Jun. 19, 2019: Everyone in retail, industry, government, and urban planning is discussing the impact of the millennial generation on communities going forward. By definition, millennials are the 92 million Americans born between 1977 and 2000 accounting for approximately 25% of our population and 21% of consumer purchasing power. Roughly one in every four millennials is a parent and 53% of millennial households have children. As a group, they differ from Gen Xers and baby boomers in many ways – when they plan to marry, their financial situation, and how they consume products and media.
Because of their distinctive characteristics, future planning on every level has to adjust accordingly.
As illustration, millennials have grown up in a world that emphasized the value of convenience. Between takeout food, video streaming, personalized social media feeds, and the ability to Google any question in real time, they have been conditioned to think in terms of how fast, efficient, and available a service or product can reach them.
As a direct response to this phenomenon, Walmart is currently expanding its same-day online grocery delivery service to 100 metro areas, covering roughly 40% of U.S. households by the end of this year.
Millennials have also aged in a world of choices; be it Netflix options, online product comparisons, and then nearly a dozen ways to pay when an item or service is chosen. Cost is a big factor, given they saddle more debt than any other generation. The average millennial debt – mostly due to college loans – is $40,000 per person, while the corresponding average salary is $35,000.
Unlike past generations who were hyper-focused on acquiring “things,” millennials spend much of their disposable income to buy “experiences.” As “millennial entrepreneur” Taylor Smith said on NBC, “We aren’t spending our money on cars, TVs, and watches. We’re renting scooters and touring Vietnam, rocking out at music festivals or hiking Machu Picchu.”
In the current market, if you sell a physical product, the item needs to tell a story or paint an experience to a millennial. (I harken back to the J. Peterman catalogue.) Tom’s Shoes is a perfect example of a brand that was able to tap into this desire. Their one-for-one purchase and giveaway has become a new category of socially conscious marketing, cementing a connection with people and causes that millennials value.
As far as purchases, millennials have little interest in owning big-ticket items such as houses, televisions, and cars. Only one in three thinks a TV is a needed purchase, as they have Netflix, Hulu, and Amazon – all with the ability to binge watch on demand.
What millennials do want is to eat right and be healthy. Along with this has come a major uptick in the sales of athletic apparel and footwear.
Tastes and interests in every life sector are changing thanks to the power and numbers of millennials, and unless society keeps up, products, even neighborhoods, could become obsolete.
Some small but cautionary tales include companies manufacturing fabric softener, napkins, and bar soap. Thinking it unnecessary and chemically laden, millennials don’t buy fabric softener. As a result, Downy’s sales dropped 26% in just eight years. Six in ten households purchased napkins 15 years ago; now it is less than four, while the sales of paper towels are skyrocketing and only 33% of millennials use bar soap to shower vs 60% of those 65 and over.
Beyond these small blips on the screen, huge institutions such as McDonald’s, national and state lotteries, and even the stock market have felt the pinch because of millennial choices. McDonald’s is reviewing its business model as millennials are preferring fresher, healthier organic and ethically sourced food such as is served at Panera, as opposed to the McDonald’s offerings.
In the 50 to 64 age cohort, 61% of Americans played a lottery last year vs only 33% of millennials. Only 13% purchased stocks vs keeping their savings in Real Estate (30%), cash (30%), and even gold (17%).
Since most millennials do not have the car to transport the 24-roll pack of paper towels, rather opting to have it delivered, bulk grocers such as Costco and BJ’s are feeling the loss.
And in a true shot to “Americana,” the sales of brand-name beer and Harleys are declining. If the millennial taste preferences for craft beer, wine, and liquor continue, by 2030, beer will no longer have the largest share of the alcohol market.
Do-rags, sidecars, and patch-laden leather jackets do not resonate with millennials. Harley Davidson, so feeling the pinch, has been re-tooling factories to manufacture scooters and attract a new market retailing at half the price of a basic Harley.
Net-net, the influence millennials have in every aspect of life is growing daily. As a society, we need to understand and engage this segment of society on their terms.