Savvy retailers know there is no such thing as one-size-fits-all marketing. Consumers vary by location, education, lifestyle, interests, occupation, age, and more. In other words, shoppers come in all shapes and sizes. These different demographics tell you who your shopper is. But it is important to think about why they buy. By breaking down consumers into the different age generations, we can start to understand psychographics that help explain why shoppers buy. Of course, each generation is diverse, and no two shoppers are exactly the same. However, each age group has shared world events, which help shape their point of view and help make them into the shopper you see today. Taking a look at each generation, their general timeline, characteristics, and coming of age environment can help you start to think critically about why some people may be motivated to buy certain products, in certain situations, and in response to certain advertising, over others. Here is a simple breakdown of the larger current generations.
Born roughly between the years of the mid-1990s to the late 2000s, Gen Z is the first group of true digital natives. Unlike Millennials, they do not remember a time before smartphones or the internet. They also grew up mostly post 9/11 and in the middle of the Great Recession. As a result, this group is very pragmatic and self-sufficient.
Though they are digital natives, Gen Z witnessed Millennials suffer the consequences of over sharing on social media. As a result, Gen Z has a more controlled online presence. Apps such as SnapChat and Whisper are preferred because they leave less of a trace. They are also careful of the persona or “aesthetic” they build with their online accounts, as these self-starters recognize that personal branding can go a long way in terms of career building.
But what does this mean for retailers? Gen Z is already the largest age demographic, edging out Millennials by a few percentage points. And even though this group is just entering the professional workforce, they already have over $44 billion in buying power. In the coming years, this number will only get larger. So, for retailers, Generation Z has a huge amount of spending power. Studies show, unlike Millennials, Gen Z is willing to spend on things rather than experiences – which is great news!
Millennials, also known as Generation Y, were born between the early 1980s and late 1990s. The average Millennial is crippled by student loan debt, and like many of their parents, were greatly impacted by the Great Recession. This highly educated and culturally diverse group will make up half the US workforce by 2020. However, by the same year, they will only make up 30 percent of total retail sales. Though the national unemployment rate is around four percent, the Millennial unemployment rate is about 11 percent. Underemployment rates are even higher, with 51 percent of 2014 – 2015 college graduates working in jobs that do not require a college degree.
Whether it’s a result of social media or their experience with the Great Recession, Millennials generally prefer to spend on experiences instead of retail items. However, retailers have been able to successfully reach this demographic through the growing wellness movement and special event retail. Retailers connected to a social cause and brands that are receptive to feedback and collaboration also motivate Millennial shoppers.
Born between the mid-1960s and early 1980s, Generation X is the age group following Baby Boomers and preceding Millennials. Also known as the “Latchkey Generation” due to the rising number of women in the workforce as well as rising divorce rates, this group had less adult supervision than previous generations. They were also the first group to come of age with MTV, also earning them the nickname “MTV Generation.”
Sandwiched between 80 million Baby Boomers and 78 million Millennials, the 46 million members of Gen X are also sometimes referred to as “The Forgotten Generation.” This small, but financially powerful group is comprised of highly educated entrepreneurs. 35 percent have college degrees. And, a whopping 55 percent of startup founders are members of Gen X. According to American Express, Gen X has more spending power than any other generation.
As consumers, Gen X is a unique bunch. They have strong ties to Millennial and Baby Boomer friends and family. They are also extremely digitally savvy. According to Millward Brown Digital, 60 percent of Gen Xers use a smartphone on a daily basis, while 67 percent use a laptop or PC daily – which surpassed the 58 percent of Millennials who use laptops or PCs daily. This group is very brand loyal, especially when compared to Millennials, Gen Z, and even Baby Boomers. Gen X is willing to pay more for brands they know and trust. Luxury brands and retailers may be most successful when targeting this group since they have high spending power and the greatest brand affinity.
This generation follows the Silent Generation and is generally comprised of those born between the mid-1940s and 1960s. The name Baby Boomer comes from the noticeable population spike in the United States after the conclusion of World War II. Baby Boomers grew up in post-war prosperity, then leading the nonconformist movement of the 1960s and 1970s.
Baby Boomers are the second largest age group behind Millennials. However, Baby Boomers have the most disposable income out of any age group. Unlike Gen X, who are still supporting or raising a family and in the middle of their peak earning years, Baby Boomers have had years of high wages and savings, and at this time generally, have fewer familial financial obligations than Gen X. According to Business Insider, Baby Boomers are also the only consumer segment that has made gains in real income since the 1970s.
In other words, Baby Boomer consumers should be at the top of mind for retailers, as they have the most discretionary income. Many marketers think of Baby Boomers as largely in-store shoppers. While brick and mortar is important, it is not the whole story. According to Forbes, Baby Boomers ranked researching and shopping as the third and fourth most important online activities, following news consumption and social media. By comparison, Millennials ranked shopping as fifth most important. So, while your email campaigns and social media ads may be targeting Millennial shoppers, you are likely reaching more Boomers than you may realize.
Born 1925 – 1945, this age group was nicknamed the Silent Generation because of their focus on careers rather than activism. The Silent Generation came of age during the McCarthy Era, and as a result, there are proportionally fewer members of this generation who are outspoken in the world of politics. However, this group also witnessed the birth of rock and roll and witnessed or participated in the Civil Rights movement.
Also known as Traditionalists, this group is known for being very hardworking, loyal, and consistent. Traditionalists are savvy consumers, often having a “pay cash or save” mentality, which has allowed them to become a fairly wealthy age group. As retailers, you can earn their trust through authenticity and reliability.