Many millennial women might remember receiving their first Tiffany & Co. bracelets.
This gift might have been bestowed unto them around the holidays or around major birthdays.
But it appears that Gen Z isn’t as enamoured with luxury goods as millennials were.
Proof? Tiffany & Co. announced that its comparable sales dipped -5% this past quarter, including the holiday season, a time signified by gifting.
It’s arguable that young people could potentially be a catalyst for this shift, even if their parents are the ones with the ostensible spending power. Experts who study millennials and the mind-blogging teen generation (“Gen Z” or “iGen”) say that young people don’t want luxurious, splashy gifts in the first place — hence the dramatic shift.
“For Gen Z, gifting is an occasion that mirrors the more conservative behaviour of Gen Z: they are practical, frugal, and prefer to blend in, not standing out with glitzy items,” Nancy Nessel, Generation Z expert, wrote in an email to Business Insider. Gen Z is very practical — financially and behaviorally – about how they attain, earn, save and spend their money, and this practical mentality applies to gifts. Gen Z is more likely to save their money, saving money gifts and earnings to put towards their savings for a car, or for college tuition.”
“Gen Z, especially the 98%, is so practical that they are fine with receiving knock offs of luxury items, such as fake Rolexes bought on the streets of NYC. Gifts are exchanged such as Avalanche, the Target line of Patagonia or other minimalist lines.”
But what about teens who are privy to a more comfortable financial situation?
“While the more affluent Gen Z might request luxury item gifts, most of Gen Z wants a very different kind of luxury item today. If Gen Z wants a luxury item, it’s going to be more practical than jewellery from Tiffany or an old traditional brand. They want items like a Patagonia vest (to wear year round), Vera Bradley set of luggage (they can use for many years ahead), Vineyard Vines clothing (a practical luxury item), or new top of the line sports gear (something they need in a more upscale presentation). Gen Z will do the research and legwork to be financially practical when it comes to gifts – affordable or expensive items.”
Jason Dorsey, teen and millennial expert, told Business Insider that young people would prefer to spend their money on experiences or technology. Better yet — they want the sweet combination of both.
“Our interviews with teens, we call them iGen, as well as millennials shows that they prefer to spend money on experiences rather than stuff. They specifically want experiences they can broadcast on social media. We see this more important than ever as our new study showed that 42% of iGen say social media has a direct impact on their happiness — which is more than 10% points higher than millennials,” Dorsey wrote in a note to Business Insider.
“Besides experiences, iGen and millennials both like to spend money on technology, what we would consider a small but utilitarian luxury. In fact, iGen, more than any other generation, said young people should get their first smartphone at age 13! The combination of wanting to buy experiences and technology does not bode well for expensive luxury items as they’re not very practical and once you’ve had your new piece of jewellery on a few Instagram pics and Snapchats, you can’t wear it for a long time or else it makes it look like you have nothing else to wear,” Dorsey wrote.
Further, luxury items — the kind that you can ‘wear forever’ — do not serve as much of a purpose on social media.
While that may seem frivolous, teens see their older peers as the embodiment of what they don’t want to become: strapped to their debts.
“The bottom line, is that our research found iGen in particular has come of age in an uncertain economic time and they don’t want to end up in debt like Millennials and this is affecting their purchases, starting with luxury goods but going all the way to choosing a more economical college,” Dorsey wrote.
Of course, a shift in the way teens spend or desire gifts can’t entirely fuel a sales dip. Tiffany & Co. blamed the nosedive on a strong United States dollar and a decrease in foreign tourism. But there are certainly other factors here — such as an overall shift in what people want for Christmas.
“One of the factors at play, at least in the United States, is a shift in holiday purchasing,” Neil Saunders, CEO of research firm Conlumino, wrote in a note to clients. “Prior to the economic downturn of 2008, the period between Thanksgiving and Christmas was key for jewellery buying. Today, while it remains the single most important period for purchasing, it accounts for a much smaller share of annual sales than it once did. Jewellery is no longer at the top of the Christmas list. For a brand like Tiffany, where lavish gifting is an important driver of buying, such a trend is distinctly unhelpful.”
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