Chanel and BMW are the top prestige brands among affluent Gen Y consumers, according to a new study.
The first annual L2 Gen Y Prestige Brand Rankings measured the affinity for 105 iconic brands among the next generation of prestige consumers. L2, a think tank for prestige brands, surveyed 450 Gen Y high-earners from 45 countries (83% are expected to make more than $100k+/year in the short term) and measured brands in six industry categories. The results of the study will be the topic of a forum presented by L2 in New York City on May 14.
The top brands for both male and female Gen Y are dominated by traditional luxury brands such as Chanel, Cartier, The Four Seasons, and Ralph Lauren. Cars dominated among men, capturing eight of the top 10 slots. German brands BMW, Mercedes-Benz and Audi also appealed to females, who rated the category second only to fashion and above beauty and skin care.
"Gen Y goodwill is arguably the closest thing to a crystal ball for predicting a brand's long-term prospects," says Scott Galloway, New York University Stern clinical associate professor of marketing, who founded L2. "Just as Boomers drove the luxury sector for the last 20 years, brands that resonate with Gen Y, whose purchasing power will surpass that of Boomers by 2017, will be the new icons of prestige."
Generation Y (born approximately 1977-1994) represents the largest consumer group in U.S. history. Estimated at 70 to 85 million strong or roughly 25% of the U.S. population, Gen Y is larger than the Baby Boomer generation and is supplanting them as the most important economic force. Gen Y's annual spending power exceeds $200 billion. They also influence another $50 billion in purchases. By 2017, Gen Y will eclipse Boomers in spending power.
For marketers, the study indicates that brands aren't capitalizing on the e-commerce opportunity. While the store is still the dominant channel, more than half of Gen Y females purchased luxury goods on discount Web sites such as Gilt.com (54%) and retail Web sites such as Net-A-Porter.com (53%), while less than a third (31%) purchased directly from a brand site.
Print continues to be a primary source for information on prestige brands. It is the top source for women and number two for men. Recommendations from family and friends via word of mouth are also crucial, ranking number one for men and number two for women. Not surprisingly, the study found that Gen Y has embraced social media and blogs. One in five respondents "like" a prestige brand on Facebook, and one in 10 "follow" a prestige brand on Twitter. Almost half have signed up to receive email from a prestige brand and almost one in five Gen Yers considers blogs one of their top three sources for information on prestige brands.