector increased by 28% compared to the previous year.

So there’s the evidence. But we imagine your next thought is: How can I action that?

*Data based on spending using Pion’s student discount marketplace, Student Beans, in the UK. 

How can luxury brands capture Gen Z’s spending power? 

1. Take your brand to where Gen Z is 

80% of Gen Zers in the UK and 72% in the US use TikTok. And you know what that means? 

TikTok is the number one way to engage Gen Z. 

Amidst a world of brat summers, demure dressing, and Canadian puppets, it might not seem like a viable option for luxury brands. After all, typically, these are brands associated with quality, status, and tradition. 

But, spoiler alert: luxury brands need to embrace the chaos. 

Whether you’re a start-up scrunchie business or a high end jewelry brand, TikTok is an absolute must for those wanting to capture Gen Z’s spend. 

P.S. Here’s a great example of creators, social media trends, and luxury fashion all coming together in one lovely TikTok. 

2. Trust 

If you’re about to drop $500 on a jacket, you want to know it’s worth it, right? 

The luxury market certainly is a sector of interest for Gen Z, but that doesn’t mean they’re not wary - after all, these are high ticket items. 

From brand image and best practices to products and customer services, this generation wants the luxury industry to be reliable. 

3. Creators

Creators are an inescapable part of youth marketing: they’re in the air we breathe and on the screens we scroll. And luxury brands need to embrace it. 

And don’t just take our word from it, learn from the best: popular creator Emma Chamberlain (who found fame on YouTube as the ‘girl next door’) works closely with Louis Vuitton, while TikToker Charli D’Amelio promoted Prada’s collection at Milan fashion week. 

We’re increasingly seeing influencers appearing on the front row on runways, and fashion content creators are hugely popular. Take Scotland-born Hollie Mercedes, for example, who introduced a whole generation to Danish luxury fashion brand, Ganni, through her aesthetic and aspirational social media content. 

After all, creators are the style icons and trendsetters of the future. 

And it doesn’t end there: this is a symbiotic relationship. Creators boost luxury brands’ popularity by introducing them to younger, more diverse audiences, while also giving the masses what they want: new brands, labels, and aesthetics.

(Top tip: the trick is to find the right creator for you brand. Engagement over followers, people! Another top tip: we can help with that thanks to our Pion Creators offering). 

4. Tech 

What does being a household name and having a multi-million dollar business get you? 

Privilege. 

You may not be able to afford a Gucci handbag or some Prada loafers, but you sure as hell know who the brands are. Basically, luxury brands have some cracking brand awareness under their (expensive) belts. And this saved energy can be channeled into disrupting the market and doing something exciting and innovative.

Whether that’s investing in AI or exploring the world of sustainable tech, now’s your time to shine.

Case study: The Savoy x Francis Bourgeois

Pricey getaways and boujee hotel stays might not be the first thing you think of when it comes to Gen Z, but we’re here to surprise you once again with a winning case study. 

Luxury five star hotel The Savoy partnered up with creator and train-loving legend Francis Bourgeois to launch their 2023 Christmas campaign, and it blew up on TikTok.

Francis earned the love of millions across the world thanks to his unrivaled (and very wholesome) passion for all things trains, and the luxury hotel jumped on the opportunity to create the perfect festive moment. 

“We keep a close eye on all of our digital analytics to see where our Gen Z users are interacting with our brand compared to other age groups in our target audience”, shares Olivia Smith, Digital Marketing Manager at The Savoy. “We then tailor these channels and touchpoints to target Gen Z.”

“The idea of ‘Coming Home for Christmas’ was designed to resonate with consumers about The Savoy being your London home from home”, she says.  “As for the festive launch for Francis Bourgeois, who better to introduce our very own steam train than TikTok’s favorite train enthusiast? Francis’ honest and authentic approach to his channels very much aligns with our values here at The Savoy.”

Key takeaways 

1. It’s a luxe life for Gen Z 

Despite the cost-of-living, Gen Z isn’t spending less money, they’re just adapting how they’re spending. 

In fact, many are choosing to invest in pricier pieces.

2. Tap into the power of creators 

To engage younger, more diverse audiences, luxury brands need to partner up with creators. 

3. Trust and authenticity come first 

Being able to trust a brand is vital for Gen Z when it comes to any purchase, but given the expense of the luxury sector, it’s more important than ever before. 

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‍Want to know more about how Gen Z is redefining luxury? Want more data that spotlights their spending habits and preferences and top tips on how luxury brands can capture Gen’s spend? Download ourGen Z and the rise of luxury report now.