Rethinking our relationship with Millennials
Over the past several years, the professional sphere has been in a state of panic, meticulously preparing for the day Millennials would arrive on the consumer market. Young consumers born between 1981 and 2000 (entering into a new millennium, hence the generation’s name) form an unpredictable army of consumers, holding the power to set fire to the retail sphere.[…] Examining their characteristics as a group, their new consumer habits aren’t limited to merely one channel — they tend to research a product and the experience it offers before making any purchases. For most of the previous generation, they represent an era of constant internet access; smartphones are as much of an extension of their arms as the hands they were born with.
According to a survey conducted by eMarketer addressing American marketing professionals, Millennials are the second disruption in importance their industry is facing.
Millennials hustle. Though they are an important factor in commercial strategies, are they the most significant piece of the puzzle? Our goal is to understand the real impact they have on the market — we must try to compensate for ill-focused campaigns, inept investments and consumer groups that have been divided by detrimental exaggerations.
Millennials’ true impact
Let’s start by pinpointing the origin of this generation. Today, Millennials are between 18 and 37. Among their generational traits, they entered the job market at the same time as the 2008 financial crisis and are aging in a culture that is increasingly becoming digitized. This is the first generation that has grown up in a world where the internet is a commodity. In the chronology of generational timelines, they are between Generation X (1960-1980) and Generation Z (2000 to today).
Millennials represent a little less than a third of consumers on the market today. They may be the biggest generation of consumers, however their impact on the market is not quite at the height media has implied.
The majority of analyses about Millennials have been conducted in the United States. However, each market can differ extremely in structure. For example, the American population is much younger than most European populations. Men aged 20-24 represent 2.8% of the European population, whereas in the United States they take up 3.6%. On the other end of the spectrum, ageing populations are higher in Europe and Canada than in the United States. If consumer habits are relatively similar throughout these countries, alarmist studies are built on (and skewer by) populations that vary greatly in size and proportion. Millennials carry less weight in Europe, and analyses and comparisons between countries need to be transposed delicately (and taken with a grain of salt).
Is this population so different from others?
We attribute unique characteristics to this age bracket. However, in a Deloitte Insight’s analysis, “The Great Retail Bifurcation,” we see that socio-demographics carry more of an influence on consumer habits than age alone. A Millennial in a lower income bracket has nearly identical buying patterns than someone from an older generation in the same financial situation. When it comes to consumers who identify as middle-class, 81% shop in physical stores (brick & mortar), no matter their age. When it comes to reactivity to promotions, exclusive online shopping habits, or in-store buying frequency, the data is systematically identical across the board for all generations who find themselves in the same income bracket.
So where are these rumours coming from? Effectively, stereotypes can often be linked back to one specific group that offsets the entire balance of a population’s perception. Millennials with a high income are 24% less likely to buy in-store. Their deviance in shopping habits is what gives their entire age group a reputation for being online shopping fanatics. In reality, they only represent 19% of Millennials and 6% of the total population.
Other studies have reached similar conclusions: this is not the only example of how 18-37 year olds are a heterogeneous group. For instance, the youngest in the category likely live with their parents, whereas the oldest are likely parents themselves. Consumer habits vary widely across the board. Their digital habits diverge as well; the younger Millennials were nearly born with cell phones, whereas older Millennials witnessed the digital revolution as it was happening in real time, slowly adapting along with the rest of society.
Are Millennials a gold mine?
The battle to conquer this generation is raging, but are they really the best target? Millennials have less buying power than older generations who have been active buyers for longer. The average millennial household annual income generated by 18-37 year olds is $65,373 — compared to the average American household income of $74,664. Furthermore, their average spending is concentrated on current needs. At 30, most are focused on paying back their student loans or investing in their first home, which tightens their budget when it comes to frivolous spending.
Despite these caveats on the actual impact Millennials are having on the retail market, the inverse risk is just as real: it’s far too early to give up on reeling them in. Their consumer habits are bound to explode within the next 10 years. ICSC estimates that by 2022, Millennials will consume 171% more than they were consuming in 2002. In 10 years, many will be focusing on Gen Z and the changes they’re destined to ignite. By then, Millennials on all ends of the bracket’s spectrum will be on the job market, and the next generation will be finishing their studies. In the same vein, we have to keep our eyes on Gen X, considering they are the ones who currently hold positions of power in companies.
Age may be an interesting variable, however, when observed on its basis alone, it doesn’t say anymore about consumer habits than any other indicators, such as gender, origin, income, or customer loyalty. To analyze your clientele in pertinent way, POTLOC recommends you adopt a multiscale method.