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Gen Y: rules of engagement

With the baby boomers past their purchasing prime, and Generation X lumbered with a house and kids, Generation Y has recently emerged as the bedrock of business growth and profit in Australia. Young, spend-thrift, materialistic, brand-loyal and often still living at home, these 15- to 30-year-olds are more likely to buy a smart phone, designer jeans or new jewellery than put money away for the future.

Having never experienced a real recession, and having easily negotiated the Global Financial Crisis, Gen Y – now the largest demographic in Australia – lives for the moment and embraces its mission to consume. Indeed, research group IBISWorld estimates that Gen Y, which it narrowly categorises as 14- to 25-year-olds, will generate more than 30 per cent of the Australian watch and jewellery retail industry’s $3.69 billion revenue in 2010-11. Add 26- to 30-year-olds into this consumer group and that percentage becomes significantly higher. So how should the jewellery trade connect with this enticing yet complex and relatively untested consumer demographic?

Gen Y form purchasing decisions via rapidly evolving technology, fashion culture and proliferating social media: so yes, engaging your product with the youth of today is complicated. But there is one fundamental dynamic at play. Gen Y uses the internet – increasingly accessed on their smart phone – and social media like Facebook to make a creative and intimate connection with brands and products.

Through these media, youth will share information and opinions with their peers about the next fashionable jewellery concept; Gen Y believes more in word-of-mouth than mass-marketing on TV. Jewellers that can market their product via internet-based social networks, and engage with Gen Y on a creative, ‘experiential’ level, are more likely to attract this target market.

Who are they?

“Gen Y is gainfully employed, living at home with mum and dad without commitments, they’ve got money to spend, and they don’t mind spending it,” surmises demographer and KPMG partner Bernard Salt. Salt authored the 2007 report Beyond the baby boomers: the rise of Generation Y for a fund management sector trying to relate to this rising demographic.

Acknowledging that there is no definitive age range for Gen Y, Salt categorises this consumer group as anyone between 15 and 30. “These are the children of the baby boomer generation. They’ve been indulged by guilty baby boomer parents [it was the first time both parents had to work] and were raised in an era of prosperity. They have total confidence in the future, no one’s ever said no to them, and they always believe that tomorrow is better than today, which means they can max out their credit card,” he explains.

These ‘echo boomers’, as baby boomer progeny are also known, have been raised as the ultimate consumers. Yet Gen Y-er Adam Penberthy, who heads Fresh Advertising Communications – an ad agency that specialises in “creating ideas for brands that young people like” – warns that this generation are in danger of becoming overexposed to marketing. “The average 21-year-old walking around right now in Brisbane, Sydney or Melbourne is exposed to over 109,000 messages targeted specifically at them and their cohort annually. You could say we’re marketed to from the minute we wake up to the minute we go to bed,” he explains, “As a result, brands now need to start thinking differently about how they’re going to connect and engage with this group of people.”

The medium is the message

How then can jewellers and brands differentiate themselves in this sea of marketing hype? “Physical experiences with brands is one of the most effective ways of getting a young consumer to consider one product over another,” Penberthy advises.  What is also called “experiential” marketing allows Gen Y to “experience the product or brand in a quirky and different way,” he adds. By way of example, Penberthy recalls a campaign where pearls were displayed on a transparent sticker on a mirror in bathrooms. “When women washed their hands they lined their neck up with the pearls and it looked as if they were wearing the necklace.”

This kind of strategy is fun, but the point is to encourage interaction; the hallmark of good communication with Gen Y. The next step is to get Gen Y to talk about the product among each other. This generation has pioneered the use of internet blogs, chat rooms and social networking sites like Twitter and Facebook to compare, peer review and research a product. This also allows them to converse with a brand and become a part of its evolution. Such engagement underlines Gen Y’s particular brand loyalty and identity.

Faced with so much mass media, Gen Y seeks a brand experience that is genuine, and which has been legitimised by word of mouth. “You’ll need to prove your brand to us. Let us touch it, try it and talk about it,” writes Nicole Crimaldi on her US-based online portal for 20-something women, Ms Career Girl. “And let us hear about it and experience it from ‘real’ people. In order to gain our trust, you’ll need to focus on experiential marketing,” she continues.

A social and interactive brand ‘experience’ is pivotal when connecting with Gen Y, as Pandora Jewellery showed last October when they launched a ‘Bracelet Designer’ Facebook application, a unique, Gen Y-forward way to involve 150,000 devoted Facebook fans with Pandora products. The application allows users to select charms and create a personalised bracelet before sharing designs with Pandora ‘bead heads’ around the world. More importantly, it builds social interaction by creating lists of the most ‘liked’ designs – the Facebook stamp of approval.

Elisha Seiver, marketing manager of Seivers Australia, which distributes the young, fashion-forward pearl brand Misaki, says, “The ‘experience’ that Gen Y seeks is something Misaki considers when developing partnerships and events.” She adds, “Misaki’s recent involvement with the Golden Globes tied in movies and celebrities, which interest Gen Y.”

Misaki has started its own YouTube channel in another attempt to resonate with Gen Y. “It is designed to allow Gen Y the ‘experience’ that they seek with brands. They may not attend one of the Misaki parties, but can see, feel and hear the event,” Seiver says.

Misaki is very careful to market in a ‘genuine’ way to Gen Y, according to Seiver. “Gen Y’s style is a physical manifestation of their personality and identity,” she explains. While brand conscious, Gen Y don’t like being marketed ‘at’ by brands. “They look for authenticity and brands that aren’t ‘trying too hard’ or telling them what’s cool,” says Seiver. “They also seek new brands to raise into the consciousness of their peers.”

Indeed, products need to be sanctified by the group if they are to appeal to Gen Y. “Gen Y are very tribal and highly influenced by their peers,” says Salt. According to Penberthy , 78 per cent of Gen Y-ers say peer groups are the number one influence on their purchasing decisions. “It’s important to try and reach Gen Y through their peers by closely linking in with trends that are progressive within this group of consumers,” he says.

Creating the Gen Y retail experience

When Gen Y arrive at a store they already know what they want. They’ve done most of their research online, read numerous blog reviews, consulted Facebook groups, relevant ‘tweets’, comparison shopping sites and so on. They know how often a product has been ‘liked’ when they enter both bricks and mortar and online stores, and expect affordability, quality, and fast service.

“If they have taken the time to purchase in-store they prefer the experience to be quick,” says Helen Hagerty, operations manager for rising Australian fashion jewellery brand Tuskc. But most Tuskc Gen Y sales are typically online, according to Hagerty. “They want the website to be informative about the products and price points all within a few clicks. If the website then feeds through to a social networking site such as Facebook – revealing feedback from their peers, and images of ‘who’s wearing it’ – users may be ready to purchase there and then.”

As well as supporting the development of its stockists’ retail websites, Tuskc has launched its own transactional retail site in an innovative scheme where margins are attributed back to the purchaser’s nearest bricks-and-mortar stockist. The brand has focused heavily on the functionality and aesthetic of this website and its Facebook page to ensure it can interact with young consumers 24/7. On Facebook, Tuskc can quickly communicate product launches, charity events, and shout about celebrities wearing Tuskc. “Facebook is brilliant for new brands as we get immediate feedback on the product and our activities at virtually no cost,” says Hagerty. “TV and print advertising does not provide this level of interaction, not to mention the expense.” Tuskc’s retailers are also encouraged to set up Facebook pages that link to the brand.

Today, mobile internet devices like iPads are being employed on the shop floor so that retailers can bring up Facebook pages, blogs and websites to further inform customers about products. Octahedron’s Swim range of retail software technology, for example, allows jewellers to interactively explore inventory with the customer from an iPad or smart phone, from anywhere in the store. This ability to shift the bricks-and-mortar experience into Gen Y’s natural digital habitat helps overcome an aversion to face-to-face transacting, and makes retail more experiential. “The new style shopping experience includes touch, sound, and a sense of individuality,” says Octahedron founder Raeleen Kaesehagen.

“Generation Y are used to searching on the internet and finding things easily,” says Don Gillett, owner of Brisbane-based Gillett’s Jewellers, which uses the Swim system both through iPads and computer kiosks in the store. Young customers commonly use the latter. “Some prefer it to looking in the counter,” Gillett explains. “I think the appeal is that no sales person is involved. They want to find what they want and get out without being hassled.”

The key for Kaesehagen is using this technology to build a more intimate retail and brand experience with Gen Y-ers who best connect with products via digital mediums. “It is not a direct selling tool and should not be used like traditional marketing. It is a way of connecting, informing and creating a culture or feeling around a brand, product or store,” she explains.

To effectively connect with Gen Y, such technology needs to also seamlessly merge with store websites and social media. Swim allows Gillett’s, for instance, to upload extra information quickly to the website if customers want to go home and think about a purchase further. Once it’s entered the social media matrix, this information can be easily shared among friends. “You’re using the media to your best advantage. It’s the peer approval that matters a lot,” says Gillett. “They [Gen Y] commonly ponder that before they make a decision on their own.”

Retailers must also consider that younger Gen Y consumers who are still at school or university have limited budgets, but will spend money on product that reflects a fashion identity sanctified within social media networks. This is where fashion jewellery chains like Diva have been so successful. Perhaps it is no coincidence that while Generation Y has grown to become Australia’s largest demographic, the fashion jewellery retail sector has grown 95 per cent since 2007 – and Diva is leading the charge as the biggest chain.

When Diva launched a Facebook page last October, it quickly gained 50,000 ‘fans’ that now interact with it on another level. “With new product ranges launching each week and 179 locations across Australia, we offer accessible fast fashion,” explains Amy-Louise Hoare, marketing manager at Diva. This youth marketing is also reflected in distinctive and trend-conscious store branding – pink logo, trademark heart and mirrored wall panels – that ensures young girls strongly identify with, and ‘experience’, the brand in a retail context.

Get connected

When engaging with Gen Y, the digital space cannot be underestimated. A December 2010 study by digital innovation think tank L2, called Gen Y Affluents, concluded that for retailers, “Websites are as influential as physical stores in shaping Gen Y sentiment.” The only thing more important to Gen Y-ers is friends’ opinions, according to the report – which surveyed 1,000 high-achieving Gen Y adults from 41 countries. When it comes to social media, the online arena and this approval-seeking go hand in hand: more than 50 per cent of Gen Y-ers told L2 that Facebook, blogs and brand videos affect their opinions about products, and more than 80 per cent use the social networking site at least once a day – that’s double the time spent watching TV and reading newspapers.

Gillett is by no means a ‘new school’ retailer – he started his retail business in the 1970s – yet he knows that his marketing future is with social media, increasingly accessed via mobile phones and tablets. “It’s very cost effective. Once you’ve got it up and running, it grows by itself,” he says, adding that TV is expensive, and claiming Gen Y no longer read newspapers. Jeff Burnes, head of marketing and communications at Pandora, is equally enthusiastic about the marketing potential of Gen Y-driven social media, advising retailers to “recruit, reward and maintain ongoing dialogue with [Facebook] fans by treating them as your most important and influential media channel”.

According to Monash University’s Australian Centre for Retail Studies, the next generation – Generation Z or the ‘net’ generation, born between the early 1990s and 2000s, with some now reaching their teens – will go one step further, communicating almost exclusively via the internet and mobile phones. Monash research analyst Lisa Tartaglia says, “Social media is the only way to communicate with Gen Z and they have high expectations of the internet and their mobile phone – as in, these tools must provide what they want.”

If that’s the next shift then experiential, social and personal retail strategies must be standard by the time these tweens are ready to take up the baton from Gen Y. After all, with Gen Y now the largest demographic in Australia, these young consumers’ contribution to jewellery revenues is surely set to soar in the coming years.

case study: pandora – build the brand experience

In December 2010, following the success of its ‘Bracelet Designer’ Facebook application, Pandora launched a dedicated iPhone application – designed to “inspire individuals no matter where they are located” – which gives mobile access to Pandora social media, in addition to an interactive gift finder and a Pandora-authorised stockist locator. According to head of marketing and communications Jeff Burnes, this is just one way that Pandora builds its brand among Gen Y-ers via experiential marketing.

“Customisation [is also] an essential consideration for Gen Y consumers [who] select brands that best represent their individuality and personality. When it comes to jewellery, giving the consumers an option to customise their jewellery to match their individual tastes will be essential in embracing this rising trend,” he says.

“Nowism” is also fundamental to Gen Y brand appeal, Burnes advises. “The digital revolution has enabled Gen Y consumers to search, give opinions and post photos in ‘real time’. People are able to instantly share content and experiences among hundreds and thousands of people globally. Pandora‘s iPhone application allows this ‘nowism’ consumer to have instant access to store locations, and to help select the perfect gift. This is part of our digital strategy to distribute content on new and emerging platforms such as 3G mobile phones and tablets or iPads,” he says.

Gen Y also need to be encouraged to become “Prosmers” (both producers and consumers), says Burnes. “Word of mouth continues to be a huge influencer for brands and retailers. Online gives consumers the playing field in which opinions and shopping experiences can be posted online and shared. We therefore create small pieces of content and encourage people to share this through social media platforms such as Facebook.”

case study: misaki – dynamic and interactive m-commerce

Central to engaging with Gen Y is making a splash on their mobile internet device – primarily smart phones, sometimes iPods, and increasingly iPads. For digital marketers trying to engage Gen Y on their home turf, the old e-commerce model, based around a static PC, has become increasingly mobile. Facebook, according to L2’s Gen Y Affluents survey, is the world’s most popular mobile web application and 25 per cent of Gen Y-ers use mobile to access social media.

This m-commerce platform, while in its incipient phase, is also allowing Gen Y to research products, and shop, on the run. It’s vital, therefore, that jewellers’ websites are formatted for iPhone and iPad. Misaki marketing manager Elisha Seiver says the pearl brand is working hard to adapt to the m-commerce paradigm.

“We have to look away from ‘traditional’ advertising mediums to capture the attention of Gen Y. Misaki has been proactive in responding to technology, embracing social networking and ensuring the website is accessible on mobile devices,” she explains. “The Misaki website is enabled for these mobile devices and automatically loads the relevant mobile-accessible version when a mobile device is detected.” Seiver reveals that Misaki is currently considering the benefits of adding an online shopping function to this mobile site.

She adds, “Mobile inter-connectivity is also key. Misaki’s mobile presence links between Facebook, YouTube [Misaki maintains a channel] and the website. This helps Misaki create awareness via events and partnerships, rather than just marketing ‘at’ Gen Y.

case study: diva – with social media, facebook rules

As a ‘fast fashion’ jewellery retailer aimed at young people, Diva communicates with its predominant Gen Y customer-base via various social media. But though Twitter and viral marketing campaigns (SMS and email) are part of the retail chain’s broader digital marketing strategy, Facebook has dominated since the company’s recent launch on the social media platform. Diva marketing manager Amy-Louise Hoare says Diva has been using this powerful social networking tool to build brand identity among Gen Y-ers in interactive and creative ways.

“Diva launched its Facebook fan page in October last year, resulting in immediate growth to over 49,000 fans in less than six months. We have created fantastic relationships with our customers. We conduct regular competitions that add a new dimension and give our fans opportunities and experiences that money can’t buy,” she says.

Diva’s most recent major Facebook competition was conducted in February, and called for best friends across Australia to enter a competition to be ‘Australia’s Favourite BFFs’. Hoare explains, “Voted for by their peers and finally crowned by Diva, Australia’s Favourite BFFs will star in the next Diva campaign – launching in store windows across the country in late April.”

But the retail chain’s digital activity doesn’t stop there: “We also have an active Twitter community, a great e-commerce site and communicate with our database via viral marketing, alerting Gen Y of new promotions and product launches,” she adds.