Millennials: thrifty when they want to be
Value is key to captivating the vast Millennials audience.
Originally published in Facts, Figures & the Future.
In this issue, F3 continues its look at Millennials with new research. (In May, we covered a Pew study and wrote how retailers and brands could connect with the skeptical yet optimistic Millennials audience; in July, we’ll focus on Hispanic Millennials.)
Millennials (defined as age 18-37 by many demographers) already number 86 million. That’s 7% bigger than Boomers. And they could grow to 88.5 million by 2020, says MetLife Mature Market Institute analyst Peter Francese, reports Barron’s. Even more narrowly defined as 18-34 by Boston Consulting Group, the consultancy says Millennials currently spend $1.3 trillion per year.
A new IRi study, Millennial Shoppers: Positive Mindset Points to Future Growth, advises how to trigger purchases in retail stores, on websites or via mobile from this technology-skewed audience starting right now.
For instance, since Millennials are more price-sensitive than consumers overall (84% vs. 75% say “price is a key driver of brand decisions”), they deploy numerous strategies to save money:
- 54% use shopper loyalty discounts (vs. 44% of consumers overall)
- 53% use coupons from home (vs. 48%)
- 46% refer to in-store circulars (vs. 42%)
- 37% react to signs and displays in-store (vs. 28%)
- 15% acknowledge online advertising (vs. 8%)
They pursue deals diligently:
- 54% use online resources to find coupons (vs. 29% of consumers overall)
- 41% use smartphones to find coupons (vs. 13%)
- Nearly 25% say smartphone apps featuring deals strongly influence their brand decisions
- In all, 40% say “more than half of their last CPG basket was purchased on deal (vs. 31%).
- 25% are buying more on deal in 2014 than in 2013
And Millennials save in other ways too, reports IRi:
- 70% compare shelf prices on everyday items (vs. 62% of consumers overall)
- 66% compare prices across retailers in the same area (vs. 59% of consumers overall)
- 58% choose a store that has the lowest price on needed items (up from 53% a year ago)
- 50% comparison shop on retailer websites (vs. 29% of consumers overall)
- 47% seek out store brands (up from 39% a year ago)
Their pervasive savings behaviors are understandable: 26% of Millennials report “difficulty affording groceries today,” notes IRi. That’s better than the 38% who said this in Q1 2013 a year ago. This upswing reflects their relatively optimistic view of financial prospects, based on a steadying of unemployment and under-employment rates. Millennials save to hold the line until times really improve for them.
The clock is ticking for retailers to refine programs based on these insights, in order to maximize their sales to Millennials. Why? Though it’s true that many Millennials graduated into a poor job market and 21.4 million live home with mom and dad out of economic necessity, the quieter story is how quickly other Millennials are progressing in their careers: In Q1 2014, 41% of Millennials felt their financial position improved in the past year (vs. 21% of all consumers). This creates an opportunity to encourage limited splurges on upscale foods and beverages and personal care products.
Once Millennials transition into marriage and motherhood (and fatherhood) – just 26% of adults age 18 to 32 are currently married - supermarkets especially will want their baskets. Yet food stores that don’t plant their seeds soon will be chasing, rather than seamlessly serving, what experts predict will be the biggest family spenders of all time.
To succeed with Millennials, says F3, retailers will need to offer the values they demand, and fill the role of the engaging, transparent, socially responsible merchant they prefer to buy from.