The trend that high value handbags can be worn with jeans and other casual items of clothing has had a major impact on the leather goods market and as a result of this, the marketing of exotic leather and the products manufactured therefrom have changed. We do not know what the future consumer trend will be, but we do know who the trendsetters will be and that their behaviour is sure to have an inevitable impact on the market for leather goods.
What we know today is that there are certain aspects that will have a definitive impact on the leather industry. To give examples, the environmental impact of the carbon foot print created by the supply chain and manufacturing facilities as well as the importance of raw material traceability which will become benchmarks to obtain access to the market place.
Other factors to consider is the disappearances of family-owned tanneries and leather goods manufacturers which have, or will become part of big corporations. All of this is part of the strategy to secure control over the supply chain securing of raw material and manufacturing skills. This is already happening and will undoubtedly escalate. Companies that are not part of the fashion brand supply chain will have a tough time in future staying in business.
The marketing of exotic leather is already challenged with the increased dependence on fashion houses. Fashion houses must change their collections three to four times a year and it just may happen that a particular exotic may miss a whole year or two.
When family-owned tanneries and leather goods manufacturers were dominant, the exotic leather business was much more stable with a more consistent demand and a market could be built for exotic leather. For the independent company the marketing and sales pipeline as we used to know it, does not exist anymore or at the best there is very little left of it.
At present crocodile leather is excluded from this volatility that is being experienced by other exotics. This can possibly be attributed to the fact that the new investors in crocodile tanneries must financially justify their investments. This is absolutely the correct strategy. However, there will be a tipping point and the current situation cannot continue indefinitely.
One of the aspects is that crocodile farmers are receiving ever-higher prices for the raw material but there is no significant effort to increase quality and this might be the Achilles heel of the industry. Keeping this in mind, crocodile leather suppliers should not rest on their laurels, thinking that they are immune to the challenges currently experienced by the rest of the exotic leather industry.
It is general practice that exotic tanneries are sellers of exotic leather and that not much attention is given to the aspect of marketing. There is good reason for this as the different species offered to the market are too fragmented and it would be quite a task to organize a marketing plan. At present, it is the South African ostrich industry, American alligator and the Japanese Reptile Association that are making some effort to promote and market exotics.
The question obviously begs, How do we approach this future exotic market? One way to try and predict the future exotic market is to look at changes in demographics. In 10 to 15 years a large segment of customers will be today’s millennials. In short the millennials are the current population group between the ages of 16 and 34 years. They will start buying exotics when they are in the age group 35 to 53. We are already in the early shift of this group to become potential customers. Millennials engage differently with brands, retail and service models. A huge contributing factor to this interaction is the rate of technological advancement and innovation. Millennials are the forefront in testing the limits of technology.
Obviously behaviour changes with age and for the millennials the process of aging will be different to that of the baby boomers. The big difference is the attachment to technology which is empowering to millennials and their belief that they can change the world through social media, not trusting institutions and corporations with a larger trust of their friends. They support the principle of fair trade and are very receptive to cause-marketing and are more likely to purchase items associated with a particular cause.
Research shows that company executives (read baby boomers) are ignoring the impact of millennials on the future of their businesses.
How do we market exotic leather to these millennials? Will they even be interested in leather? Even more so in exotic leather in particular? We as tanners must realize that we are not in a position to market our leather to the final millennial consumer but that we must present our leather to those designers and decision makers that are selling product to the millennials. There is a very good chance that they themselves will be millennials. We therefore find ourselves in the privileged position that we only need to deal with a select group of millennials and that they have substantial influence on what material will be used in the collections of fashion brands.
How do we deal with this select group of significant individuals? Research in the USA identified very specific characteristics as to how millennials perceive the world and how they react to it. Millennials are distinguished from older generations (generation x, baby boomers and silent group) by their spending habits, brand preferences, values, personalities and general outlook on life.
In terms of marketing, millennials expect two–way mutual relations with companies and their brands. This is called the reciprocity marketing principle. The normal linear frame work of marketing where communication is pushed to the customer does not work with this group. They want to be part of the communication and because of this, they have a bigger sway over their family and friends in terms of purchasing decisions.
When a decision is taken to target the millennials in the manufacturing sector, the principles of the reciprocity marketing should be followed and the following aspects form the base of this approach:
Multimedia and multi-channel: Millennials can deal with a variety of media and channels at the same time. However, the most important tool is mobile smartphones. It is known that 67% of millennials in the research group use their smartphone to access Facebook. Traditional media like TV, print, radio and catalogues have very little, or even no influence on this group. Marketing exotic leather to millennial decision makers can be done effectively through using mobile phone apps ie: Facebook, Instagram, Twitter etc. There is however certain criteria which needs to be met to make it effective:
To reach millennials through social media, the communication should be optimistic, positive and authentic. Marketing communication should be real i.e. don’t claim product attributes that are not true. A good example is not to use the following: “world class” and “best in the world”.
The same can be said about customer service. Listen well and react immediately. Millennials are an impatient bunch and they move very quickly to the next product.
Communicate clear and measurable goals
Companies should make a conscious decision that they will set up a specific marketing strategy for millennials. See it as “future“ marketing with very specific goals within the overall company marketing objectives. The challenge is to have sustainable focus, as impact on the bottom line will not be immediately visible and there is a good chance that you as the marketing entity will lose interest. This is relevant to social media marketing in general.
Companies must show that they are aligned with the millennials’ values. Companies should share more detailed information on their social responsibility programs and what they do to protect the environment. We in the leather industry should realize that the humane treatment of animals will become a major issue in future and it will get to a stage that the responsibility to guarantee that a species was treated humanely will be the tanner’s responsibility. As mentioned earlier, it will be required to report the impact on the environment of transforming a raw skin into a piece of leather.
The above are only a few aspects covering the behaviour of millennials and is it an effort to sensitize my fellow colleagues in the exotic leather industry that we do have a long way to go in refining the approach we have to market exotic leather.
As with many things in life, the aspect of millennials as reported in social science research literature is very complex and a clear picture is not yet available how they will “mature”.