Born between the years 1980 – 1996, there are 80 million Millennials in the U.S. They are currently the largest demographic, making up 25% of the U.S. population. They have $200 billion in buying power and constitute 21% of all discretionary purchases.
Peter Pan Generation
American sociologists designated Millennials as the Peter Pan generation, because of their perceived tendency to delay certain rites of passage into adulthood such as buying a house or even moving out of their parents’ homes, delaying marriage and having children. Currently, just one in four Millennials has children. A 2016 study showed as many as 32% of Millennials live with their parents, and overall are more likely to live with their parents than with a relationship partner, an unprecedented occurrence since this data first started being collected in 1880.
There are two factors at play here. First, finances are playing a role in these delays. Only 35% of Millennials consider themselves middle class, much less than any other generation. Student loan debt, lack of initial employment after college, and underemployment all contribute.
But, the idea of what it means to be an “adult” is different for many Millennials than it is for other generations. They place more emphasis on personal skills, characteristics, and abilities over the more traditional rite of passage events such as marriage, having children, and becoming homeowners. Overall, a shift in priorities and a life patterns means a shift in spending, too.
Why Are Millennials Important for Retail?
Within the next year, Millennials will have more buying power than any other generation. As retailers, if you’re not targeting Millennials you’re missing out on some of your largest opportunities. Millennials will soon make up half the U.S. workforce. This group is also finally starting to build families, adopt pets, and buy homes, which means their buying power and influence over the retail industry will only increase in the coming years.
4 Ways to Appeal to Millennials
Millennials came of age during a time of technological change, globalization, and economic disruption. When combined, these factors give Millennials a unique set of behaviors and experiences that influence purchasing patterns. Though at first a confusing demographic, retailers can appeal to Millennials shoppers by following these four basic principles:
For Millennials, convenience is king. Mobile technology is critical for this group, and being able to seamlessly use multiple devices across the purchasing path is considered a necessity. For example, having up-to-date inventory on your website makes it easier for Millennials to chose your store for quick errands.
Of course, product delivery is also at the top of mind when it comes to convenience. Most of us think of Amazon 2-day or 2-hour shipping when we think of convenience. But, many independent brick and mortar stores do really well with this group by offering in-store pickup. By letting customers place orders over the phone, through your website, or over email and letting them pick it up in-store that day, you beat out 2-day shipping. Throw in gift-wrapping or custom gift baskets for special occasions and that’s the icing on the cake.
40% of Millennials want to participate in co-creation of products and brands and 70% feel a responsibility to share feedback after a good or bad experience. For Millennials, relationships with their favorite brands are two-sided. If you want them to trust you and choose your store, you need to listen to Millennials and involve them in your process.
Luckily, collaboration doesn’t have to be complicated. 62% of Millennials say if a brand engages with them on social media they are more likely to become a loyal customer. An act as simple as responding to customers’ comments on your Facebook or Instagram page can go a long way. Not to mention, encouraging shoppers to share their purchases and in-store experiences makes great user-generated content and word-of-mouth marketing. If you have a few customers who are your biggest fans on social media, be sure to reach out and say thank you.
Also don’t be shy about taking the collaboration offline and in-person. For example, solicit customer feedback on new products, and even run test groups with your frequent shoppers. Involving them in the process and incorporating their feedback will only increase shopper loyalty. In short, taking the time to start conversations, on social media or in real life, is the easiest way to collaborate with your Millennial shoppers.
Offer an Experience
More than 3 in 4 Millennials (78%) would choose to spend money on a desirable experience over buying something desirable. We all know Millennials spend a good amount of their discretionary income on experiences like going out to eat, movies, travel, and concerts.
Build a better relationship with Millennials by creating additional opportunities to engage with your brand. For example, many athleisure and athletic stores host yoga classes or sponsor athletic contests and races. Gift and apparel boutiques offer paint and sip classes, but instead of painting canvases, decorate glasses, coasters and other home good items that can be found in the store.
The experience doesn’t have to be a class either. Some independent jewelry, apparel, gift, and bookstores offer subscription boxes to keep customers engaged. Online and in-store contests are another way to offer further engagement.
It’s not a secret that today’s shoppers want a personalized experience, and Millennials are no exception. But, personalization doesn’t necessarily mean having super advanced targeting technology. For Millennials, personalization comes in the form of friendly and knowledgeable store associates when shopping in-store. In-store and online they want helpful product recommendations. Overall, Millennials want store policies that are consumer-centric and easy to work with. Friction-filled return policies, or billing practices, that make shoppers feel like a number instead of a person can scare away Millennial customers for good. Data-driven personalization is great, but more importantly, Millennials want to know your efforts are coming from a genuine place of providing the best possible experience for each customer as an individual
This notoriously tricky group is shaking up cultural norms and business models across the U.S., and retail is no exception. By ignoring this group, retailers are at risk of alienating one of the country’s largest populations. However, by operating under the principles of convenience, collaboration, engagement, and personalization, you can keep Millennial shoppers coming back for more.