Millennials’ shifts will affect CPG and retailers
Millennials are the demographic group of 20- to 30-year-olds who, once the economy cooperates, will be on the brink of first home purchases, marriage, parenthood, career development and larger incomes.
With that comes a $54.3 billion opportunity for CPG, estimates a study from IRI, Winning with Millennial Women Shoppers. As these consumers establish their adult lives, their decisions on where to live and what to buy will have a profound effect on the nation’s hotter and colder spots; the cities and regions they favor could look very different from their parent’s choices.
“Contrary to popular belief, it is Millennials, not Baby Boomers, who will dominate U.S. domestic migration in the decade ahead,” says Sean Seitzinger, senior vice president, IRI Consulting & Innovation. “A household led by a person in their 20s is eight times more likely to move to another region of the country than a Boomer in their 60s. During the next five to eight years, many Millennials are expected to migrate to the Southeast, Southwest and the Rockies. These moderately sized cities feature strong opportunities for entry-level jobs, affordable housing and favorable weather,” all of which Millennials value highly.
While CPG could sell to them wherever they live, SupermarketGuru.com sees the types of housing they select, the foods they eat, and the climates and seasons that surround them affecting product development for this demographic. Retailers could face a more profound effect on their customer bases—and therefore location and go-to-market strategies—if new areas swell and established ones contract as a result of their moves. Moreover, the distance between Millennials and their parents could boost the need for travel, child care (no nearby support system of grandparents) and other services that CPG and retail might try to cross-promote with their brands.
Looking at the 46.8 million Millennials living in the United States today, IRI says:
• They shop less often, spend more per trip, and spend a higher proportion on CPG at supercenters and Walmart.
• Budget-constrained, they’ve cut back on categories such as frozen poultry, chewing gum, salty snacks and frozen pizza.
• Nonfoods categories with high appeal to them include hair care, suntan products and household cleaner cloths.
• Their private label acceptance roughly equals that of older shoppers—which means brands need to influence them through media other than TV, radio and print.
• They want retailers to do more to guide them toward healthier options in the store. Their top better-for-you snack categories are granola/cereal bars, yogurt and crackers.