How, Where and Why Millennials Make Luxury Purchases

Responses are splintered, reflecting millennials’ financial challenges

Author: Maria Minsker

July 28, 2017

Millennials have a complicated relationship with money. Pilloried by some people for spending too much on indulgences like artisanal coffee, hailed by others for their attention to discounts and comparison shopping, millennials do not neatly fit into a single box when it comes to spending, although as a whole the generation continues to feel the aftershocks of the deep global recession that welcomed them to the workforce. 

That multifaceted nature is highlighted in a recent Deloitte study of millennials’ luxury purchasing behaviors and attitudes, exploring some of the ways in which they vary by country.

The most common way in which young adults research luxury purchases is via social media, Deloitte found. One in five internet users ages 20 to 30 surveyed worldwide said that social networks were their primary research tool when thinking about a luxury purchase. 

Though social media was the leader, responses varied by country. The study, which covered the US, the UK, Italy and China, found that social sites had a lower impact among respondents in China, for example.

Additionally, five other options were named as the primary research tool for luxury items by at least 10% of the survey base—for instance, using a brand’s website or looking through fashion magazines (cited by 15.1% and 14.4%, respectively).

Those country-by-country variations extended to other areas of consideration. For example, younger adults in China and the UK were much more likely to say they were “very interested” in luxury items, whereas those in Italy and the US were less likely to express higher interest.

Similarly, the triggers that motivate millennials to make luxury purchases differ across markets. Not surprisingly, the most commonly cited purchase trigger among total internet users in the survey was an impending event, such as a wedding or party. But again, the response was splintered; at least 10% of respondents named reasons such as a big payday or “when I’m feeling a bit low” as luxury purchase triggers.

When it comes to where millennials buy luxury items, more than half still prefer physical stores, while just over four in 10 go online. That result is skewed somewhat by the fact that those in China are more likely to buy in-store, likely because of lingering concerns about counterfeit luxury goods in that market.

Even with the survey base in China weighing the balance a bit, the Deloitte survey suggests a bigger role for digital in the luxury market than suggested by other data sources.

For comparison, an April report from Bain & Company and luxury marketplace Farfetch estimated that digital accounted for only 8% of total luxury sales worldwide in 2016.

That share is expected to grow strongly over the next few years, reaching 25% by 2025. Still, that’s a far cry from the 40.2% of global millennials in the Deloitte survey who say they prefer to buy luxury items digitally.

Photo by Carli Jeen on Unsplash