Millennials & The Impact on Retail
Millennials, aka Gen Y, aka The Plugged in Generation, whatever you call them they are the largest generation of all time and their behaviour is unlike any who have come before them. Born between 1980s – 2000, their size and influence will change the world forever!
Retailers need to adapt their businesses to connect with Millennials. To do this, they need to understand their behaviour, what is important to them and why they buy.
Let’s have a look at a few key behaviours that will help retailers understand this generation.
- The Plugged in Generation are true digital natives – they have grown up with technology in their hands and an ‘organic’ part of their life. They use social media and the internet to check and authenticate businesses and buy products and services. They play videos, watch TV online, use instant messaging and chat to communicate with their friends, download music and movies.
- They are used to rapid change, the world they know has evolved and changed quickly in their lifetime.
- They are part of the ‘Sharing Economy’ and prefer to ‘have access’, ‘rent’ or ‘use’ rather than ‘own’ items. Ownership is not a priority to them. They are happy to use the available capacity of items rather than buy their own. They are big supporters of collaborative consumption. A great example of this is Car Sharing; Millennials prefer to pay for a car as they need it rather than buy and own one.
For the Sharing Economy to work, the ‘Trust Economy’ must exist. We trust ratings reviews and feedback, in fact, this is the ‘currency’ for the new economy. Millennials value trust as they do money.
- Millennials access this ‘trust economy’ through their own online networks which they access through social media. Social media is this generation’s connective tissue.
It is also how they connect and review retailers and brands. They will like and buy a brand / from a retailer who uses social media ‘properly’ over one that doesn’t.
- They use technology to access information on products and reviews as part of their retail experience. Convenience and costs are important factors for them and will impact their final purchase decision.
They ‘live’ online so it shouldn’t be a surprise that they shop and buy online too.
- Brands are not as important as price. Over 55% of Millennials use their phone in store to check prices. They will consider quality but price is the most important factor for them.
Brands and businesses that traded on their long history, ‘heritage brands’ need to recognize that this is a hindrance more than a help to this generation. They are more than likely to consider these brands as outdated and not evolving.
- Being digital natives, they expect to have a personalised experience with business and brands they like. They want retailers to remember their preferences and habits and connect with them on their terms.
- They will check the authenticity of a business and be vocal in their support or displeasure online. It is important that the business is authentic and the business acts with integrity if it hopes to connect with a Millennial.
- They live at home longer than other generations. This means that they don’t spend on their own possessions till later in life, if at all.
- They put off marriage, children and buying property until much later in life than other generations.
- They value experiences more than ‘things’. They will spend on travel, food and other experiences rather than on products.
- Health and wellbeing are very important to Millennials. They watch what they eat and track their health using technology and devices. They access apps to monitor training, nutritional information online, healthy recipes and foods etc.
They spend money in this area and value is more important than price.
Millennials have grown up with technology and quick access to information and data. They are far more sophisticated in their understanding of how brands market and communicate to the consumer. They have a strong ‘BS’ filter and don’t want to be ‘sold to’. They want to be ‘spoken to’ not talked at, they want their favourite stores and brands to ‘know’ them and tailor the offer and conversation to them.
There is not doubt that this will require traditional retailers and brands to adapt their business model and activity to meet the needs of Millennials in order to survive this fast changing retail environment!