(This is the second in a series about today’s luxury market and customer. If you read my first article, “Are the Roaring 20’s Back?” you would already know that focusing on the luxury market is a key strategy for 2022 and beyond)
What’s a HENRY? Or rather, who are the HENRYs?
HENRY stands for High Earners Not Rich Yet. What does this mean? According to the Wise Marketer, they are mostly Millennials (born between 1981 and 1996, which means they would have been between 25 to 40 in 2021) but overall a household under 55 whose income ranges between $100 and $250K and who have not yet amassed investable assets of $1M.
Many of these HENRY customers have cleared college loans and dependency on their parents or family, and are in a rising income mode; while the Millenial HENRY has not totally done so, their spending is nonetheless rising. With that rising income comes a rise in discretionary spending, more than the Gen X or Baby Boomer HENRYs.
Let’s look at the entire Millennial generation first. According to Goldman Sachs, they are the largest population cohort: 92 million vs 61 Million Gen X (1965-1980) and 77 million Baby Boomers (1946-1964) and the first generation of Digital Natives. That said, their debt burden is higher than those of its predecessors, but the Pandemic has started to reverse that.
So why focus on the Millennial HENRY?
First, they spend more than the other generations within the HENRY group. According to Wise Marketer, Discretionary Spending peaks at age 40, and begins to decline at age 50. The report cites $86K for Millennial HENRYs as opposed to $67K and $60K for Gen X and Boomer HENRYs.
And that is only going to get bigger as the younger Millennial HENRYs reach their peak spending years.
What is the customer profile of the Millenial HENRY?
So Millennial HENRYs are a particular bunch with particular requirements which are different from their older HENRY cohorts. How so?
1. Mobile-First Marketing- There have been different numbers at different times, but Millenials make the majority of their purchases on their smartphone and, if you add laptops and tablets, that about does it all.
That said, the luxury market is and always will be a sector that is oriented toward physical stores, due to the price, the service and the overall experience. BUT, digital marketing is becoming a key tool for a ROPO (Research Online, Purchase Offline) or a Showrooming (the opposite of ROPO) strategy, which many luxury customers prefer. Either way, digital presence is key to success in the luxury market as well as all the others.
Millennial HENRYs are ideal luxury customers, but with their own style and conditions. To HENRYs, brands have to fulfill their Aspirational Self; their view of who they are and who they want to be. As well, their Prosocial Signaling and their need for Uniqueness. This certainly applies to luxury fashion, but also determines where they eat, which car they drive, and where they vacation.
More, the Millennial HENRY is comfortable with new technology and adopts that as a signal of who they are.
Ethics and Sustainability figure for the Millennial HENRY, where they were not a factor for their predecessors.
Make me look good, feel good, feel special about myself and my association with you, brand. And follow my needs, or someone else will.
This is one of the biggest differences between the Millennial Luxury Customer and their predecessor generations: brands have to follow them, not the other way around. Even the big iconic brands like LVMH and Kering are learning that.
For the Millennial, the sacred Four P’s of marketing have become the Four E’s:
• Product >> has changed to >> Experience
• Place >> has changed to >> Everyplace
• Price >> has changed to >> Exchange
• Promotion >> has changed to >> Evangelism
On Strategy explains:
Experience: Where marketers used to focus on their product, now we must think of the entire customer experience- what does a customer encounter related to purchasing and using your product/service?
EveryPlace: Today, place has become everyplace- there’s just SO MANY methods for conveying your message: IM, SMS, countless social media websites, video games, product placement in places like TV, Movies, internet video clips- the list goes on.
Exchange: With so much on the web being offered for free, pricing has become much different. Words like Freemium, describing how premium services pay for free services offered by the same company would have boggled marketers minds a few years ago.
Engagement/Evangelism: Promotion isn’t enough any longer. With so many more message channels, we can’t just bombard people with messages and hope they’ll pick them up. Companies have to figure out how to get consumers to allow them into their attention spans.
Brands better pay very close attention to the entire experience, from Awareness to Advocacy, or someone else will be glad to do it for them. This is especially important, as well as difficult, in the digital space.
What happens as Millennial HENRYs get old and start to peak spending?
Everything they believed and their approach to spending is geometrically multiplied by their followers, Gen Z.
But that’s another subject. Watch this space.