Perhaps no generation has been researched, studied and discussed as much as Millennials.
Since their emergence as a driving force in the consumer marketplace more than a decade ago, the demographic group that covers those born between 1981 and 1996, according to the Pew Research Center, has often been viewed as enigmatic.
But as Millennials age, they are hitting key life moments that include marriage, parenthood and homeownership, which are leading to changes in their personal priorities, the products they need and purchase and how and where they shop.
Experts said this is creating a divide among Millennials that now requires marketers, retailers and product suppliers to recognize the differing needs among the older and younger members of this generational group.
“As Millennials age and move into the next stage of their lives, they are shifting their spending priorities,” said Marshal Cohen, chief industry advisor with The NPD Group. “They are understanding that it’s not about ‘me’ anymore and their spending will be focused more on their home and their lifestyle.”
While the life changes older Millennials are experiencing are similar to that of the generations that have come before, unlike Baby Boomers and those in Generation X, they have come of age in a digital world that has provided them new ways to communicate and shop.
The Internet became an everyday fact of life during the mid-1990s when older Millennials were entering their high school years. A decade later, as they entered the workforce, the smartphone was introduced, which revolutionized many aspects of life, including shopping.
Convenience became key and loyalty to retail brands diminished.
“Millennials had many more shopping opportunities available to them than previous generations,” said Pam Danziger, president and founder of Unity Marketing. “As a result, they are also less loyal to shopping at certain stores.”
Keeping a close watch on how Millennials evolve as a consumer group and trying to build their loyalty to certain brands will be vital to retailers and housewares suppliers for many years to come. Figures from Pew Research project that the age group numbers 73 million and will soon overtake Baby Boomers as the largest living adult generation.
Similar to the generations that have come before them, hitting life’s major moments is altering how and where Millennials shop. For example, as they entered the workforce and began leaving the homes of their parents, limited income forced them to purchase products that were cheaper and in some ways disposable.
“They were willing to buy 10 cheap blenders over a 10-year period rather than one blender that was of better quality and would last,” Cohen said. “They now have a want to buy a better product for them and their kids.”
While some Millennials are evolving in how they define a product’s value and are showing a greater willingness to invest in items that will last longer, experts said they do not expect major changes in how consumers in this demographic group shop for products.
Having spent much of their life exposed to the convenience of shopping online and more recently, shopping on digital devices such as smartphones and tablets, many Millennials remain focused on taking a digital route when looking to buy items from retailers that either have a foundation in brick-and-mortar or are e-commerce pure-plays.
“They are accustomed to shopping in a 24/7 online world at their fingertips and having products arrive at home in two days,” said Cohen. “They were raised on instant gratification and retailers must continue to keep pace with that.”
The continued evolution of the omnichannel experience at retail has been a focal point for many retailers in recent years. The challenge brick-and-mortar retailers have been facing is the issue of showrooming, where a consumer visits a store but then uses his/her smartphone to check pricing online and purchases the product from another retailer that is then shipped to their home.
But Cohen feels retailers that have brick-and-mortar and e-commerce operations need to continue developing new ways to bring the two sides of their businesses closer.
“We’re seeing so many retailers getting into next-day and same-day delivery and carrying certain brands more online than in stores,” he said. “But can they do more to have brick and mortar be more like their online operations while also seeing if the look and feel of online can be brought to their stores?”
A big issue facing retailers today with Millennials is loyalty. While Baby Boomers and Generation Xers have “favorite” retailers they shop often, their younger counterparts have shown a proclivity to shop just about anywhere to find the product and value they desire.
“When shopping, they have had more choices and more ways to find the things that they want than previous generations,” Danziger said of Millennials.
One way to build loyalty with Millennials could be the focus on providing this demographic an experience they feel is personal, she said. This could include everything from having a person greeting people at the door to making sure store personnel are knowledgeable and able to answer shopper questions on the selling floor.
“Retailers can try to lure people with cheap prices but that creates a race to the bottom and that’s not good,” Danziger said. “It’s also important to remember that this is a generation that has been marketed to since birth. They can sniff out a marketing message unlike other generations and are quickly skeptical of brands that try too hard.”
With offering a positive experience in mind, Danziger noted recent surveys have found that Amazon and Costco are retailers which ranked high among Millennials. While the e-commerce pureplay and warehouse club differ greatly in their individual approaches to retailing, the commonality among the two is their membership-driven programs— Amazon with Prime and Costco with its annual membership fee.
In addition, she said both offer services that are attractive to Millennials while also meeting their shopping needs. Amazon through Prime offers the convenience of two-day delivery while Costco’s store personnel are known for their high level of customer service.
One challenge facing many Millennials today is a lack of knowledge when it comes to buying products for the home or completing small home improvement projects. This need to be educated could provide some retailers with an opportunity to connect with new customers.
Officials with hardware retailer True Value, seeing an opportunity to build a relationship with Millennials, said its small footprint stores located near neighborhoods provides an opportunity to build its business with a new customer base.
“Our analysis tells us the reason why Millennials do not want to go to a big box store is that when they walk in they feel kind of lost,” Jennifer Born, a spokesperson for True Value, told HOMEWORLD BUSINESS® in a recent interview. “Our stores are local, they know what’s trending in terms of seasonality and our product assortment is very localized.”
Echoing the sentiments of Danziger, Born said the ability of True Value stores to provide shoppers individualized attention when looking for home items or trying to fix a plumbing problem provides an advantage over its big-box competitors and e-commerce outlets.
“Online shopping is not slowing, but you can’t ask for plumbing advice online,” Born said. “They will be coming to the store to make a purchase to solve their problem.”
She noted that Millennial shoppers living in metropolitan areas are among True Value’s most profitable customer segments. While they make up a smaller percentage of shoppers than Baby Boomers, the average spend of Millennials is much higher.
Born said the metropolitan Millennial shopper is buying a range of items such as paint, cleaning supplies, kitchen organizers, trash cans and shower liners and tools.
Editor’s Note: Mike Duff contributed to this story.