Economic uncertainty makes America's young adults avid deal seekers—this affects where they shop and the brands they buy.
This economy has put youthful ambition on hold. College graduates have returned home in record numbers, unemployed or under-employed. The U.S. 2010 project, from Brown University and the Russell Sage Foundation, disclosed that 24% of people age 20 to 34 lived with their parents between 2007 and 2009, well above the 17% in 1980.
Marriage rates were also down—to 38% of men and 47% of women age 25 to 29, well below the 1980 levels of 59% of men and 65% of women.
The affected Millennials do influence food buying in their parents’ homes, but their true value to food marketers will be when they’re on their own. This generation of 50 million+ is off to a slow economic start and could be the first generation in America to fare less well than their parents. When marketers tailor offers to 18- to 34-year-olds, they need to accept that their CPG spending habits are unfolding slowly.
In its Millennial Shoppers: Tapping into the Next Growth Segment report, released this summer, SymphonyIRI Group said: “During the past 18 months, Millennial shoppers have demonstrated more volatility and less fiscal confidence versus the average shopper. This is having a profound impact on daily rituals and associated CPG-related purchase attitudes and behaviors.”
Millennials that have left the nest are still likely to live in larger households, either with friends, roommates, children or spouses. They are, says SymphonyIRI Group, 50% likelier to be in a three- or four-person household and 75% likelier to be in a household of five or more. And one-third of them (32%) have difficulty affording their weekly groceries vs. 22% of the general population.
Moreover, Millennials feel less confident about their finances today than a year ago. “Price has escalated as a purchase consideration, the group is more likely to be giving up favorite brands to save money, and Millennials generally feel they have had to make more sacrifices than others in order to make ends meet,” the report adds.
As a result, 52% said they eat out less often than before the economic downturn, and 47% cook from scratch or with limited convenience foods to save money, in a Q2 2012 survey.
Where do Millennials spend their CPG dollars? Nearly half (47.9%) in the grocery channel, followed by 20.5% in supercenters, 8.7% in wholesale clubs, 7.3% at mass merchants, 6.5% in drug stores, 5.5% in specialty outlets, 1.3% in dollar stores, and 0.7% in convenience stores, according to SymphonyIRI Consumer Network data for the 52 weeks ended May 13, 2012. Their spend in the drug channel is 13% above average—partly due to tech-savvy programs by CVS (loyalty card information stores in smartphones) and Rite Aid (digital coupons load onto loyalty cards, and a QR code program piloting in San Diego answers frequently asked questions).
Millennial shoppers are avid deal seekers: 86.3% seek the lowest everyday prices in their selection of a retailer. And new media influences their brand choices: 15% of Millennial shoppers use smartphone apps for this purpose vs. 4% of the population as a whole, the report noted.