A Tiffany & Co. bracelet was once a status symbol for young people. That might not be the case anymore.
Here’s the evidence: Tiffany & Co. announced that its global comparable sales declined 5% (on a constant exchange rate basis) for the fourth quarter of fiscal 2015, which included the holiday season — a time many millennial women might recall begging for one of the iconic “Return to Tiffany” bracelets ten years ago.
The brand is not entirely dead; global comparable sales on a constant exchange rate basis for all of fiscal 2015 were flat.
“While Tiffany still has a strong brand, it is notable that the brand resonates most with affluent older shoppers. Among affluent younger shoppers the brand is not viewed negatively but is seen as representing ‘old world luxury’ which does not entirely chime with their lifestyles and values. This means Tiffany often loses out among this important, and growing, group.” Neil Saunders, CEO of consulting firm Conlumino, wrote in a note to clients.
Tiffany’s classic look doesn’t bode well for young people, who are used to the speed, price, and trend-focused fast fashion. (Consider the rapidly growing fast fashion-esque jewelry startup, BaubleBar).
That’s not to say Tiffany hasn’t tried to rectify this problem.
“Tiffany has tried to address this problem with the introduction of new fashion focused collections and more accessible introductory price points across some ranges. However, while the changes have been well received, we do not believe they have been sufficient to change perceptions,” Saunders wrote. “These are clearly long term issues which have acted as a drag on Tiffany for some time. However, they were exacerbated during the fourth quarter by the lower levels of holiday gifting of jewelry in the US. For a brand like Tiffany, where lavish gifting is an important driver of buying, such a trend was distinctly unhelpful.”
“For Gen Z, gifting is an occasion that mirrors the more conservative behavior of Gen Z: they are practical, frugal, and prefer to blend in, not standing out with glitzy items,” Nancy Nessel, Generation Z expert, wrote in an email to Business Insider in January. “Gen Z is very practical — financially and behaviorally — about how they attain, earn, save and spend their money, and this practical mentality applies to gifts. Gen Z is more likely to save their money, saving money gifts and earnings to put towards their savings for a car, or for college tuition.”
“Gen Z, especially the 98%, is so practical that they are fine with receiving knock offs of luxury items, such as fake Rolexes bought on the streets of NYC. Gifts are exchanged such as Avalanche, the Target line of Patagonia or other minimalist lines.”
This would mean that the holiday times — once marked by lavish gift giving — is getting a makeover.
But what about teens who are privy to a more comfortable financial situation?
“While the more affluent Gen Z might request luxury item gifts, most of Gen Z wants a very different kind of luxury item today. If Gen Z wants a luxury item, it’s going to be more practical than jewelry from Tiffany or an old traditional brand. They want items like a Patagonia vest (to wear year round), Vera Bradley set of luggage (they can use for many years ahead), Vineyard Vines clothing (a practical luxury item), or new top of the line sports gear (something they need in a more upscale presentation). Gen Z will do the research and legwork to be financially practical when it comes to gifts – affordable or expensive items.”
Jason Dorsey, teen and millennial expert, told Business Insider in January that young people would prefer to spend their money on experiences or technology. Better yet — they want the sweet combination of both.
“Our interviews with teens, we call them iGen, as well as millennials shows that they prefer to spend money on experiences rather than stuff. They specifically want experiences they can broadcast on social media. We see this more important than ever as our new study showed that 42% of iGen say social media has a direct impact on their happiness—which is more than 10% points higher than millennials,” Dorsey wrote in a note to Business Insider.
“Besides experiences, iGen and millennials both like to spend money on technology, what we would consider a small but utilitarian luxury. In fact, iGen, more than any other generation, said young people should get their first smartphone at age 13! The combination of wanting to buy experiences and technology does not bode well for expensive luxury items as they’re not very practical and once you’ve had your new piece of jewelry on a few Instagram pics and Snapchats, you can’t wear it for a long time or else it makes it look like you have nothing else to wear,” Dorsey wrote.
While that may seem frivolous, teens see their older peers as the embodiment of what they don’t want to become: strapped to their debts.
“The bottom line, is that our research found iGen in particular has come of age in an uncertain economic time and they don’t want to end up in debt like Millennials and this is affecting their purchases, starting with luxury goods but going all the way to choosing a more economical college,” Dorsey wrote.
Of course, a shift in the way teens spend or desire gifts can’t entirely fuel a sales nosedive. The company pointed to several other factors as detriments to sales, including a strong dollar and “volatile and uncertain economic and equity market conditions that will likely affect consumer spending.”
In other words — most people don’t want to shell out lots of cash for jewelry right now.