Millennials, also known as Generation Y, are not your parents’ generation; they do things differently and in a big way. Millennials also happen to be the largest generation; some 80 million individuals born after 1980 and before the early 2000s make up this young but influential demographic. Nowhere is this influence being felt more than in the retail industry: recent research reveals that Millennials are changing the rules of brand marketing, redefining purchase habits, and revolutionizing the shopping experience as we know it. Along with changing ideologies in technology, privacy, and social interaction, Milliennials are forcing retailers to reevaluate how they attract and communicate with consumers.
Brand Marketing: Not Your Traditional Approach
Millennials are anything but traditional when it comes to retail shopping. It should come as no surprise that Millennials prefer being able to interact with brands through digital channels versus historical marketing tactics such as circulars or in-store advertisements. Retailers also cannot rely on the traditional “quality products at a good deal” approach, an effective marketing component of baby boomers. Instead, Millennials are forcing brand marketing strategies to become much more participative in ways such as casually engaging them on Facebook or Twitter. In fact, the entire marketing equation for Millennials has evolved to include this participative aspect:
One way for brands to become more participative is to offer loyalty and reward programs; 77 percent of Millennials reported participating in such programs and 78 percent reported being more likely to purchase from a brand with a loyalty/rewards program than a brand without one. Brands that succeed in attracting Millennials are often then rewarded for their efforts: Millennials are leaders in “word-of-mouth” recommendations. In this age of social media, “valuable brand advocates” who share opinions on- and off-line with peers are arguably the most effective marketing tool.
The Shopping Experience: A Two-Way Street
The participative and engaging approach goes beyond just selling; the entire retail shopping experience needs to be more engaging. Retailers need to make Millennials feel as if they are a part of something fashionable and trendy; something that their friends belong to – Millennials associated themselves with the statement “It’s ok if others know I am associated with it” twice as often as Baby Boomers.
The all-in-one shopping experience of major in-store retailers is becoming a thing of the past, as the ease and convenience of online shopping is putting more pressure on in-store retailers than ever. It can be far less preferable to go to a brick-and-mortar store when online purchases arrive within a few days and shipping is (often) free. Additionally, the sheer quantity of online vendors has afforded Millennials (and consumers in general) more retail options than ever before, thereby allowing Millennials to be more selective with their purchases. Millennials actually prefer to browse for products over purchasing them, and only pull the trigger after a smile of satisfaction – a retailer’s ability to “make me smile” is 33 percent more important to Millennials than Baby Boomers.
Online retailers interested in appealing to Millennial consumers need to provide them with a more shareable and social shopping experience. As the pioneers of social media, it is especially important for online retailers to offer products and advice to Millennials on social networks. Millennials want to share these things with 100, 1,000, or even 10,000 friends and followers (i.e. your potential customers). This dialog can be enhanced by a well-developed mobile strategy that engages the 50 percent of Millennials that are browsing and reviewing products via their mobile devices.
Purchasing Habits: Here and Now
Millennials live and shop in the moment, often making purchases and dealing with the repercussions later. In one survey, 52 percent of Millennials were more likely to make impulse purchases than any other generation. This is an alarming difference from the nearly 8 out of 10 baby Boomers whose purchases are driven by practical decisions. Millennials don’t stop spending in a recession either; only 20 percent of Millennials reported spending less on apparel during the most recent economic downturn.
Despite the rapid spending habits of Millennials, they put a lot of thought into the products and services they adopt. Millennials are more cosmopolitan in nature, and view their purchases through a global lens, which for example, leads to a higher preference for “green” products. These reasons are why Millennials are more likely to shop at smaller retailers with authentic cultural items than large chain operations.
Millennials do more than just purchase environmentally or socially responsible products; they donate their time and money to charitable causes. In 2011, 75 percent of Millennials donated to charity and 60 percent volunteered for a good cause. In the near future, the brands that Millennials support the most are likely to have a positive impact on the world.
The New Dialogue
Millennials are using the advancements in technology and mobile communication to change how they interact with brands. The brands that nurture these interactions and turn them into strong relationships will be rewarded in new ways. For instance, Millennials are willing to share private information in exchange for benefits – 56 percent would share their location for a discount.Ultimately, Millennials are now calling the shots, and retailers will just have to listen.
To learn more about Millennials and their shopping habits, click here.