De Beers' millennial push a model for fashion, luxury retail
London
DE BEERS' insights into millennial earnings, wealth and desires could well be a model for fashion, luxury and other businesses.
The giant mining company, which accounts for 34 per cent of global rough diamond production, believes that it is essential to boost marketing to attract this target group.
It estimates that women and men between the ages of 18 and 39 will soon account for the biggest slice of the US$82 billion global diamond jewellery market.
"Retailers across a range of industries are finding they need to rewrite the rule book when it comes to forging and maintaining connections with consumers," says Bruce Cleaver, De Beers' CEO.
"It is no longer a realistic option to place a product in a store front or on the home page of a website, run some traditional advertising and then simply sit back and wait.
"Marketing tropes of yesteryear cannot be relied upon," Mr Cleaver adds. "Today's consumers focus on networks and instantaneous information sharing within an increasingly connected world. They want businesses to demonstrate they understand what truly matters to them."
In its 2018 Diamond Insight report, De Beers divides consumer generations into Gen Z, aged 0 to 20; younger millennials aged 21 to 25; older millennials, 26 to 39; Gen X, 40 to 52, and Baby Boomers, 53 to 71.
The company forecasts that millennials will be the highest-spending generation from 2020. Its data indicates that in 2017, the generation of 40 years or older comprised 36 per cent of the 7.4 billion global population. Millennials in the 21 to 39 age group are 29 per cent of the total and their numbers are growing fast. Girls and boys in Gen Z are already 35 per cent of the global populace. Many of the 2.6 billion will soon turn 20 and become millennials.
The majority of millennials in rich and poor nations neither have the earnings nor savings to purchase luxury items such as diamonds. But since there are already 2.19 billion millennials, a mere 5 per cent to 10 per cent would amount to as many as 100 to 200 million young people with adequate surplus income. Growth in their spending power is expected to come from their own earnings and inheritance.
Indeed, the World Bank predicts that millennials' collective annual income will exceed US$4 trillion by 2030. Moreover, millennials who are fortunate will receive a transfer of at least US$30 trillion from US Baby Boomers during the next three decades, estimates Accenture, a management consultant. Millennials are thus core consumers today for most businesses, including the luxury industry.
UBS estimates that millennials account for 50 per cent of Gucci's sales and 65 per cent of Yves Saint Laurent's turnover. They are already significant gem jewellery consumers as the average marriage age is between 24 and 30 in the US, China, India, Japan, rest of Asia, Middle East, Americas and Africa.
"Brands and retailers who provide original and entertaining websites, apps and communications will put themselves ahead of their competitors," the De Beers report states. "A smart presence on social media, particularly Instagram and Snapchat ... is the route to a coveted loyal customer network."
Companies and marketing organisations "will need to truly align their values with the social consciousness of millennials and Gen Z", the report adds. "Ethical and responsible consumerism, rejection of gender stereotyping and genuine commitment to environmental preservation and fair trade will be an increasingly important way to connect with the young generations," it says.
"We need to listen closely to consumers, bringing with us innovative and thought-provoking propositions that set us apart from the rest," Mr Cleaver says.
"Trust is a fundamental component of this. For younger consumers, what you do and how you do it are becoming just as important as what you sell and how you sell it. Paying lip service to doing good simply isn't good enough."
