Millennials now make up a significant segment of the luxury market, motivating brands to invest large amounts of their marketing budget to target them. Gucci, the leading brand in Gartner L2’s Digital IQ Index: Fashion Global, reported in May that over 60% of its clients come from this young consumer base, underlining the willingness of this demographic to spend money on luxury goods. Despite lower spending power, millennials are more likely to purchase luxury goods than any other age cohort, as they seek to reach the aspirational standard of living perpetuated by influencer marketing and social media.
Compared to traditional luxury consumers, millennials have smaller wallets and more debt— from credit cards and student loans alike. However, only two brands tracked by Gartner L2— Cole Haan and Valentino— give customers the option to to pay for purchases with flexible financing options through lending startup Affirm. Though this is a common practice among resale and third-party retailers like TheRealReal, luxury brands have been slower to adopt, even as competition heats up to capture the millennial consumer.
Unlike third-party retailers, the use of finance alternatives remains a gap for fashion brands when targeting millennial consumers, who are more willing to convert if luxury brands offer financing during check-out. As brands aim to match millennial preferences for sustainability and streetwear, financing could be the next step.