New research on the buying habits of the Millennial generation has led to some surprising discoveries; and retailers may have to change some marketing focus to capture this generation of consumers.
Like their grandparents (aka Baby Boomers) the Millennials are a very large demographic, but one of the main differences is their diversity of needs and spending habits. As revealed in the consumer survey conducted by global management consulting firm L.E.K. Consulting, Millennials share some buying habits with previous generations of younger consumers, yet they have also diverged from “the norm” in that within this demographic are several “sub-groups” of consumers.
According to Rob Haslehurst, Managing Director of L.E.K.’s Consumer Products and Retail practice and co-author of the report, “Retailers Play the Generation Game: Lessons from Adapting to Millennials,” these consumers “are sometimes treated as a monolithic group, although they’re not, and it’s often assumed that they behave the way young consumers have always behaved, which is a half-truth at best.”
L.E.K.’s survey of 3,800 American consumers included 2,200 Millennials and 200 teenagers at the threshold of the next generation “Gen Z.” They explored the preferences and behaviours of the unique Millennial sub-groups, and compared these to how Gen X and Baby Boomer consumers behaved when they were the same age.
The largest differences were seen in the Millennials with kids, and the ones without, although differences in education level also weighed in. Perhaps not so surprising, L.E.K.’s survey found that Millennials with children and at least a college education spent considerably more than average in several categories. Most notable of these were in purchases for the home (a whopping 68 % more) but also in footwear (56 % more), electronics (52 %), and for apparel and personal care (49 % each). In the U.S.A. research has shown that Millennials spend 1.2 trillion dollars annually, so these percentages are eye-opening.
What else did they find that was helpful to retailers?
- Millennials will spend more on convenience than previous generations, such as prepared foods, while cutting costs through ride sharing, or buying when free shipping is included. A creative retailer should focus on “value-added” purchase incentives.
- They spend far more time researching purchases—one hour more than Baby Boomers in most cases! For retailers, this means a concise, user-friendly online shopping experience is essential to attract more of these buyers.
- They are more socially conscious. Therefore, they prefer to buy a brand that is honestly authentic as well as “kind to the environment” or the community. Promotional tie-ins to non-profit businesses or that otherwise aid minorities or the community are more attractive to them.
In summary, retailers have always had to adjust to changing generations, but in the case of the Millennials they should also consider targeting their sub-groups, not just the age group, and to utilize technology to personalize the targeting of Millennials by using location-based marketing, social media and other apps which also may add convenience to the Millennial buyer.
