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Background:

Luxury footwear is booming as consumers opt to spend more than ever on shoes with soaring prices. The market for designer shoes is set to grow to $40 billion by 2027, up from $31 billion in 2022, according to Euromonitor International. As consumer demand grows, competition is heating up for brands from Manolo Blahnik and Christian Louboutin to Chanel and Prada who stake much of their businesses on the core segment. The market is much-changed: shoppers crave comfort, but also newness and uniqueness. They also have more choices than ever: cowboy boots, Mary Janes, stilettos and mules have been trending recently.

“There was this vibe shift occurring post-pandemic. The shoes that consumers want today look and feel very different from what they had before,” said Diana Lee, BoF’s director of research and analysis, on the heels of publishing BoF Insights’ latest report “The Statement Shoe: Reimagining Designer Footwear.”

Key Insights:

• The footwear category is poised for growth this year: 84 percent of consumers surveyed across the UK, US and China told BoF Insights they were planning on investing in footwear in the coming year. At the same time, prices for women’s footwear have increased 10 percent from 2019.
• Shoes have become more expensive, partially, thanks to streetwear’s hype cycle, which has conditioned consumers to shell out for limited edition items. Of course, inflation and rising costs across the supply chain have contributed to increases.
• Much about the footwear market has changed. Mass trends toward casualisation have led consumers to seek out comfort, primarily, when buying shoes.
• Still, high heels are performing well following the return of in-person events. And, the high heel space has seen a sort of reinvention as brands opt for designs that grab consumers attention — like Loewe’s eggshell and balloon designs. Meanwhile, newcomers like Amina Muaddi are stealing share.

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Background:

Gen-Z, or those born between 1997 and 2010, accounts for 25 percent of the world’s population. With the oldest of the generation turning 25 this year, the group has already come into its own with a purchasing power of about $360 billion. Fashion brands have always chased youth, but Gen-Z brings a whole new set of marketing challenges. Having grown up in the midst of rapid technological advancement, a worsening climate crisis and global movements like Me Too and Black Lives Matter, Gen-Z has been characterised as more pragmatic and socially aware, while also being trend-fixated. The contradictions are endless.

“This state of the world is set to continue for Gen-Z, it drives a lot of a Gen-Z psyche… That Gen-Z spending power is particularly tricky to unlock because the cash is really hard won and this generation has really different values,” said Diana Lee, BoF’s director of research and analysis, on the heels of publishing BoF Insights’ latest report “Gen-Z and Fashion in the Age of Realism.”

Key Insights:

• Sometimes, Gen-Z contradicts itself. For example, top fashion brands including Nike and Gucci were among the general group’s favourite brands — but smaller focus groups said they wanted to support underrepresented designers. As well, fast fashion brands like Shein are popular, but the group says they care about sustainability.
• Gen-Zers increasingly impact the economy. However, the group will come into its own with more financial insecurity than those before it.
• BoF Insights distilled the demographic down to a few key personas with distinct characteristics to understand its habits and behaviours: the forgers, signatures, satellites, rebels, explorers and idealists.
• Generally, brands should communicate with Gen-Z in a casual, natural, community-forward way. The group is less beholden to traditional tastemakers, and trends move fast.

BoF Insights is the new data and analysis think tank from The Business of Fashion, arming fashion and luxury professionals with the business intelligence they need to make better strategic decisions. For more insights, please see BoF Insights’ archive on topics like designer bags, resale, digital fashion, and fashion’s supply chain.

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All businesses must learn to navigate the cultural and technological shifts ushered in by young consumers, but this is particularly important for the fashion industry because it is predicated on style and novelty. Gen-Zers — the first true digital natives — range from ages 12 to 25 and are now coming into their own.

Having mastered social media platforms at an early age, this generation is adept at producing and consuming fashion content, doing so at a faster pace than any generation before. This inverts the design process where styles are now percolating bottom-up rather than being pushed down from the traditional gatekeepers, while also accelerating trend creation. This digital savviness manifests in the way Gen-Z discovers, purchases, and even disposes of fashion. As a result, this generation has the power to reshape all the points in the consumer journey as they mature and gain purchasing power.

Brands and retailers must take note of this generation’s intricacies in order to thrive. BoF Insights’ latest report Gen-Z and Fashion in the Age of Realism focuses on the US, where Gen-Z has an estimated disposable income of $360 billion.

Below is a look at what the fashion industry needs to know to craft a winning, long-term strategy with Gen-Z.

The vast majority of Gen-Zers find fashion inspiration through social media platforms, especially TikTok with its personalised #ForYou pages. Nonetheless, the next step — in terms of converting those young consumers — is arguably more important. In this case, Instagram still comes out slightly ahead in terms of providing the information needed to pull the trigger. Meanwhile, Snapchat and Facebook lag with BoF Insights’ panel despite their investments in social commerce features, including AR try-on and integrated shops, respectively.

“What are the kids wearing these days?” is the perennial question fashion forecasters ask. The fashion industry, often out of necessity, is obsessed with chasing youth, especially as young consumers enter the workforce, inform new styles and shift buying behaviours.

Gen-Z — aged between 12 and 25 and accounting for approximately 25 percent of the world’s population — is now coming into its own. But Gen-Z is truly unique. As the first digital natives, their formative years have been unlike that of previous generations, creating a greater cultural chasm between Gen-Z and older generations. Social platforms have given Gen-Z tastemakers an unparalleled ability to convene and speak to audiences.

In the US, Gen-Z is particularly shaping the culture and moving the economy with a purchasing power of about $360 billion. Each generation experiences distinct events that shape its life outlook. Baby Boomers benefitted from an economic boom after World War II, living in an age of optimism. Gen-X matured as social mores changed and female labour participation jumped, living in an age of independence. Millennials, typically the children of more affluent Baby Boomers, benefitted from the advent of the internet, living in an age of idealism. Yet, Millennials are old enough to remember a less digital world.

Gen-Z is much more pragmatic, growing up under the lens of technology from the outset. The worsening climate crisis, pressing global movements such as “Me Too” and “Black Lives Matter” and the Covid-19 pandemic all serve as a backdrop for the current age — an age of realism.

Gen-Z and Fashion in the Age of Realism is the newest report from BoF Insights, exploring Gen-Z’s relationship to fashion, identifying the distinct personality types, their sources of inspiration, their preferred brands, and their approach to sustainable fashion. This report is informed by in-depth analysis of social media behaviour, a survey of nearly 1,000 Gen-Zers as well as focus groups.

Fashion is the favourite entertainment category for US Gen-Zers to spend money on, outranking other categories like dining, video games and consoles, and music. Young consumers are critical to the fashion industry, not least because per capita spending on fashion declines as we age:

To best engage with and speak to young consumers, BoF Insights partnered with Quilt.AI — an AI-powered insights company — to canvass social media behaviour and profiles to identify six personality “clusters” that characterise the US Gen-Z population. While Gen-Z is like other generations in that they defy stereotyping, these clusters are a critical heuristic for executives to understand Gen-Zers’ shared affiliations, interests and perspectives:

BoF Insights has also collaborated with Juv Consulting — a company launched by three 16-year-old entrepreneurs in 2016 — to field a proprietary survey of nearly 1,000 US Gen-Zers. This survey reveals that 89 percent of the survey participants rate fashion as important for boosting confidence, while 82 percent say fashion is important for establishing their identities. For Gen-Zers, fashion is less about being trendy or denoting status.

Keeping up with fads has become more difficult than ever, as social media has accelerated trend formation. Moreover, Gen-Z has inverted the design process — aesthetics like Barbiecore, Cottagecore, Dark Academia and Coastal Grandma originated bottoms-up from social media and resale platform content instead of top-down from fashion brands and retailers. As a result, many Gen-Zers tend to adapt pieces representative of trends into their own personal styles, as opposed to following trends full-scale.

Brands like Nike, Gucci and Adidas have built the most ardent following among this generation as the leading favoured brands among our panel. Gucci is the only luxury brand to appear in the top 10 list of unprompted favourite brands, while Louis Vuitton appears further down among the top 20. Gucci is notable for its efforts to court young consumers early on within virtual gaming worlds like Roblox. In particular, BoF Insights reveals that the majority of Gen-Zers aspire to buy more luxury clothing and accessories as they gain purchasing power.

The report completes its analysis with a playbook for fashion executives, unpacking how your companies can best connect with Gen-Z through four pillars: communications, style, communities and brand evolution.

Why this BoF Insights report is a must-have:

• Assesses the generational divide and prevailing attitudes of each major US generation from Baby Boomers to Gen-Zers, including a detailed examination of why Gen-Z is distinct by identifying six key values
• Features proprietary research with Gen-Z consumers in the US, revealing the most in-demand fashion and footwear brands, shopping triggers, sources of inspiration, and information for purchasing and finally methods of product disposal (including resale)
• Analyses six key personality clusters that are representative of the US Gen-Z population using machine learning applied to social media profiles
• Highlights concise case studies on Dr. Martens, Gucci, PacSun, Princess Polly and Remass (one of the top sellers on Depop), as well as strategic analysis of fashion companies like Abercrombie & Fitch, Aritzia, Forever 21, Gap, Guess, J.Crew, Nike and Patagonia
• Unpacks tactics for brands and retailers to effectively appeal to Gen-Z related to tailoring communications, honing in on style/positioning amid trend acceleration, building and engaging communities, and enabling a company to identify and adapt to cultural and technological shifts

This report is based on four proprietary research inputs:

• Survey panel of approximately 1,000 Gen-Z participants (aged 13 - 25) across the US fielded by Juv Consulting
• Social media analysis by Quilt.AI of approximately 5,000 public Instagram posts conducted via machine learning to create six personality clusters
• 4 focus groups with a total of 15 Gen-Z participants located across the US (conducted with The Z Suite from BCG PR and Juv Consulting)
• 8 interviews with executives from agencies, consultants, start-up operators and influencers and 12 interviews with founders, chief executives and other senior executives from brands, retailers, rental platforms, resale platforms, and gaming and social media platforms

Companies featured in the report include: Abercrombie & Fitch, Adidas, American Eagle, Aritzia, By Rotation, Claire’s, Depop, Forever 21, Gucci, Guess, H&M, Levi’s, Louis Vuitton, Nike, Old Navy, PacSun, Patagonia, Pink, Princess Polly, Puma, Roblox, Shein, TikTok, Under Armour, Uniqlo, Urban Outfitters, Vans and Zara.