Gen Z is redefining Luxury: Why exclusivity is becoming more personal, cultural and meaningful. | The Generation Z Shift: Conversations

Description

While Gen Z is often thought to be democratizing the high-end market, recent research indicates they are actually redefining the concept of exclusivity through a lens of personal identity and cultural knowledge. Unlike older generations who prioritized wealth and heritage, younger consumers seek unique, coded status symbols such as rare vintage finds, niche fragrances, and curated pre-owned items. This shift moves luxury away from simple price-based scarcity toward meaningful experiences and personal recognition, where "knowing" a brand is more important than merely owning it. Consequently, luxury houses must balance their historical legacy with active creativity and human-centric service to remain relevant. Ultimately, the next generation is not rejecting prestige but is instead demanding that exclusivity provide a sense of belonging rather than just a barrier to entry.

The Gen Z shift: Redefining European Leadership

An essential audio series by Benoît Vancauwenberghe, founder of 20Something, realized by an AI podcast by NotebookKLM. This is the indispensable resource for HR Leaders and Managers across Europe. We cut through the noise, providing actionable insights on how Gen Z is fundamentally reshaping leadership, work, and talent strategy. Packed with cutting-edge research and consulting experience.

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Transcription

Speaker #0
Welcome to the Gen Z Shift, a podcast decoding Generation Z and Generation Alpha for leaders, brands, and changemakers. Based on the research and articles of Benoivin Kauenberger, a European expert on Generation Z, Generation Alpha, and brand culture. Each episode helps you understand the generations reshaping how we work, consume, connect, and live. Because the future isn't coming. It's already here. So, I want you to picture the most exclusive luxury store in the world. You know the one. You've got the heavy velvet rope. The intimidating bouncer, the hushed atmosphere, and that crazy multi-year wait list.
Speaker #1
Right, the classic formula for desire.
Speaker #0
Exactly, keep people out. But today, we're doing a deep dive into an entirely different reality. Gen Z is basically walking right past that bouncer, not to tear the velvet rope down and let everyone in, but to completely change what it means to be on the inside.
Speaker #1
Yeah, it's a profound structural change to how the market actually operates.
Speaker #0
It really is. And if you're leading a brand or just trying to understand the changing mechanics of status, the sources we're unpacking today reveal a massive shift in how exclusivity actually functions. So if the old model was all about the velvet rope, what are the sources telling us about how Gen Z is slipping past the bouncer today?
Speaker #1
Well, to truly grasp the magnitude of what the data is telling us, we kind of have to look back at the old luxury equation. Historically, it was incredibly stable. A house leveraged its heritage, set a sky-high price, and just heavily restricted distribution.
Speaker #0
Manufactured scarcity.
Speaker #1
Exactly. That manufactured scarcity was the engine of desire. The logic was purely mathematical. The fewer people who could access a product, the more valuable it appeared. Social recognition came from being one of the rare few who could afford the financial barrier to entry. But what we're seeing in the research today is that this old mathematical equation is completely breaking down.
Speaker #0
Which is wild because, you know, if you look at the headlines, The popular narrative is that this younger generation is democratizing luxury. Like, they're supposedly anti-gatekeeping and demanding that everything be accessible to everyone. But looking at our sources, that narrative seems, well, entirely false.
Speaker #1
Oh, it's far from the truth. The data indicates they actually really crave exclusivity.
Speaker #0
Wait, really? They still want the velvet rope.
Speaker #1
They do. There's a recent McKinsey State of Fashion report looking ahead to 2026, and it found something that directly contradicts that whole democratization myth. Gen Z and millennial luxury customers cite exclusivity as a primary reason to increase their luxury spending 11 percentage points more often than the average older consumer.
Speaker #0
Wow, 11 points more.
Speaker #1
Yes. And McKinsey also projects that Gen Z luxury spending will actually surpass baby boomer spending by 2029.
Speaker #0
That's a huge shift.
Speaker #1
It is. The divergence isn't in their desire for exclusivity. It's in how they evaluate it. For older generations, Exclusivity was a reflection of accumulated wealth. For this generation, it's deeply tied to personal identity, self-definition, and cultural signaling.
Speaker #0
Okay, I want to dig into that shift from wealth to personal identity. Because if they still demand exclusivity, but they're evaluating it based on personal meaning rather than just an intimidating price tag, that fundamentally alters... Product strategy, right? I mean, a brand can't just slap a giant logo on a limited run bag and expect it to sell out just because it's expensive and hard to find.
Speaker #1
Right. The old dynamic where scarcity automatically equals exclusivity is completely dead. Luxury brands have historically been absolute masters of manufacturing that artificial scarcity. But there's this fascinating 2025 experimental study involving millennials and Gen Z that isolates this exact mechanism.
Speaker #0
Oh, the one about purchase intentions?
Speaker #1
Yes, exactly. The researchers wanted to see what actually drives the intention to purchase a luxury item. They discovered that the need for uniqueness significantly predicted purchase intention, while scarcity by itself did not have that same direct causal effect.
Speaker #0
I see. So scarcity is something a brand manufactures, while uniqueness is something the consumer feels.
Speaker #1
Precisely. That's the vital distinction. Scarcity is just a supply chain decision. Uniqueness is an emotional resonance. Right. If a brand produces only 500 units of a jacket, But that jacket doesn't say anything interesting about the individual wearing it. The modern consumer views it merely as a scarce object, not a unique one. A brand-imposed limitation only translates to desirability if it reinforces the consumer's individual narrative.
Speaker #0
Okay, let's unpack this for a second, because I'm trying to square that psychological need for deep individuality with the reality of how this generation actually navigates the world. If Gen Z is, you know, hyper-online, spending hours scrolling mass digital platforms like TikTok, where an algorithmic feed is pushing the exact same global trends to millions of people simultaneously, isn't that the opposite of uniqueness? How do they balance mass digital discovery with wanting something highly individual?
Speaker #1
It does seem contradictory at first.
Speaker #0
Yeah.
Speaker #1
But you have to look at how they actually use those algorithms. They aren't passively absorbing a single monoculture. They use these massive digital platforms to endlessly fracture culture into hyper-specific micro-niches.
Speaker #0
Oh, I see. So they're digging deeper.
Speaker #1
Exactly. They use the mass scale of the Internet to find incredibly obscure, specific aesthetics that perfectly match their internal identity. When they finally decide to splurge on a luxury item, they want that purchase to reflect. that highly curated, deeply researched version of themselves. They're highly discerning. They aren't buying the item to prove they're rich. They're buying it to prove they have a distinct, highly cultivated point of view.
Speaker #0
Which means the actual products that satisfy that need aren't necessarily going to be found sitting under glass in a pristine, newly opened boutique. If a consumer is looking for a piece that proves they have a unique point of view, they're going to look for items that have a story, a history, and like... an element of rarity that can't just be artificially manufactured by a marketing department.
Speaker #1
Exactly.
Speaker #0
Which leads us directly into the explosive data we're seeing around the secondhand market.
Speaker #1
Yeah, the rise of resale is arguably the most disruptive force traditional luxury has faced in decades. Because if you apply the old economic logic, resale is terrifying for a heritage brand. The assumption was always that if more people can access a prestigious label at a lower price point, the perceived exclusivity of the brand must plummet.
Speaker #0
Right, because it cannibalizes the primary market.
Speaker #1
Exactly. Right. But the data reveals a much more complex consumer psychology here. EY's 2026 Luxury Client Index surveyed over 1,600 luxury consumers across 11 global markets. They found that 62% of these consumers would willingly buy certified pre-owned items directly from the luxury brands themselves.
Speaker #0
And if you're sitting in a boardroom right now as a brand director looking at that 62% figure, your first instinct might be panic. You spend millions crafting an immaculate physical storefront, designing new collections, pushing full price inventory, and the data says your target buyer is actively seeking out a 10-year-old stuffed up bag.
Speaker #1
Oh, and it gets even more challenging for the traditional mindset. In that same EY index, only 24% of respondents believe that offering pre-owned items reduced a brand's exclusivity.
Speaker #0
Wow, only 24%.
Speaker #1
Yeah, and the critical finding is that 46% of all respondents, and that number jumps to 53% for Gen Z state. that the existence of certified pre-owned items actually increases their likelihood of buying luxury overall.
Speaker #0
That feels entirely counterintuitive. Introducing used, more accessible inventory actually increases the desire for the premium brand as a whole. How does the mechanism of that even work? Why does a cheaper, older item make the brand more desirable to this demographic?
Speaker #1
Because engaging with the pre-owned market isn't a rejection of luxury. It's a rejection of the generic. There's a 2025 Italian study looking specifically at Gen Z consumers in vintage fashion that breaks down the actual drivers behind this.
Speaker #0
And it's not just about sustainability, right? Because that's what we always hear.
Speaker #1
Exactly. The media narrative is always that this demographic buys vintage primarily because they're the ultra-green, climate-conscious generation. But the researchers found that while sustainability is definitely a factor, it is not the dominant psychological driver. What actually drives the behavior is the search for uniqueness, a high level of personal involvement in fashion history, and the experiential thrill of offline shopping.
Speaker #0
So budget matters, but the core motivation is the pleasure of the hunt.
Speaker #1
Spot on. The hunt is everything.
Speaker #0
You know, it's like the difference between walking into an airport bookstore and buying the mass market thriller sitting right on the front display versus spending a Saturday afternoon hunting through a dusty local bookshop to find a discontinued first edition print from 2003. Both of those books cost money, right? Both require an exchange of capital. But the second one proves you have better taste.
Speaker #1
I love that analogy.
Speaker #0
Thanks. I mean, it proves you put in effort, you had to dig for it, you had to know what you were looking for, and you had to actually recognize its value when you found it.
Speaker #1
Expanding on that bookstore analogy, the person who buys the airport bestseller and the person who hunts down the rare 2003 edition are both seeking a form of exclusivity. But the effort required to find the 2003 edition creates a much... deeper emotional bond with the object. However, there is a massive operational warning for brands in the sources here.
Speaker #0
What's the warning?
Speaker #1
A 2026 study noted that if a luxury brand involves itself in the secondhand market, it can actually reduce perceived exclusivity if the execution is poor.
Speaker #0
Ah, so you can't just throw a rack of used clothes in the back corner of your flagship store and expect it to generate that thrill of the hunt. It would just look like a clearance section, which instantly kills the aura of luxury.
Speaker #1
It destroys the aura entirely. For a brand to succeed in the second-hand space, they have to treat their archival pieces with even more reverence than their new collections. It requires heavy curation, meticulous authentication, and strict control over the narrative. Resale only elevates a luxury brand if the brand uses it to reinforce the feeling of uniqueness and discovery. They really have to act more like museum curators than traditional retailers.
Speaker #0
That hunt for a rare 2003 piece reveals a massive behavioral shift. The person hunting for that archival bag isn't just trying to show off that they had the money to buy it. They're trying to communicate that they have the knowledge to appreciate it. The item isn't just a vessel for financial capital anymore. It's a vessel for cultural capital.
Speaker #1
And this represents a fundamental redefining of how we signal status today. The sources consistently highlight a transition from an ownership to recognition model. In the traditional luxury framework, the signal was intentionally blunt and easy for anyone to decode. You wore a highly recognizable logo or carried an iconic bag, and it immediately broadcasted economic dominance. It was a very loud way of saying, I have the financial resources to afford this.
Speaker #0
It was the giant gold watch or the logo monogrammed luggage. The entire point was that the average person on the street knew exactly how much it cost.
Speaker #1
Yes, conspicuous consumption. But for younger consumers, distinction has become heavily coded. The value is no longer in broadcasting your bank account to everyone. The value is in broadcasting your specific knowledge to a select group of peers. The flex is knowing the obscure designer before they became mainstream, or understanding the niche architectural reference behind a collaboration, or wearing a fragrance that the average person cannot identify. The new luxury signal doesn't say, I have money. It says, I know what this is.
Speaker #0
You're essentially paying a premium to be on an inside joke. You're purchasing a physical object to prove you belong to a very specific, highly educated cultural tier.
Speaker #1
There's a 2025 study focused on the niche fragrance market in China that perfectly illustrates this mechanism. Fragrance is the ultimate test case because it's completely invisible. You cannot flash a logo.
Speaker #0
Oh, that's such a good point.
Speaker #1
The researchers found that psychological attachment to these niche luxury products was driven by personalization, community identity. and the cultural value embedded in the brand's story. As the Chinese luxury market matures, we see a massive move away from pure conspicuous consumption toward this subtle, coded consumption.
Speaker #0
So what does this all mean for those legacy brands? Because if we zoom out, this is a terrifying shift. If you're steering a brand that has been around for 150 years, your entire business model is built on the assumption that your logo carries inherent, undeniable value. But if a Gen Z customer... only likes them and treats luxury as just one part of their fluid lifestyle, can a brand even rely on its 150-year-old logo anymore?
Speaker #1
It definitely doesn't carry enough weight to guarantee loyalty on its own. A 2021 study looking at Gen Z's relationship with luxury brands found a really revealing shift in language. Their relationship with luxury was overwhelmingly described as like, not love.
Speaker #0
Ouch. For a heritage brand that assumes its customers hold this deep, multi-generational reverence for its name, Hearing that their demographic just casually likes them has to be a half reality check.
Speaker #1
It fundamentally alters the power dynamic. Older generations often possessed a deep, almost inherited emotional attachment to a single fashion house. It was a lifelong relationship. But younger consumers integrate luxury into a much more fluid identity. Right. Luxury is not the sole symbol of their success. A single consumer today might buy a vintage piece from a historic European house on Tuesday. Discover an obscure niche brand through a TikTok creator on Wednesday and drop significant money on an extraordinary piece of jewelry from a completely unknown artisan on Thursday. The purchase must be won every single time.
Speaker #0
The battleground has entirely shifted. You can't coast on the momentum of a legacy logo. You have to offer something beyond the physical product to capture their attention. And looking at the data, it seems the only way to compete when history isn't enough on its own. is to leverage that history to create hyper-personalized experiences.
Speaker #1
It is important to clarify that heritage hasn't vanished as a driver of value. The EY study found that 46% of Gen Z respondents still cite heritage and legacy as a reason for preferring established luxury brands.
Speaker #0
Okay, so it still matters.
Speaker #1
It does. However, we have to look at the relative weight of that factor. For baby boomers, that figure was 67%. The gravity of history is weakening as we move down the generational timeline. For an older customer, The mere fact that a house has operated since the 19th century carries enormous inherent legitimacy. But Deloitte's 2026 work points out that younger consumers approach that history with a different framework. They acknowledge the 150 years of history, but they immediately ask, what are you doing with those 150 years now?
Speaker #0
It's great that you've been making leather trunks for royalty since the 1800s, but how does that archival knowledge help me express my specific identity today? The history has to be active.
Speaker #1
Active is the perfect word. A house cannot simply protect its old codes. It must continuously prove why those codes remain culturally relevant. Which brings us to the new premium placed on experience. The physical product is now only a fraction of the total luxury value proposition.
Speaker #0
And the data on that is wild.
Speaker #1
It really is. EY found that 73% of aspirational luxury clients would actually pay money simply to attend an exclusive luxury experience, even without taking a physical product home. Furthermore, 75% stated they would be more likely to repurchase from a brand if they were offered complimentary experiences.
Speaker #0
But the data also shows a staggering disconnect in how brands are delivering on that, right? because a remarkable 30% of these consumers reported that they had received... absolutely zero exclusive experiences or invitations from a luxury brand in the past 12 months. Brands are spending massive amounts of capital trying to make a handbag feel exclusive, while the consumer is actively signaling that they'd rather be invited to a private dinner with the creative director or, like, given a tour of the workshop.
Speaker #1
The industry is still largely trapped in an infrastructure built to sell physical goods, while the consumer is demanding hospitality and access. Rarity still matters deeply, but rarity is increasingly tied to access and discovery. not just the price of the object. And this explains why, despite being a generation that lives entirely online, physical stores remain absolutely critical. The EY study found that 71% of respondents still use brand stores as their final purchase channel.
Speaker #0
Because you can't get a VIP experience or the thrill of discovery just from clicking a digital shopping cart icon.
Speaker #1
Exactly. The human interaction, the personal recommendations, and the physical atmosphere of the store are the primary drivers of satisfaction. Digital platforms are unparalleled for the discovery phase, but the physical environment is what creates the necessary ceremony of luxury.
Speaker #0
Which brings us to a massive operational tension. If consumers demand hyper-personalization and highly curated experiences, brands naturally turn to artificial intelligence to deliver that at scale. AI can process massive amounts of customer data to predict exactly what you want. But how does an algorithm provide a ceremony?
Speaker #1
It creates what EY terms the AI paradox. And understanding this paradox is essential for anyone trying to navigate the market today. The data shows that 94% of aspirational luxury clients believe AI can and should improve the shopping experience.
Speaker #0
Right. They want the friction removed.
Speaker #1
Exactly. They want better search functions and highly accurate product recommendations. They want the technology. But simultaneously, 72% of those same consumers worry about losing the human touch.
Speaker #0
If we break down the mechanism of that paradox, it makes complete sense. AI is like a brilliant digital butler who knows your exact measurements and past purchases. It's incredibly precise, but it's automated. It doesn't actually care about you. It's just running math. The human touch is the store associate who pulls a specific watch from the back room and says, I saved this specifically for you because I remember the story you told me about your grandmother. AI can't fake that feeling of belonging.
Speaker #1
That tension is the perfect definition of 2026 luxury. Why does the human remembering your story matter so much more than the computer storing the data? Because a human being chooses to remember. An AI is programmed to store data points. The human associate shares vulnerability, memory, and genuine connection. The more technology and AI personalize the logistical aspects of our lives, the more valuable genuinely human recognition becomes. History must be active, not preserved in amber.
Speaker #0
So synthesizing all of these sources, we started by asking a core question for this deep dive. Are they democratizing luxury or are they redefining exclusivity? It's clear that the velvet rope hasn't gone anywhere. The bouncer is still at the door. But the rules for who gets to unclip the rope have entirely changed.
Speaker #1
That is the ultimate takeaway. Gen Z is absolutely not democratizing luxury. They still want the velvet rope. But the profound philosophical shift is the movement from exclusion to belonging. They care less about who you keep outside. and much more about how special and culturally understood you make them feel once they're inside.
Speaker #0
It's a complete inversion. Which leaves me with one final lingering thought for you to consider. If the new luxury is all about proving your cultural knowledge over your financial wealth, what happens in a few years when AI gets so good that it can perfectly simulate cultural capital for absolutely anyone? When an algorithm can fake being an insider, how will we prove our uniqueness then? 3X for listening to the Gen Z Shift Audio.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

The Generation Z Shift: Conversations explores the signals, tensions and changes emerging across today’s workplaces. Inspired by Benoit Vancauwenberghe’s work with younger generations, his 20something articles, research, and consulting experience, each episode turns one idea into a short, accessible conversation.

The series looks at questions such as why loyalty is changing, what younger generations expect from leadership, how feedback culture is evolving, why disengagement can be a signal rather than the problem itself, and what organizations need to rethink to stay relevant.

This audio series expands on the world behind The Gen Z Shift. It is not the audiobook, but a complementary series designed to explore the ideas, observations, and generational shifts shaping work, leadership, and culture. Created from Benoit’s original content and produced in an AI-generated conversational format using NotebookLM. Listen, question your assumptions, and learn to read the signals differently.

Hosted on Ausha. See ausha.co/privacy-policy for more information.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Description

The Gen Z shift: Redefining European Leadership

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Welcome to the Gen Z Shift, a podcast decoding Generation Z and Generation Alpha for leaders, brands, and changemakers. Based on the research and articles of Benoivin Kauenberger, a European expert on Generation Z, Generation Alpha, and brand culture. Each episode helps you understand the generations reshaping how we work, consume, connect, and live. Because the future isn't coming. It's already here. So, I want you to picture the most exclusive luxury store in the world. You know the one. You've got the heavy velvet rope. The intimidating bouncer, the hushed atmosphere, and that crazy multi-year wait list.
Speaker #1
Right, the classic formula for desire.
Speaker #0
Exactly, keep people out. But today, we're doing a deep dive into an entirely different reality. Gen Z is basically walking right past that bouncer, not to tear the velvet rope down and let everyone in, but to completely change what it means to be on the inside.
Speaker #1
Yeah, it's a profound structural change to how the market actually operates.
Speaker #0
It really is. And if you're leading a brand or just trying to understand the changing mechanics of status, the sources we're unpacking today reveal a massive shift in how exclusivity actually functions. So if the old model was all about the velvet rope, what are the sources telling us about how Gen Z is slipping past the bouncer today?
Speaker #1
Well, to truly grasp the magnitude of what the data is telling us, we kind of have to look back at the old luxury equation. Historically, it was incredibly stable. A house leveraged its heritage, set a sky-high price, and just heavily restricted distribution.
Speaker #0
Manufactured scarcity.
Speaker #1
Exactly. That manufactured scarcity was the engine of desire. The logic was purely mathematical. The fewer people who could access a product, the more valuable it appeared. Social recognition came from being one of the rare few who could afford the financial barrier to entry. But what we're seeing in the research today is that this old mathematical equation is completely breaking down.
Speaker #0
Which is wild because, you know, if you look at the headlines, The popular narrative is that this younger generation is democratizing luxury. Like, they're supposedly anti-gatekeeping and demanding that everything be accessible to everyone. But looking at our sources, that narrative seems, well, entirely false.
Speaker #1
Oh, it's far from the truth. The data indicates they actually really crave exclusivity.
Speaker #0
Wait, really? They still want the velvet rope.
Speaker #1
They do. There's a recent McKinsey State of Fashion report looking ahead to 2026, and it found something that directly contradicts that whole democratization myth. Gen Z and millennial luxury customers cite exclusivity as a primary reason to increase their luxury spending 11 percentage points more often than the average older consumer.
Speaker #0
Wow, 11 points more.
Speaker #1
Yes. And McKinsey also projects that Gen Z luxury spending will actually surpass baby boomer spending by 2029.
Speaker #0
That's a huge shift.
Speaker #1
It is. The divergence isn't in their desire for exclusivity. It's in how they evaluate it. For older generations, Exclusivity was a reflection of accumulated wealth. For this generation, it's deeply tied to personal identity, self-definition, and cultural signaling.
Speaker #0
Okay, I want to dig into that shift from wealth to personal identity. Because if they still demand exclusivity, but they're evaluating it based on personal meaning rather than just an intimidating price tag, that fundamentally alters... Product strategy, right? I mean, a brand can't just slap a giant logo on a limited run bag and expect it to sell out just because it's expensive and hard to find.
Speaker #1
Right. The old dynamic where scarcity automatically equals exclusivity is completely dead. Luxury brands have historically been absolute masters of manufacturing that artificial scarcity. But there's this fascinating 2025 experimental study involving millennials and Gen Z that isolates this exact mechanism.
Speaker #0
Oh, the one about purchase intentions?
Speaker #1
Yes, exactly. The researchers wanted to see what actually drives the intention to purchase a luxury item. They discovered that the need for uniqueness significantly predicted purchase intention, while scarcity by itself did not have that same direct causal effect.
Speaker #0
I see. So scarcity is something a brand manufactures, while uniqueness is something the consumer feels.
Speaker #1
Precisely. That's the vital distinction. Scarcity is just a supply chain decision. Uniqueness is an emotional resonance. Right. If a brand produces only 500 units of a jacket, But that jacket doesn't say anything interesting about the individual wearing it. The modern consumer views it merely as a scarce object, not a unique one. A brand-imposed limitation only translates to desirability if it reinforces the consumer's individual narrative.
Speaker #0
Okay, let's unpack this for a second, because I'm trying to square that psychological need for deep individuality with the reality of how this generation actually navigates the world. If Gen Z is, you know, hyper-online, spending hours scrolling mass digital platforms like TikTok, where an algorithmic feed is pushing the exact same global trends to millions of people simultaneously, isn't that the opposite of uniqueness? How do they balance mass digital discovery with wanting something highly individual?
Speaker #1
It does seem contradictory at first.
Speaker #0
Yeah.
Speaker #1
But you have to look at how they actually use those algorithms. They aren't passively absorbing a single monoculture. They use these massive digital platforms to endlessly fracture culture into hyper-specific micro-niches.
Speaker #0
Oh, I see. So they're digging deeper.
Speaker #1
Exactly. They use the mass scale of the Internet to find incredibly obscure, specific aesthetics that perfectly match their internal identity. When they finally decide to splurge on a luxury item, they want that purchase to reflect. that highly curated, deeply researched version of themselves. They're highly discerning. They aren't buying the item to prove they're rich. They're buying it to prove they have a distinct, highly cultivated point of view.
Speaker #0
Which means the actual products that satisfy that need aren't necessarily going to be found sitting under glass in a pristine, newly opened boutique. If a consumer is looking for a piece that proves they have a unique point of view, they're going to look for items that have a story, a history, and like... an element of rarity that can't just be artificially manufactured by a marketing department.
Speaker #1
Exactly.
Speaker #0
Which leads us directly into the explosive data we're seeing around the secondhand market.
Speaker #1
Yeah, the rise of resale is arguably the most disruptive force traditional luxury has faced in decades. Because if you apply the old economic logic, resale is terrifying for a heritage brand. The assumption was always that if more people can access a prestigious label at a lower price point, the perceived exclusivity of the brand must plummet.
Speaker #0
Right, because it cannibalizes the primary market.
Speaker #1
Exactly. Right. But the data reveals a much more complex consumer psychology here. EY's 2026 Luxury Client Index surveyed over 1,600 luxury consumers across 11 global markets. They found that 62% of these consumers would willingly buy certified pre-owned items directly from the luxury brands themselves.
Speaker #0
And if you're sitting in a boardroom right now as a brand director looking at that 62% figure, your first instinct might be panic. You spend millions crafting an immaculate physical storefront, designing new collections, pushing full price inventory, and the data says your target buyer is actively seeking out a 10-year-old stuffed up bag.
Speaker #1
Oh, and it gets even more challenging for the traditional mindset. In that same EY index, only 24% of respondents believe that offering pre-owned items reduced a brand's exclusivity.
Speaker #0
Wow, only 24%.
Speaker #1
Yeah, and the critical finding is that 46% of all respondents, and that number jumps to 53% for Gen Z state. that the existence of certified pre-owned items actually increases their likelihood of buying luxury overall.
Speaker #0
That feels entirely counterintuitive. Introducing used, more accessible inventory actually increases the desire for the premium brand as a whole. How does the mechanism of that even work? Why does a cheaper, older item make the brand more desirable to this demographic?
Speaker #1
Because engaging with the pre-owned market isn't a rejection of luxury. It's a rejection of the generic. There's a 2025 Italian study looking specifically at Gen Z consumers in vintage fashion that breaks down the actual drivers behind this.
Speaker #0
And it's not just about sustainability, right? Because that's what we always hear.
Speaker #1
Exactly. The media narrative is always that this demographic buys vintage primarily because they're the ultra-green, climate-conscious generation. But the researchers found that while sustainability is definitely a factor, it is not the dominant psychological driver. What actually drives the behavior is the search for uniqueness, a high level of personal involvement in fashion history, and the experiential thrill of offline shopping.
Speaker #0
So budget matters, but the core motivation is the pleasure of the hunt.
Speaker #1
Spot on. The hunt is everything.
Speaker #0
You know, it's like the difference between walking into an airport bookstore and buying the mass market thriller sitting right on the front display versus spending a Saturday afternoon hunting through a dusty local bookshop to find a discontinued first edition print from 2003. Both of those books cost money, right? Both require an exchange of capital. But the second one proves you have better taste.
Speaker #1
I love that analogy.
Speaker #0
Thanks. I mean, it proves you put in effort, you had to dig for it, you had to know what you were looking for, and you had to actually recognize its value when you found it.
Speaker #1
Expanding on that bookstore analogy, the person who buys the airport bestseller and the person who hunts down the rare 2003 edition are both seeking a form of exclusivity. But the effort required to find the 2003 edition creates a much... deeper emotional bond with the object. However, there is a massive operational warning for brands in the sources here.
Speaker #0
What's the warning?
Speaker #1
A 2026 study noted that if a luxury brand involves itself in the secondhand market, it can actually reduce perceived exclusivity if the execution is poor.
Speaker #0
Ah, so you can't just throw a rack of used clothes in the back corner of your flagship store and expect it to generate that thrill of the hunt. It would just look like a clearance section, which instantly kills the aura of luxury.
Speaker #1
It destroys the aura entirely. For a brand to succeed in the second-hand space, they have to treat their archival pieces with even more reverence than their new collections. It requires heavy curation, meticulous authentication, and strict control over the narrative. Resale only elevates a luxury brand if the brand uses it to reinforce the feeling of uniqueness and discovery. They really have to act more like museum curators than traditional retailers.
Speaker #0
That hunt for a rare 2003 piece reveals a massive behavioral shift. The person hunting for that archival bag isn't just trying to show off that they had the money to buy it. They're trying to communicate that they have the knowledge to appreciate it. The item isn't just a vessel for financial capital anymore. It's a vessel for cultural capital.
Speaker #1
And this represents a fundamental redefining of how we signal status today. The sources consistently highlight a transition from an ownership to recognition model. In the traditional luxury framework, the signal was intentionally blunt and easy for anyone to decode. You wore a highly recognizable logo or carried an iconic bag, and it immediately broadcasted economic dominance. It was a very loud way of saying, I have the financial resources to afford this.
Speaker #0
It was the giant gold watch or the logo monogrammed luggage. The entire point was that the average person on the street knew exactly how much it cost.
Speaker #1
Yes, conspicuous consumption. But for younger consumers, distinction has become heavily coded. The value is no longer in broadcasting your bank account to everyone. The value is in broadcasting your specific knowledge to a select group of peers. The flex is knowing the obscure designer before they became mainstream, or understanding the niche architectural reference behind a collaboration, or wearing a fragrance that the average person cannot identify. The new luxury signal doesn't say, I have money. It says, I know what this is.
Speaker #0
You're essentially paying a premium to be on an inside joke. You're purchasing a physical object to prove you belong to a very specific, highly educated cultural tier.
Speaker #1
There's a 2025 study focused on the niche fragrance market in China that perfectly illustrates this mechanism. Fragrance is the ultimate test case because it's completely invisible. You cannot flash a logo.
Speaker #0
Oh, that's such a good point.
Speaker #1
The researchers found that psychological attachment to these niche luxury products was driven by personalization, community identity. and the cultural value embedded in the brand's story. As the Chinese luxury market matures, we see a massive move away from pure conspicuous consumption toward this subtle, coded consumption.
Speaker #0
So what does this all mean for those legacy brands? Because if we zoom out, this is a terrifying shift. If you're steering a brand that has been around for 150 years, your entire business model is built on the assumption that your logo carries inherent, undeniable value. But if a Gen Z customer... only likes them and treats luxury as just one part of their fluid lifestyle, can a brand even rely on its 150-year-old logo anymore?
Speaker #1
It definitely doesn't carry enough weight to guarantee loyalty on its own. A 2021 study looking at Gen Z's relationship with luxury brands found a really revealing shift in language. Their relationship with luxury was overwhelmingly described as like, not love.
Speaker #0
Ouch. For a heritage brand that assumes its customers hold this deep, multi-generational reverence for its name, Hearing that their demographic just casually likes them has to be a half reality check.
Speaker #1
It fundamentally alters the power dynamic. Older generations often possessed a deep, almost inherited emotional attachment to a single fashion house. It was a lifelong relationship. But younger consumers integrate luxury into a much more fluid identity. Right. Luxury is not the sole symbol of their success. A single consumer today might buy a vintage piece from a historic European house on Tuesday. Discover an obscure niche brand through a TikTok creator on Wednesday and drop significant money on an extraordinary piece of jewelry from a completely unknown artisan on Thursday. The purchase must be won every single time.
Speaker #0
The battleground has entirely shifted. You can't coast on the momentum of a legacy logo. You have to offer something beyond the physical product to capture their attention. And looking at the data, it seems the only way to compete when history isn't enough on its own. is to leverage that history to create hyper-personalized experiences.
Speaker #1
It is important to clarify that heritage hasn't vanished as a driver of value. The EY study found that 46% of Gen Z respondents still cite heritage and legacy as a reason for preferring established luxury brands.
Speaker #0
Okay, so it still matters.
Speaker #1
It does. However, we have to look at the relative weight of that factor. For baby boomers, that figure was 67%. The gravity of history is weakening as we move down the generational timeline. For an older customer, The mere fact that a house has operated since the 19th century carries enormous inherent legitimacy. But Deloitte's 2026 work points out that younger consumers approach that history with a different framework. They acknowledge the 150 years of history, but they immediately ask, what are you doing with those 150 years now?
Speaker #0
It's great that you've been making leather trunks for royalty since the 1800s, but how does that archival knowledge help me express my specific identity today? The history has to be active.
Speaker #1
Active is the perfect word. A house cannot simply protect its old codes. It must continuously prove why those codes remain culturally relevant. Which brings us to the new premium placed on experience. The physical product is now only a fraction of the total luxury value proposition.
Speaker #0
And the data on that is wild.
Speaker #1
It really is. EY found that 73% of aspirational luxury clients would actually pay money simply to attend an exclusive luxury experience, even without taking a physical product home. Furthermore, 75% stated they would be more likely to repurchase from a brand if they were offered complimentary experiences.
Speaker #0
But the data also shows a staggering disconnect in how brands are delivering on that, right? because a remarkable 30% of these consumers reported that they had received... absolutely zero exclusive experiences or invitations from a luxury brand in the past 12 months. Brands are spending massive amounts of capital trying to make a handbag feel exclusive, while the consumer is actively signaling that they'd rather be invited to a private dinner with the creative director or, like, given a tour of the workshop.
Speaker #1
The industry is still largely trapped in an infrastructure built to sell physical goods, while the consumer is demanding hospitality and access. Rarity still matters deeply, but rarity is increasingly tied to access and discovery. not just the price of the object. And this explains why, despite being a generation that lives entirely online, physical stores remain absolutely critical. The EY study found that 71% of respondents still use brand stores as their final purchase channel.
Speaker #0
Because you can't get a VIP experience or the thrill of discovery just from clicking a digital shopping cart icon.
Speaker #1
Exactly. The human interaction, the personal recommendations, and the physical atmosphere of the store are the primary drivers of satisfaction. Digital platforms are unparalleled for the discovery phase, but the physical environment is what creates the necessary ceremony of luxury.
Speaker #0
Which brings us to a massive operational tension. If consumers demand hyper-personalization and highly curated experiences, brands naturally turn to artificial intelligence to deliver that at scale. AI can process massive amounts of customer data to predict exactly what you want. But how does an algorithm provide a ceremony?
Speaker #1
It creates what EY terms the AI paradox. And understanding this paradox is essential for anyone trying to navigate the market today. The data shows that 94% of aspirational luxury clients believe AI can and should improve the shopping experience.
Speaker #0
Right. They want the friction removed.
Speaker #1
Exactly. They want better search functions and highly accurate product recommendations. They want the technology. But simultaneously, 72% of those same consumers worry about losing the human touch.
Speaker #0
If we break down the mechanism of that paradox, it makes complete sense. AI is like a brilliant digital butler who knows your exact measurements and past purchases. It's incredibly precise, but it's automated. It doesn't actually care about you. It's just running math. The human touch is the store associate who pulls a specific watch from the back room and says, I saved this specifically for you because I remember the story you told me about your grandmother. AI can't fake that feeling of belonging.
Speaker #1
That tension is the perfect definition of 2026 luxury. Why does the human remembering your story matter so much more than the computer storing the data? Because a human being chooses to remember. An AI is programmed to store data points. The human associate shares vulnerability, memory, and genuine connection. The more technology and AI personalize the logistical aspects of our lives, the more valuable genuinely human recognition becomes. History must be active, not preserved in amber.
Speaker #0
So synthesizing all of these sources, we started by asking a core question for this deep dive. Are they democratizing luxury or are they redefining exclusivity? It's clear that the velvet rope hasn't gone anywhere. The bouncer is still at the door. But the rules for who gets to unclip the rope have entirely changed.
Speaker #1
That is the ultimate takeaway. Gen Z is absolutely not democratizing luxury. They still want the velvet rope. But the profound philosophical shift is the movement from exclusion to belonging. They care less about who you keep outside. and much more about how special and culturally understood you make them feel once they're inside.
Speaker #0
It's a complete inversion. Which leaves me with one final lingering thought for you to consider. If the new luxury is all about proving your cultural knowledge over your financial wealth, what happens in a few years when AI gets so good that it can perfectly simulate cultural capital for absolutely anyone? When an algorithm can fake being an insider, how will we prove our uniqueness then? 3X for listening to the Gen Z Shift Audio.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

Hosted on Ausha. See ausha.co/privacy-policy for more information.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

Hosted on Ausha. See ausha.co/privacy-policy for more information.

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The Gen Z shift: Redefining European Leadership

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Welcome to the Gen Z Shift, a podcast decoding Generation Z and Generation Alpha for leaders, brands, and changemakers. Based on the research and articles of Benoivin Kauenberger, a European expert on Generation Z, Generation Alpha, and brand culture. Each episode helps you understand the generations reshaping how we work, consume, connect, and live. Because the future isn't coming. It's already here. So, I want you to picture the most exclusive luxury store in the world. You know the one. You've got the heavy velvet rope. The intimidating bouncer, the hushed atmosphere, and that crazy multi-year wait list.
Speaker #1
Right, the classic formula for desire.
Speaker #0
Exactly, keep people out. But today, we're doing a deep dive into an entirely different reality. Gen Z is basically walking right past that bouncer, not to tear the velvet rope down and let everyone in, but to completely change what it means to be on the inside.
Speaker #1
Yeah, it's a profound structural change to how the market actually operates.
Speaker #0
It really is. And if you're leading a brand or just trying to understand the changing mechanics of status, the sources we're unpacking today reveal a massive shift in how exclusivity actually functions. So if the old model was all about the velvet rope, what are the sources telling us about how Gen Z is slipping past the bouncer today?
Speaker #1
Well, to truly grasp the magnitude of what the data is telling us, we kind of have to look back at the old luxury equation. Historically, it was incredibly stable. A house leveraged its heritage, set a sky-high price, and just heavily restricted distribution.
Speaker #0
Manufactured scarcity.
Speaker #1
Exactly. That manufactured scarcity was the engine of desire. The logic was purely mathematical. The fewer people who could access a product, the more valuable it appeared. Social recognition came from being one of the rare few who could afford the financial barrier to entry. But what we're seeing in the research today is that this old mathematical equation is completely breaking down.
Speaker #0
Which is wild because, you know, if you look at the headlines, The popular narrative is that this younger generation is democratizing luxury. Like, they're supposedly anti-gatekeeping and demanding that everything be accessible to everyone. But looking at our sources, that narrative seems, well, entirely false.
Speaker #1
Oh, it's far from the truth. The data indicates they actually really crave exclusivity.
Speaker #0
Wait, really? They still want the velvet rope.
Speaker #1
They do. There's a recent McKinsey State of Fashion report looking ahead to 2026, and it found something that directly contradicts that whole democratization myth. Gen Z and millennial luxury customers cite exclusivity as a primary reason to increase their luxury spending 11 percentage points more often than the average older consumer.
Speaker #0
Wow, 11 points more.
Speaker #1
Yes. And McKinsey also projects that Gen Z luxury spending will actually surpass baby boomer spending by 2029.
Speaker #0
That's a huge shift.
Speaker #1
It is. The divergence isn't in their desire for exclusivity. It's in how they evaluate it. For older generations, Exclusivity was a reflection of accumulated wealth. For this generation, it's deeply tied to personal identity, self-definition, and cultural signaling.
Speaker #0
Okay, I want to dig into that shift from wealth to personal identity. Because if they still demand exclusivity, but they're evaluating it based on personal meaning rather than just an intimidating price tag, that fundamentally alters... Product strategy, right? I mean, a brand can't just slap a giant logo on a limited run bag and expect it to sell out just because it's expensive and hard to find.
Speaker #1
Right. The old dynamic where scarcity automatically equals exclusivity is completely dead. Luxury brands have historically been absolute masters of manufacturing that artificial scarcity. But there's this fascinating 2025 experimental study involving millennials and Gen Z that isolates this exact mechanism.
Speaker #0
Oh, the one about purchase intentions?
Speaker #1
Yes, exactly. The researchers wanted to see what actually drives the intention to purchase a luxury item. They discovered that the need for uniqueness significantly predicted purchase intention, while scarcity by itself did not have that same direct causal effect.
Speaker #0
I see. So scarcity is something a brand manufactures, while uniqueness is something the consumer feels.
Speaker #1
Precisely. That's the vital distinction. Scarcity is just a supply chain decision. Uniqueness is an emotional resonance. Right. If a brand produces only 500 units of a jacket, But that jacket doesn't say anything interesting about the individual wearing it. The modern consumer views it merely as a scarce object, not a unique one. A brand-imposed limitation only translates to desirability if it reinforces the consumer's individual narrative.
Speaker #0
Okay, let's unpack this for a second, because I'm trying to square that psychological need for deep individuality with the reality of how this generation actually navigates the world. If Gen Z is, you know, hyper-online, spending hours scrolling mass digital platforms like TikTok, where an algorithmic feed is pushing the exact same global trends to millions of people simultaneously, isn't that the opposite of uniqueness? How do they balance mass digital discovery with wanting something highly individual?
Speaker #1
It does seem contradictory at first.
Speaker #0
Yeah.
Speaker #1
But you have to look at how they actually use those algorithms. They aren't passively absorbing a single monoculture. They use these massive digital platforms to endlessly fracture culture into hyper-specific micro-niches.
Speaker #0
Oh, I see. So they're digging deeper.
Speaker #1
Exactly. They use the mass scale of the Internet to find incredibly obscure, specific aesthetics that perfectly match their internal identity. When they finally decide to splurge on a luxury item, they want that purchase to reflect. that highly curated, deeply researched version of themselves. They're highly discerning. They aren't buying the item to prove they're rich. They're buying it to prove they have a distinct, highly cultivated point of view.
Speaker #0
Which means the actual products that satisfy that need aren't necessarily going to be found sitting under glass in a pristine, newly opened boutique. If a consumer is looking for a piece that proves they have a unique point of view, they're going to look for items that have a story, a history, and like... an element of rarity that can't just be artificially manufactured by a marketing department.
Speaker #1
Exactly.
Speaker #0
Which leads us directly into the explosive data we're seeing around the secondhand market.
Speaker #1
Yeah, the rise of resale is arguably the most disruptive force traditional luxury has faced in decades. Because if you apply the old economic logic, resale is terrifying for a heritage brand. The assumption was always that if more people can access a prestigious label at a lower price point, the perceived exclusivity of the brand must plummet.
Speaker #0
Right, because it cannibalizes the primary market.
Speaker #1
Exactly. Right. But the data reveals a much more complex consumer psychology here. EY's 2026 Luxury Client Index surveyed over 1,600 luxury consumers across 11 global markets. They found that 62% of these consumers would willingly buy certified pre-owned items directly from the luxury brands themselves.
Speaker #0
And if you're sitting in a boardroom right now as a brand director looking at that 62% figure, your first instinct might be panic. You spend millions crafting an immaculate physical storefront, designing new collections, pushing full price inventory, and the data says your target buyer is actively seeking out a 10-year-old stuffed up bag.
Speaker #1
Oh, and it gets even more challenging for the traditional mindset. In that same EY index, only 24% of respondents believe that offering pre-owned items reduced a brand's exclusivity.
Speaker #0
Wow, only 24%.
Speaker #1
Yeah, and the critical finding is that 46% of all respondents, and that number jumps to 53% for Gen Z state. that the existence of certified pre-owned items actually increases their likelihood of buying luxury overall.
Speaker #0
That feels entirely counterintuitive. Introducing used, more accessible inventory actually increases the desire for the premium brand as a whole. How does the mechanism of that even work? Why does a cheaper, older item make the brand more desirable to this demographic?
Speaker #1
Because engaging with the pre-owned market isn't a rejection of luxury. It's a rejection of the generic. There's a 2025 Italian study looking specifically at Gen Z consumers in vintage fashion that breaks down the actual drivers behind this.
Speaker #0
And it's not just about sustainability, right? Because that's what we always hear.
Speaker #1
Exactly. The media narrative is always that this demographic buys vintage primarily because they're the ultra-green, climate-conscious generation. But the researchers found that while sustainability is definitely a factor, it is not the dominant psychological driver. What actually drives the behavior is the search for uniqueness, a high level of personal involvement in fashion history, and the experiential thrill of offline shopping.
Speaker #0
So budget matters, but the core motivation is the pleasure of the hunt.
Speaker #1
Spot on. The hunt is everything.
Speaker #0
You know, it's like the difference between walking into an airport bookstore and buying the mass market thriller sitting right on the front display versus spending a Saturday afternoon hunting through a dusty local bookshop to find a discontinued first edition print from 2003. Both of those books cost money, right? Both require an exchange of capital. But the second one proves you have better taste.
Speaker #1
I love that analogy.
Speaker #0
Thanks. I mean, it proves you put in effort, you had to dig for it, you had to know what you were looking for, and you had to actually recognize its value when you found it.
Speaker #1
Expanding on that bookstore analogy, the person who buys the airport bestseller and the person who hunts down the rare 2003 edition are both seeking a form of exclusivity. But the effort required to find the 2003 edition creates a much... deeper emotional bond with the object. However, there is a massive operational warning for brands in the sources here.
Speaker #0
What's the warning?
Speaker #1
A 2026 study noted that if a luxury brand involves itself in the secondhand market, it can actually reduce perceived exclusivity if the execution is poor.
Speaker #0
Ah, so you can't just throw a rack of used clothes in the back corner of your flagship store and expect it to generate that thrill of the hunt. It would just look like a clearance section, which instantly kills the aura of luxury.
Speaker #1
It destroys the aura entirely. For a brand to succeed in the second-hand space, they have to treat their archival pieces with even more reverence than their new collections. It requires heavy curation, meticulous authentication, and strict control over the narrative. Resale only elevates a luxury brand if the brand uses it to reinforce the feeling of uniqueness and discovery. They really have to act more like museum curators than traditional retailers.
Speaker #0
That hunt for a rare 2003 piece reveals a massive behavioral shift. The person hunting for that archival bag isn't just trying to show off that they had the money to buy it. They're trying to communicate that they have the knowledge to appreciate it. The item isn't just a vessel for financial capital anymore. It's a vessel for cultural capital.
Speaker #1
And this represents a fundamental redefining of how we signal status today. The sources consistently highlight a transition from an ownership to recognition model. In the traditional luxury framework, the signal was intentionally blunt and easy for anyone to decode. You wore a highly recognizable logo or carried an iconic bag, and it immediately broadcasted economic dominance. It was a very loud way of saying, I have the financial resources to afford this.
Speaker #0
It was the giant gold watch or the logo monogrammed luggage. The entire point was that the average person on the street knew exactly how much it cost.
Speaker #1
Yes, conspicuous consumption. But for younger consumers, distinction has become heavily coded. The value is no longer in broadcasting your bank account to everyone. The value is in broadcasting your specific knowledge to a select group of peers. The flex is knowing the obscure designer before they became mainstream, or understanding the niche architectural reference behind a collaboration, or wearing a fragrance that the average person cannot identify. The new luxury signal doesn't say, I have money. It says, I know what this is.
Speaker #0
You're essentially paying a premium to be on an inside joke. You're purchasing a physical object to prove you belong to a very specific, highly educated cultural tier.
Speaker #1
There's a 2025 study focused on the niche fragrance market in China that perfectly illustrates this mechanism. Fragrance is the ultimate test case because it's completely invisible. You cannot flash a logo.
Speaker #0
Oh, that's such a good point.
Speaker #1
The researchers found that psychological attachment to these niche luxury products was driven by personalization, community identity. and the cultural value embedded in the brand's story. As the Chinese luxury market matures, we see a massive move away from pure conspicuous consumption toward this subtle, coded consumption.
Speaker #0
So what does this all mean for those legacy brands? Because if we zoom out, this is a terrifying shift. If you're steering a brand that has been around for 150 years, your entire business model is built on the assumption that your logo carries inherent, undeniable value. But if a Gen Z customer... only likes them and treats luxury as just one part of their fluid lifestyle, can a brand even rely on its 150-year-old logo anymore?
Speaker #1
It definitely doesn't carry enough weight to guarantee loyalty on its own. A 2021 study looking at Gen Z's relationship with luxury brands found a really revealing shift in language. Their relationship with luxury was overwhelmingly described as like, not love.
Speaker #0
Ouch. For a heritage brand that assumes its customers hold this deep, multi-generational reverence for its name, Hearing that their demographic just casually likes them has to be a half reality check.
Speaker #1
It fundamentally alters the power dynamic. Older generations often possessed a deep, almost inherited emotional attachment to a single fashion house. It was a lifelong relationship. But younger consumers integrate luxury into a much more fluid identity. Right. Luxury is not the sole symbol of their success. A single consumer today might buy a vintage piece from a historic European house on Tuesday. Discover an obscure niche brand through a TikTok creator on Wednesday and drop significant money on an extraordinary piece of jewelry from a completely unknown artisan on Thursday. The purchase must be won every single time.
Speaker #0
The battleground has entirely shifted. You can't coast on the momentum of a legacy logo. You have to offer something beyond the physical product to capture their attention. And looking at the data, it seems the only way to compete when history isn't enough on its own. is to leverage that history to create hyper-personalized experiences.
Speaker #1
It is important to clarify that heritage hasn't vanished as a driver of value. The EY study found that 46% of Gen Z respondents still cite heritage and legacy as a reason for preferring established luxury brands.
Speaker #0
Okay, so it still matters.
Speaker #1
It does. However, we have to look at the relative weight of that factor. For baby boomers, that figure was 67%. The gravity of history is weakening as we move down the generational timeline. For an older customer, The mere fact that a house has operated since the 19th century carries enormous inherent legitimacy. But Deloitte's 2026 work points out that younger consumers approach that history with a different framework. They acknowledge the 150 years of history, but they immediately ask, what are you doing with those 150 years now?
Speaker #0
It's great that you've been making leather trunks for royalty since the 1800s, but how does that archival knowledge help me express my specific identity today? The history has to be active.
Speaker #1
Active is the perfect word. A house cannot simply protect its old codes. It must continuously prove why those codes remain culturally relevant. Which brings us to the new premium placed on experience. The physical product is now only a fraction of the total luxury value proposition.
Speaker #0
And the data on that is wild.
Speaker #1
It really is. EY found that 73% of aspirational luxury clients would actually pay money simply to attend an exclusive luxury experience, even without taking a physical product home. Furthermore, 75% stated they would be more likely to repurchase from a brand if they were offered complimentary experiences.
Speaker #0
But the data also shows a staggering disconnect in how brands are delivering on that, right? because a remarkable 30% of these consumers reported that they had received... absolutely zero exclusive experiences or invitations from a luxury brand in the past 12 months. Brands are spending massive amounts of capital trying to make a handbag feel exclusive, while the consumer is actively signaling that they'd rather be invited to a private dinner with the creative director or, like, given a tour of the workshop.
Speaker #1
The industry is still largely trapped in an infrastructure built to sell physical goods, while the consumer is demanding hospitality and access. Rarity still matters deeply, but rarity is increasingly tied to access and discovery. not just the price of the object. And this explains why, despite being a generation that lives entirely online, physical stores remain absolutely critical. The EY study found that 71% of respondents still use brand stores as their final purchase channel.
Speaker #0
Because you can't get a VIP experience or the thrill of discovery just from clicking a digital shopping cart icon.
Speaker #1
Exactly. The human interaction, the personal recommendations, and the physical atmosphere of the store are the primary drivers of satisfaction. Digital platforms are unparalleled for the discovery phase, but the physical environment is what creates the necessary ceremony of luxury.
Speaker #0
Which brings us to a massive operational tension. If consumers demand hyper-personalization and highly curated experiences, brands naturally turn to artificial intelligence to deliver that at scale. AI can process massive amounts of customer data to predict exactly what you want. But how does an algorithm provide a ceremony?
Speaker #1
It creates what EY terms the AI paradox. And understanding this paradox is essential for anyone trying to navigate the market today. The data shows that 94% of aspirational luxury clients believe AI can and should improve the shopping experience.
Speaker #0
Right. They want the friction removed.
Speaker #1
Exactly. They want better search functions and highly accurate product recommendations. They want the technology. But simultaneously, 72% of those same consumers worry about losing the human touch.
Speaker #0
If we break down the mechanism of that paradox, it makes complete sense. AI is like a brilliant digital butler who knows your exact measurements and past purchases. It's incredibly precise, but it's automated. It doesn't actually care about you. It's just running math. The human touch is the store associate who pulls a specific watch from the back room and says, I saved this specifically for you because I remember the story you told me about your grandmother. AI can't fake that feeling of belonging.
Speaker #1
That tension is the perfect definition of 2026 luxury. Why does the human remembering your story matter so much more than the computer storing the data? Because a human being chooses to remember. An AI is programmed to store data points. The human associate shares vulnerability, memory, and genuine connection. The more technology and AI personalize the logistical aspects of our lives, the more valuable genuinely human recognition becomes. History must be active, not preserved in amber.
Speaker #0
So synthesizing all of these sources, we started by asking a core question for this deep dive. Are they democratizing luxury or are they redefining exclusivity? It's clear that the velvet rope hasn't gone anywhere. The bouncer is still at the door. But the rules for who gets to unclip the rope have entirely changed.
Speaker #1
That is the ultimate takeaway. Gen Z is absolutely not democratizing luxury. They still want the velvet rope. But the profound philosophical shift is the movement from exclusion to belonging. They care less about who you keep outside. and much more about how special and culturally understood you make them feel once they're inside.
Speaker #0
It's a complete inversion. Which leaves me with one final lingering thought for you to consider. If the new luxury is all about proving your cultural knowledge over your financial wealth, what happens in a few years when AI gets so good that it can perfectly simulate cultural capital for absolutely anyone? When an algorithm can fake being an insider, how will we prove our uniqueness then? 3X for listening to the Gen Z Shift Audio.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

Hosted on Ausha. See ausha.co/privacy-policy for more information.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Description

The Gen Z shift: Redefining European Leadership

Hosted on Ausha. See ausha.co/privacy-policy for more information.

Transcription

Speaker #0
Welcome to the Gen Z Shift, a podcast decoding Generation Z and Generation Alpha for leaders, brands, and changemakers. Based on the research and articles of Benoivin Kauenberger, a European expert on Generation Z, Generation Alpha, and brand culture. Each episode helps you understand the generations reshaping how we work, consume, connect, and live. Because the future isn't coming. It's already here. So, I want you to picture the most exclusive luxury store in the world. You know the one. You've got the heavy velvet rope. The intimidating bouncer, the hushed atmosphere, and that crazy multi-year wait list.
Speaker #1
Right, the classic formula for desire.
Speaker #0
Exactly, keep people out. But today, we're doing a deep dive into an entirely different reality. Gen Z is basically walking right past that bouncer, not to tear the velvet rope down and let everyone in, but to completely change what it means to be on the inside.
Speaker #1
Yeah, it's a profound structural change to how the market actually operates.
Speaker #0
It really is. And if you're leading a brand or just trying to understand the changing mechanics of status, the sources we're unpacking today reveal a massive shift in how exclusivity actually functions. So if the old model was all about the velvet rope, what are the sources telling us about how Gen Z is slipping past the bouncer today?
Speaker #1
Well, to truly grasp the magnitude of what the data is telling us, we kind of have to look back at the old luxury equation. Historically, it was incredibly stable. A house leveraged its heritage, set a sky-high price, and just heavily restricted distribution.
Speaker #0
Manufactured scarcity.
Speaker #1
Exactly. That manufactured scarcity was the engine of desire. The logic was purely mathematical. The fewer people who could access a product, the more valuable it appeared. Social recognition came from being one of the rare few who could afford the financial barrier to entry. But what we're seeing in the research today is that this old mathematical equation is completely breaking down.
Speaker #0
Which is wild because, you know, if you look at the headlines, The popular narrative is that this younger generation is democratizing luxury. Like, they're supposedly anti-gatekeeping and demanding that everything be accessible to everyone. But looking at our sources, that narrative seems, well, entirely false.
Speaker #1
Oh, it's far from the truth. The data indicates they actually really crave exclusivity.
Speaker #0
Wait, really? They still want the velvet rope.
Speaker #1
They do. There's a recent McKinsey State of Fashion report looking ahead to 2026, and it found something that directly contradicts that whole democratization myth. Gen Z and millennial luxury customers cite exclusivity as a primary reason to increase their luxury spending 11 percentage points more often than the average older consumer.
Speaker #0
Wow, 11 points more.
Speaker #1
Yes. And McKinsey also projects that Gen Z luxury spending will actually surpass baby boomer spending by 2029.
Speaker #0
That's a huge shift.
Speaker #1
It is. The divergence isn't in their desire for exclusivity. It's in how they evaluate it. For older generations, Exclusivity was a reflection of accumulated wealth. For this generation, it's deeply tied to personal identity, self-definition, and cultural signaling.
Speaker #0
Okay, I want to dig into that shift from wealth to personal identity. Because if they still demand exclusivity, but they're evaluating it based on personal meaning rather than just an intimidating price tag, that fundamentally alters... Product strategy, right? I mean, a brand can't just slap a giant logo on a limited run bag and expect it to sell out just because it's expensive and hard to find.
Speaker #1
Right. The old dynamic where scarcity automatically equals exclusivity is completely dead. Luxury brands have historically been absolute masters of manufacturing that artificial scarcity. But there's this fascinating 2025 experimental study involving millennials and Gen Z that isolates this exact mechanism.
Speaker #0
Oh, the one about purchase intentions?
Speaker #1
Yes, exactly. The researchers wanted to see what actually drives the intention to purchase a luxury item. They discovered that the need for uniqueness significantly predicted purchase intention, while scarcity by itself did not have that same direct causal effect.
Speaker #0
I see. So scarcity is something a brand manufactures, while uniqueness is something the consumer feels.
Speaker #1
Precisely. That's the vital distinction. Scarcity is just a supply chain decision. Uniqueness is an emotional resonance. Right. If a brand produces only 500 units of a jacket, But that jacket doesn't say anything interesting about the individual wearing it. The modern consumer views it merely as a scarce object, not a unique one. A brand-imposed limitation only translates to desirability if it reinforces the consumer's individual narrative.
Speaker #0
Okay, let's unpack this for a second, because I'm trying to square that psychological need for deep individuality with the reality of how this generation actually navigates the world. If Gen Z is, you know, hyper-online, spending hours scrolling mass digital platforms like TikTok, where an algorithmic feed is pushing the exact same global trends to millions of people simultaneously, isn't that the opposite of uniqueness? How do they balance mass digital discovery with wanting something highly individual?
Speaker #1
It does seem contradictory at first.
Speaker #0
Yeah.
Speaker #1
But you have to look at how they actually use those algorithms. They aren't passively absorbing a single monoculture. They use these massive digital platforms to endlessly fracture culture into hyper-specific micro-niches.
Speaker #0
Oh, I see. So they're digging deeper.
Speaker #1
Exactly. They use the mass scale of the Internet to find incredibly obscure, specific aesthetics that perfectly match their internal identity. When they finally decide to splurge on a luxury item, they want that purchase to reflect. that highly curated, deeply researched version of themselves. They're highly discerning. They aren't buying the item to prove they're rich. They're buying it to prove they have a distinct, highly cultivated point of view.
Speaker #0
Which means the actual products that satisfy that need aren't necessarily going to be found sitting under glass in a pristine, newly opened boutique. If a consumer is looking for a piece that proves they have a unique point of view, they're going to look for items that have a story, a history, and like... an element of rarity that can't just be artificially manufactured by a marketing department.
Speaker #1
Exactly.
Speaker #0
Which leads us directly into the explosive data we're seeing around the secondhand market.
Speaker #1
Yeah, the rise of resale is arguably the most disruptive force traditional luxury has faced in decades. Because if you apply the old economic logic, resale is terrifying for a heritage brand. The assumption was always that if more people can access a prestigious label at a lower price point, the perceived exclusivity of the brand must plummet.
Speaker #0
Right, because it cannibalizes the primary market.
Speaker #1
Exactly. Right. But the data reveals a much more complex consumer psychology here. EY's 2026 Luxury Client Index surveyed over 1,600 luxury consumers across 11 global markets. They found that 62% of these consumers would willingly buy certified pre-owned items directly from the luxury brands themselves.
Speaker #0
And if you're sitting in a boardroom right now as a brand director looking at that 62% figure, your first instinct might be panic. You spend millions crafting an immaculate physical storefront, designing new collections, pushing full price inventory, and the data says your target buyer is actively seeking out a 10-year-old stuffed up bag.
Speaker #1
Oh, and it gets even more challenging for the traditional mindset. In that same EY index, only 24% of respondents believe that offering pre-owned items reduced a brand's exclusivity.
Speaker #0
Wow, only 24%.
Speaker #1
Yeah, and the critical finding is that 46% of all respondents, and that number jumps to 53% for Gen Z state. that the existence of certified pre-owned items actually increases their likelihood of buying luxury overall.
Speaker #0
That feels entirely counterintuitive. Introducing used, more accessible inventory actually increases the desire for the premium brand as a whole. How does the mechanism of that even work? Why does a cheaper, older item make the brand more desirable to this demographic?
Speaker #1
Because engaging with the pre-owned market isn't a rejection of luxury. It's a rejection of the generic. There's a 2025 Italian study looking specifically at Gen Z consumers in vintage fashion that breaks down the actual drivers behind this.
Speaker #0
And it's not just about sustainability, right? Because that's what we always hear.
Speaker #1
Exactly. The media narrative is always that this demographic buys vintage primarily because they're the ultra-green, climate-conscious generation. But the researchers found that while sustainability is definitely a factor, it is not the dominant psychological driver. What actually drives the behavior is the search for uniqueness, a high level of personal involvement in fashion history, and the experiential thrill of offline shopping.
Speaker #0
So budget matters, but the core motivation is the pleasure of the hunt.
Speaker #1
Spot on. The hunt is everything.
Speaker #0
You know, it's like the difference between walking into an airport bookstore and buying the mass market thriller sitting right on the front display versus spending a Saturday afternoon hunting through a dusty local bookshop to find a discontinued first edition print from 2003. Both of those books cost money, right? Both require an exchange of capital. But the second one proves you have better taste.
Speaker #1
I love that analogy.
Speaker #0
Thanks. I mean, it proves you put in effort, you had to dig for it, you had to know what you were looking for, and you had to actually recognize its value when you found it.
Speaker #1
Expanding on that bookstore analogy, the person who buys the airport bestseller and the person who hunts down the rare 2003 edition are both seeking a form of exclusivity. But the effort required to find the 2003 edition creates a much... deeper emotional bond with the object. However, there is a massive operational warning for brands in the sources here.
Speaker #0
What's the warning?
Speaker #1
A 2026 study noted that if a luxury brand involves itself in the secondhand market, it can actually reduce perceived exclusivity if the execution is poor.
Speaker #0
Ah, so you can't just throw a rack of used clothes in the back corner of your flagship store and expect it to generate that thrill of the hunt. It would just look like a clearance section, which instantly kills the aura of luxury.
Speaker #1
It destroys the aura entirely. For a brand to succeed in the second-hand space, they have to treat their archival pieces with even more reverence than their new collections. It requires heavy curation, meticulous authentication, and strict control over the narrative. Resale only elevates a luxury brand if the brand uses it to reinforce the feeling of uniqueness and discovery. They really have to act more like museum curators than traditional retailers.
Speaker #0
That hunt for a rare 2003 piece reveals a massive behavioral shift. The person hunting for that archival bag isn't just trying to show off that they had the money to buy it. They're trying to communicate that they have the knowledge to appreciate it. The item isn't just a vessel for financial capital anymore. It's a vessel for cultural capital.
Speaker #1
And this represents a fundamental redefining of how we signal status today. The sources consistently highlight a transition from an ownership to recognition model. In the traditional luxury framework, the signal was intentionally blunt and easy for anyone to decode. You wore a highly recognizable logo or carried an iconic bag, and it immediately broadcasted economic dominance. It was a very loud way of saying, I have the financial resources to afford this.
Speaker #0
It was the giant gold watch or the logo monogrammed luggage. The entire point was that the average person on the street knew exactly how much it cost.
Speaker #1
Yes, conspicuous consumption. But for younger consumers, distinction has become heavily coded. The value is no longer in broadcasting your bank account to everyone. The value is in broadcasting your specific knowledge to a select group of peers. The flex is knowing the obscure designer before they became mainstream, or understanding the niche architectural reference behind a collaboration, or wearing a fragrance that the average person cannot identify. The new luxury signal doesn't say, I have money. It says, I know what this is.
Speaker #0
You're essentially paying a premium to be on an inside joke. You're purchasing a physical object to prove you belong to a very specific, highly educated cultural tier.
Speaker #1
There's a 2025 study focused on the niche fragrance market in China that perfectly illustrates this mechanism. Fragrance is the ultimate test case because it's completely invisible. You cannot flash a logo.
Speaker #0
Oh, that's such a good point.
Speaker #1
The researchers found that psychological attachment to these niche luxury products was driven by personalization, community identity. and the cultural value embedded in the brand's story. As the Chinese luxury market matures, we see a massive move away from pure conspicuous consumption toward this subtle, coded consumption.
Speaker #0
So what does this all mean for those legacy brands? Because if we zoom out, this is a terrifying shift. If you're steering a brand that has been around for 150 years, your entire business model is built on the assumption that your logo carries inherent, undeniable value. But if a Gen Z customer... only likes them and treats luxury as just one part of their fluid lifestyle, can a brand even rely on its 150-year-old logo anymore?
Speaker #1
It definitely doesn't carry enough weight to guarantee loyalty on its own. A 2021 study looking at Gen Z's relationship with luxury brands found a really revealing shift in language. Their relationship with luxury was overwhelmingly described as like, not love.
Speaker #0
Ouch. For a heritage brand that assumes its customers hold this deep, multi-generational reverence for its name, Hearing that their demographic just casually likes them has to be a half reality check.
Speaker #1
It fundamentally alters the power dynamic. Older generations often possessed a deep, almost inherited emotional attachment to a single fashion house. It was a lifelong relationship. But younger consumers integrate luxury into a much more fluid identity. Right. Luxury is not the sole symbol of their success. A single consumer today might buy a vintage piece from a historic European house on Tuesday. Discover an obscure niche brand through a TikTok creator on Wednesday and drop significant money on an extraordinary piece of jewelry from a completely unknown artisan on Thursday. The purchase must be won every single time.
Speaker #0
The battleground has entirely shifted. You can't coast on the momentum of a legacy logo. You have to offer something beyond the physical product to capture their attention. And looking at the data, it seems the only way to compete when history isn't enough on its own. is to leverage that history to create hyper-personalized experiences.
Speaker #1
It is important to clarify that heritage hasn't vanished as a driver of value. The EY study found that 46% of Gen Z respondents still cite heritage and legacy as a reason for preferring established luxury brands.
Speaker #0
Okay, so it still matters.
Speaker #1
It does. However, we have to look at the relative weight of that factor. For baby boomers, that figure was 67%. The gravity of history is weakening as we move down the generational timeline. For an older customer, The mere fact that a house has operated since the 19th century carries enormous inherent legitimacy. But Deloitte's 2026 work points out that younger consumers approach that history with a different framework. They acknowledge the 150 years of history, but they immediately ask, what are you doing with those 150 years now?
Speaker #0
It's great that you've been making leather trunks for royalty since the 1800s, but how does that archival knowledge help me express my specific identity today? The history has to be active.
Speaker #1
Active is the perfect word. A house cannot simply protect its old codes. It must continuously prove why those codes remain culturally relevant. Which brings us to the new premium placed on experience. The physical product is now only a fraction of the total luxury value proposition.
Speaker #0
And the data on that is wild.
Speaker #1
It really is. EY found that 73% of aspirational luxury clients would actually pay money simply to attend an exclusive luxury experience, even without taking a physical product home. Furthermore, 75% stated they would be more likely to repurchase from a brand if they were offered complimentary experiences.
Speaker #0
But the data also shows a staggering disconnect in how brands are delivering on that, right? because a remarkable 30% of these consumers reported that they had received... absolutely zero exclusive experiences or invitations from a luxury brand in the past 12 months. Brands are spending massive amounts of capital trying to make a handbag feel exclusive, while the consumer is actively signaling that they'd rather be invited to a private dinner with the creative director or, like, given a tour of the workshop.
Speaker #1
The industry is still largely trapped in an infrastructure built to sell physical goods, while the consumer is demanding hospitality and access. Rarity still matters deeply, but rarity is increasingly tied to access and discovery. not just the price of the object. And this explains why, despite being a generation that lives entirely online, physical stores remain absolutely critical. The EY study found that 71% of respondents still use brand stores as their final purchase channel.
Speaker #0
Because you can't get a VIP experience or the thrill of discovery just from clicking a digital shopping cart icon.
Speaker #1
Exactly. The human interaction, the personal recommendations, and the physical atmosphere of the store are the primary drivers of satisfaction. Digital platforms are unparalleled for the discovery phase, but the physical environment is what creates the necessary ceremony of luxury.
Speaker #0
Which brings us to a massive operational tension. If consumers demand hyper-personalization and highly curated experiences, brands naturally turn to artificial intelligence to deliver that at scale. AI can process massive amounts of customer data to predict exactly what you want. But how does an algorithm provide a ceremony?
Speaker #1
It creates what EY terms the AI paradox. And understanding this paradox is essential for anyone trying to navigate the market today. The data shows that 94% of aspirational luxury clients believe AI can and should improve the shopping experience.
Speaker #0
Right. They want the friction removed.
Speaker #1
Exactly. They want better search functions and highly accurate product recommendations. They want the technology. But simultaneously, 72% of those same consumers worry about losing the human touch.
Speaker #0
If we break down the mechanism of that paradox, it makes complete sense. AI is like a brilliant digital butler who knows your exact measurements and past purchases. It's incredibly precise, but it's automated. It doesn't actually care about you. It's just running math. The human touch is the store associate who pulls a specific watch from the back room and says, I saved this specifically for you because I remember the story you told me about your grandmother. AI can't fake that feeling of belonging.
Speaker #1
That tension is the perfect definition of 2026 luxury. Why does the human remembering your story matter so much more than the computer storing the data? Because a human being chooses to remember. An AI is programmed to store data points. The human associate shares vulnerability, memory, and genuine connection. The more technology and AI personalize the logistical aspects of our lives, the more valuable genuinely human recognition becomes. History must be active, not preserved in amber.
Speaker #0
So synthesizing all of these sources, we started by asking a core question for this deep dive. Are they democratizing luxury or are they redefining exclusivity? It's clear that the velvet rope hasn't gone anywhere. The bouncer is still at the door. But the rules for who gets to unclip the rope have entirely changed.
Speaker #1
That is the ultimate takeaway. Gen Z is absolutely not democratizing luxury. They still want the velvet rope. But the profound philosophical shift is the movement from exclusion to belonging. They care less about who you keep outside. and much more about how special and culturally understood you make them feel once they're inside.
Speaker #0
It's a complete inversion. Which leaves me with one final lingering thought for you to consider. If the new luxury is all about proving your cultural knowledge over your financial wealth, what happens in a few years when AI gets so good that it can perfectly simulate cultural capital for absolutely anyone? When an algorithm can fake being an insider, how will we prove our uniqueness then? 3X for listening to the Gen Z Shift Audio.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

Hosted on Ausha. See ausha.co/privacy-policy for more information.

About The Generation Z Shift: Conversations

An audio series extending the ideas behind Benoit Vancauwenberghe’s bestselling book, The Gen Z Shift: Why Today's Leaders Keep Acting on the Wrong Signals

How are Gen Z and Gen Alpha reshaping the way we work, lead, and build organizations?

Hosted on Ausha. See ausha.co/privacy-policy for more information.

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