The luxury brand paradox

Balancing a rich heritage with a future of innovation

Rapid digital acceleration has challenged many industries to balance tradition with innovation; however, this tension is particularly acute for the luxury sector. A striking paradox exists between traditional luxury, which centers on exclusivity and scarcity versus modern luxury, which enables accessibility to all.

Can the two exist in harmony?

In this paper, we’ll take a closer look at many facets of the luxury brand paradox and the consumers that will drive its future. We will explore the need to balance the rich history, culture, and exclusivity of a luxury brand with the growing focus on ESG (Environmental, Social and Governance); consider ways to enhance the brand-consumer relationship; and examine a new world of potential opportunities for luxury brands in the rapidly growing metaverse.

The luxury brand paradox
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The new luxury consumer

Millennials and Generation Z are instrumental to the growth of the luxury market. Gen Z already is estimated to account for 40 percent of the world's consumers, they have a global buying power of $150 billion and influence $600 billion of consumer spend. 1

Key factors involved in Gen Z’s decision-making include being socially conscious, tech savvy, active on social media and online, and are more wary of traditional credit. 


Socially conscious: More than 70% care about buying environmentally sustainable / responsible products.2


Tech savvy: Avg. first smartphone age ~10 years old and avg. first social media account by ~11 years old.3


Connected: Gen Z spent ~3 hours a day on social media in 2020.4


Online: ~75% spend their free time online5 and they spend ~8 hours a day since COVID-19.6

"New payment options" not "credit"

"Cash" not "credit": Shift away from "credit" and 25% use buy now / pay later apps or tools.7

A future of sustainability

Luxury brands have always reflected what society considers aspirational. Today, that translates into being more diverse and inclusive and deploying sustainable practices and products. Since luxury brands don’t have to contend with race-to-the-bottom pricing, they can invest in truly sustainable products and practices—a key characteristic that can set it these brands apart from mass market. Moreover, innovations in materials and manufacturing, and a focus on plant-based ingredients, allow luxury brands to differentiate with socially responsible products without sacrificing high standards.

Identity is fluid and diverse


of Gen Z identify as gender neutral.8


of consumers are more likely to trust brands that show diversity in ads.9

Sustainability is worth paying for


of consumers are willing to pay more for a sustainable product—Gen Z is 87%.10


of consumers care more about wearing sustainable apparel than before the pandemic.11


1  WP Engine “Generation Influence: Reaching Gen Z in the New Digital Paradigm,” August 13, 2020.

2 “The environment is Gen Z’s No. 1 concern – and some companies are taking advantage of that,” August 10, 2021. 

3  Influence Central, “Kids &Tech: The Evolution of Today’s Digital Native", 2016.

4  GWI, “Social media marketing trends in 2021,” 2021.

5  National Retail Federation in association with IBM Institute for Business Value., "Uniquely Generation Z. What brands should know about today’s youngest consumers,” 2017.

6  Global Web Index, “Gen Z: Observing the latest trends on Gen Zs,. 2020.

Logica, The Future of Money 2020: The Consumer Money Mindset in Time of COVID-19,” 2020.

Brookings Institute, “Now more than half of Americans are millennials or younger,”  July 30, 2020.

Adobe,“Despite 25 Years of Advertising Growth, Diversity Remains a Challenge,”  June 4, 2019.

10  Statista “Shoppers who are willing to pay extra for sustainable products in the United States as of September 2018, by generation,” October 2018.

11  ThredUP, “Ninth Annual Resale Report,” June,23,2021.