November 4, 2013
Are Retailers Ready for the Millennial Takeover?
While the Millennial generation is expected to outspend Baby Boomers by 2017, retailers are underestimating the size and purchasing power of this consumer. That’s the conclusion of a new study, What Happens When Millennials Get the Wallet, from Berglass + Associates and Women’s Wear Daily.
As part of the study, an online survey, which was conducted in September 2013, queried 121 U.S. business leaders primarily in the apparel, accessories, footwear and beauty sectors, including department stores, specialty stores, home shopping and direct-mail catalogs. Key findings unveiled in the survey include:
- Approximately half of respondents are unaware that Millennials are expected to outspend Baby Boomers annually within five years.
- Millennials rely most on their friends to make buying decisions, yet more than a quarter of respondents mistakenly believe that online advertising is the number one influencer of Millennials’ purchasing activity.
- Of the executives that were surveyed, more than 30 percent are CEOs or presidents who plan to significantly increase their digital leadership over the next three years.
- Sixty percent of respondents are not conducting any research or analysis of the Millennial customer.
- Only 36 percent of respondents from companies with both physical stores and e-commerce sites offer a seamless customer experience, yet Millennials expect the channels to be integrated.
"Millennials have different motivations, attitudes and behaviors than previous generations, and retailers need to adjust their business strategies accordingly in order to thrive," said Les Berglass, CEO of Berglass + Associates. "For the first time in several decades, we will see a new member of the C-suite, who will be responsible for driving two-way communication between the Millennial customer and the brand and for developing initiatives that will deliver long-term growth."
BrainTrust
Recent Discussions
Discussion Questions
Do you agree that retailers are underestimating the impact Millennials will have on their businesses in the years ahead? What questions should they be asking about how retail may change with Millennials set to become the biggest purchasing group?
Poll
I think most retailers in their rush to omnichannel are underestimating the impact Boomers still have and will continue to have on luxury purchases.
Millennials are most like my grandparents — scrimp and scavenge, re-use, buy used, etc. The bigger question is how that Millennial mindset will impact retail as they scoff at the Boomers who are willing to pay top-dollar and expect a great experience.
If you are the local dollar store, Millennials are probably well known as the biggest purchasing group already.
Some retailers may not be on the money with their read on the Millennial madness (a trend in my book – remember the boomer trend we all in retail went through?), but that is not a killer. Why? When it comes to the advancements in retail technology and speed of its deployment, a retailer can very quickly be Millennial-ready. The only thing moving faster than the Millennials and their social obsession is retail technology. Soon, the Millennials will follow – not lead – the retailers who have the best technology to support their shoppers – boomers or Millennials.
One way or another, our industry will lead the Millennials vs. them guiding us.
CHARGE!
Many retailers are underestimating how Millennials will shape their businesses in the next 5-10 years. Millenials shop differently and are influenced differently than the previous generations, especially Boomers. Advertising skepticism, little use for traditional communication vehicles and a sense of sustainable responsibility are all part of the equation that retailers will have to address, while gradually phasing out the forms of ads and communications that appeal to the majority of their current shoppers.
The successful retailers will get ahead of this curve by doing (or buying) research, hiring Millennials who understand and participate in these changes, and finding ways to communicate across their broad spectrum of customers.
Absolutely. Many retailers mistakenly believe that as these consumers mature they will behave in a fashion similar to their parents. This perception will be fatal if retailers expect to capture this business.
In my research comparing Millennials with Baby Boomers, I found the following: Millennials are four times more likely to use social media to get advice on products and services compared to Baby Boomers. In addition, Millennials are five times more likely to use social networks to complain about faulty products or services. Further, Millennials are more likely to allow a positive or negative comment from a social media friend to influence decisions than Baby Boomers.
In summary, my research found that the two largest generations are different in enough ways (attitudes, behaviors, and lifestyles) to suggest the development of specific marketing strategies and tactics. While Millennials may eventually behave like Baby Boomers (which I seriously doubt), a “one size fits all” approach will be doomed to failure. Retailers need to put down the shotguns and pick up the rifles.
The sheer numbers and purchasing power of these generations represent untapped potential if we can get each generation to perceive “your store as their store.”
They need to pay off their student loans and get out of mom’s basement before they can think of going shopping!
Retailers have to be nimble enough to figure out who their target customer(s) are and how to deal with each segment (or in fact customer) in the most appropriate fashion. Millennials maybe more comfortable with social media as a vehicle and the retailers who want this group as their customer need to communicate with them appropriately.
Depending on where you draw the age parameters, the Millennial group is around 30% larger than the Boomer group. This fact alone should inspire a lot of study and preparation by retailers. Given the nature of retailing, however, retailers tend not to be great long-range planners. In addition, the questions that need to be answered and the preparations that need to be made are incredibly complex, inasmuch as the way the Millennials act today is no guarantee that they will act the same as they enter their prime spending years.
My guess is that there are, as always, lots of surprises coming as one generation yields to the next.
First of all, we need to draw the line between what a Millennial is vs the traits of certain age groups. Yes, many Millennials fall into the age group that thrives on shopping with friends and getting advice from them. We all went through that. It’s an age thing. The retailers who depend on those age groups definitely need to give them the tools to do just that.
The key word here is tools; mechanisms to reach, messages that influence, these continue to change with each new generation. Every retailer, regardless of age group, will need to adapt their tools for the generation at hand.
With such a dichotomy of tools that speak to boomers vs Millennials, retailers are walking the wire as to when to make the shift. Are they aware of it? Sure, unless they live under a rock. Are they ready for it? We all know that retail is often late to the party, and for good reason in some cases, but this party is starting!
Once these young people get out of college and land a job their shopping influence will be stronger than retailers expect. They will teach retailers what they (retailers) think they know but don’t. This is the group that will dictate the future of retailing.
Retailers will be facing a new consumer very soon, a consumer that shops very differently. Loyalty is also viewed very differently; don’t expect that Millennials will be wooed by all the paper coupons that come with a cash register receipt in exchange for their shopper information. They are value driven, make skillful price comparisons, are brand insensitive in many cases, and importantly, peer endorsements truly matter. Creating the value proposition that is clearly communicated is key.
We just did a study (1,800 people, US) and two things are clear: Millennials don’t like stores as much as boomers or as much as they like shopping online and they really don’t like store associates, period. It is clear that unless retailers would like to take a bath with many of the assets they’ve got already in the marketplace, they need to improve the customer experience for younger people. They’re just not as attached as previous generations to the physical elements of retail.
One theory is that after so many years of ‘box’ exposure, they’ve pretty much decided that it’s too much of a hassle to go out and shop in the likes of those places vs just doing it at home. And that’s a problem.
Changing consumer behavior can be linked closely with evolving technology. Consumers, especially Millennials, rely on social media for product recommendations, they use their phones to compare prices (hence the rise of showrooming), and as mentioned in the article, they expect a seamless online and offline shopping experience. Retailers should be prepared to adjust. A great starting point would be to utilize social media to engage consumers and get feedback. For retailers operating in both the online space and brick-and-mortar, integrating the two (and mobile too, actually) may be difficult but necessary in the long run.
Young Internet users – the so called Millennials – have grown up with doing everything on the Internet and they want the speed and convenience that online retail delivers. They are the first truly digital generation.
Consistency in product assortment, price and customer service – whether that be in-store, online or through a mobile device – is now demanded by this increasingly influential demographic who are at the forefront of the buy anytime, anywhere revolution. Given that Millennials will be the biggest purchasing group by 2017, it’s incredible that just 36% of retailers surveyed currently offer a seamless customer experience cross-channel.
Retailers that are unable to deliver the same omnichannel offering will unquestionably suffer as Millennials increasingly demand an integrated, seamless experience regardless of the channel. That means being able to transition effortlessly from smartphone to personal computer to physical store in their quest for the best product, service, price and promotion.
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I think most retailers in their rush to omnichannel are underestimating the impact Boomers still have and will continue to have on luxury purchases.
Millennials are most like my grandparents — scrimp and scavenge, re-use, buy used, etc. The bigger question is how that Millennial mindset will impact retail as they scoff at the Boomers who are willing to pay top-dollar and expect a great experience.
If you are the local dollar store, Millennials are probably well known as the biggest purchasing group already.
Some retailers may not be on the money with their read on the Millennial madness (a trend in my book – remember the boomer trend we all in retail went through?), but that is not a killer. Why? When it comes to the advancements in retail technology and speed of its deployment, a retailer can very quickly be Millennial-ready. The only thing moving faster than the Millennials and their social obsession is retail technology. Soon, the Millennials will follow – not lead – the retailers who have the best technology to support their shoppers – boomers or Millennials.
One way or another, our industry will lead the Millennials vs. them guiding us.
CHARGE!
Many retailers are underestimating how Millennials will shape their businesses in the next 5-10 years. Millenials shop differently and are influenced differently than the previous generations, especially Boomers. Advertising skepticism, little use for traditional communication vehicles and a sense of sustainable responsibility are all part of the equation that retailers will have to address, while gradually phasing out the forms of ads and communications that appeal to the majority of their current shoppers.
The successful retailers will get ahead of this curve by doing (or buying) research, hiring Millennials who understand and participate in these changes, and finding ways to communicate across their broad spectrum of customers.
Absolutely. Many retailers mistakenly believe that as these consumers mature they will behave in a fashion similar to their parents. This perception will be fatal if retailers expect to capture this business.
In my research comparing Millennials with Baby Boomers, I found the following: Millennials are four times more likely to use social media to get advice on products and services compared to Baby Boomers. In addition, Millennials are five times more likely to use social networks to complain about faulty products or services. Further, Millennials are more likely to allow a positive or negative comment from a social media friend to influence decisions than Baby Boomers.
In summary, my research found that the two largest generations are different in enough ways (attitudes, behaviors, and lifestyles) to suggest the development of specific marketing strategies and tactics. While Millennials may eventually behave like Baby Boomers (which I seriously doubt), a “one size fits all” approach will be doomed to failure. Retailers need to put down the shotguns and pick up the rifles.
The sheer numbers and purchasing power of these generations represent untapped potential if we can get each generation to perceive “your store as their store.”
They need to pay off their student loans and get out of mom’s basement before they can think of going shopping!
Retailers have to be nimble enough to figure out who their target customer(s) are and how to deal with each segment (or in fact customer) in the most appropriate fashion. Millennials maybe more comfortable with social media as a vehicle and the retailers who want this group as their customer need to communicate with them appropriately.
Depending on where you draw the age parameters, the Millennial group is around 30% larger than the Boomer group. This fact alone should inspire a lot of study and preparation by retailers. Given the nature of retailing, however, retailers tend not to be great long-range planners. In addition, the questions that need to be answered and the preparations that need to be made are incredibly complex, inasmuch as the way the Millennials act today is no guarantee that they will act the same as they enter their prime spending years.
My guess is that there are, as always, lots of surprises coming as one generation yields to the next.
First of all, we need to draw the line between what a Millennial is vs the traits of certain age groups. Yes, many Millennials fall into the age group that thrives on shopping with friends and getting advice from them. We all went through that. It’s an age thing. The retailers who depend on those age groups definitely need to give them the tools to do just that.
The key word here is tools; mechanisms to reach, messages that influence, these continue to change with each new generation. Every retailer, regardless of age group, will need to adapt their tools for the generation at hand.
With such a dichotomy of tools that speak to boomers vs Millennials, retailers are walking the wire as to when to make the shift. Are they aware of it? Sure, unless they live under a rock. Are they ready for it? We all know that retail is often late to the party, and for good reason in some cases, but this party is starting!
Once these young people get out of college and land a job their shopping influence will be stronger than retailers expect. They will teach retailers what they (retailers) think they know but don’t. This is the group that will dictate the future of retailing.
Retailers will be facing a new consumer very soon, a consumer that shops very differently. Loyalty is also viewed very differently; don’t expect that Millennials will be wooed by all the paper coupons that come with a cash register receipt in exchange for their shopper information. They are value driven, make skillful price comparisons, are brand insensitive in many cases, and importantly, peer endorsements truly matter. Creating the value proposition that is clearly communicated is key.
We just did a study (1,800 people, US) and two things are clear: Millennials don’t like stores as much as boomers or as much as they like shopping online and they really don’t like store associates, period. It is clear that unless retailers would like to take a bath with many of the assets they’ve got already in the marketplace, they need to improve the customer experience for younger people. They’re just not as attached as previous generations to the physical elements of retail.
One theory is that after so many years of ‘box’ exposure, they’ve pretty much decided that it’s too much of a hassle to go out and shop in the likes of those places vs just doing it at home. And that’s a problem.
Changing consumer behavior can be linked closely with evolving technology. Consumers, especially Millennials, rely on social media for product recommendations, they use their phones to compare prices (hence the rise of showrooming), and as mentioned in the article, they expect a seamless online and offline shopping experience. Retailers should be prepared to adjust. A great starting point would be to utilize social media to engage consumers and get feedback. For retailers operating in both the online space and brick-and-mortar, integrating the two (and mobile too, actually) may be difficult but necessary in the long run.
Young Internet users – the so called Millennials – have grown up with doing everything on the Internet and they want the speed and convenience that online retail delivers. They are the first truly digital generation.
Consistency in product assortment, price and customer service – whether that be in-store, online or through a mobile device – is now demanded by this increasingly influential demographic who are at the forefront of the buy anytime, anywhere revolution. Given that Millennials will be the biggest purchasing group by 2017, it’s incredible that just 36% of retailers surveyed currently offer a seamless customer experience cross-channel.
Retailers that are unable to deliver the same omnichannel offering will unquestionably suffer as Millennials increasingly demand an integrated, seamless experience regardless of the channel. That means being able to transition effortlessly from smartphone to personal computer to physical store in their quest for the best product, service, price and promotion.