Back off Baby Boomers, move over Generation X – clear the aisles for Generation Y, also known as the Millennials. Based on consumer spending trends, they are set to gain a significant amount of purchasing power. In roughly five years, America’s first “always connected” cohort of consumers will start joining Generation X as the nation’s top spenders. The digital natives have always known life with broadband Internet, cell phones and other technical forms of communication – the tools are natural and integral parts of their lives. When they walked into grade school, the World Wide Web was just revving up. During middle school, Palm Pilots and iMacs began filling store shelves. While many attended high school, Napster was battling record companies. As they looked up colleges, it seemed like everyone was sharing music on MP3 players and transferring apps across smartphones. Millennials are a group of networked learners who know the potential of online communities, especially those formed around celebrities, brands, products and services.
Adults between 35-54 years old exhibit the highest annual consumer expenditure rates, according to the U.S. Bureau of Labor Statistics (2011). Using common definitions, Generation X currently contains individuals 30 to 45 years old. Baby Boomers represent the age bracket of 46-64. Today, those two generations hold the majority of America’s purchasing power. However, Generation Y, 18-29, are gaining traction, as Baby Boomers become far less benevolent and much more thrifty. Millennials are the most massive generational cohort in U.S. history, so their coming of age will radically challenge existing understandings of consumer behaviors.
Who are these youngsters?
Almost all of the Millennials are using the Internet (95 percent), based on the latest Pew statistics (2011). A survey by Pew (2010) found most are politically liberal, tech savvy, confident and excited about their future. While they still respect a need for prayer, they are the least religious American generation in modern times. They’re shying away from marriage far more than their parents and grandparents. However, Millennials place a great deal of importance on parenthood and marriage, more than career and financial success. A survey by Public Religion Research Institute (2011) found at least a 20-point gap between them and seniors on every public policy concerning the rights for gay and lesbian people – they overwhelmingly support marriage, adoption and workplace protection.
Millennials are more ethnically and racially diverse than their elders, as well as the most educated group of young adults in U.S. history, according to Pew. The nation’s latest wave of consumers is accustomed to intercultural competence, instant information and technical platforms for managing arrays of social connections. Three-quarters are registered with at least one social networking website. One in five has posted a personal video online. More than 80 percent say they sleep with a cell phone by their bed, ready for phone calls, text messages, emails, songs, videos, games and news. Nearly two thirds admit to sending text messages while driving a car. According to a survey last year, 58 percent of Americans 25-34 years old own a smartphone, and about half of the younger adults carry one (2011).
Millennial attitudes and expectations will change buying habits in the United States. In response, business owners must change the way they sell. Specifically, they must embrace consumer desires to participate in commerce – involvement that takes them far beyond a one-time trade for a value-added benefit. A majority of Millennials say allowing feedback online is necessary and they’ll continue to participate in new systems, according to data from BazaarVoice (2012), an organization that captures and analyzes consumer needs. Eighty-four percent of survey respondents have suggested that online user-generated content greatly influences their purchase decisions. Young adults rely on researching consumer reviews for buying major electronics, cars, hotels, travel accommodations, credit cards and insurance. What’s more, they’re more inclined to trust website recommendations posted by strangers than opinions from close friends and family members. Most Millennials have openly shared their own purchase opinions online. They value intact, unedited feedback and nearly all of them are annoyed by company representatives who make changes for basic spelling or grammar errors.
Millennials will change American buying habits. In response, businesses must change the way they sell.
People are spending more time than ever using social media, according to a Social Media Report by Nielsen and NM Incite (2011). The report revealed that consumers today rely on social media to discover, research and share information about brands and products. Among social media users, consumer-generated reviews and product ratings are their preferred sources of information – trumping company websites, call centers and emails. Active social networkers often spend more too. When compared to the average adult Internet user, they are 75 percent more likely to spend heavily on music, and 47 percent more likely to spend a lot on clothing, shoes and accessories. Business owners who are overly concerned that using social media might amplify unfavorable opinions about their products or services should place more attention on cleaning up company operations. People will talk about their brand online, regardless.
For many Millennials, retail stores are convenient means to fulfill purchase decisions, commitments made before opening shop doors. Consumer needs are changing, but brick-and-mortar stores aren’t going away, according to research published in January by Deloitte (2012). Deloitte researchers say the survival of the sales and service environment depends on incorporating elements of the physical and virtual worlds. Instead of cash registers, the Millennials will prefer mobile points of sale that span an entire store floor. New technologies must allow consumers to gather more of their product information there, using customized, aggregated data that better anticipates their needs. Eventually, the retail store’s role in facilitating consumer transactions will seem less like a competitor of virtual channels and more like an integrated and cooperative solution.
Millennials will continue to decentralization commerce with innovative consumer crowdsourcing systems. The days are dimming for loud, pushy advertisements and business-centric product development. Marketing futurist are expecting expansions in public participation. There are several examples of collective product creation seeded today, such as online storefronts for customizing housewares, t-shirts, jewelry and automobiles. As Internet bandwidth widens for more data and cloud computing diffuses more system resources, robust platforms will allow a sharper focus on consumer involvement than ever before. The Millennials are an educated and social generation with an impressive willingness to collectively build value in businesses and collaborate with fellow consumers. As their purchasing power increases, they’re bound to form a more intuitive marketplace.
Bureau of Labor Statistics. (2011, September 27). Age of reference person: Average annual expenditures and characteristics. Retrieved February 12, 2012, from U.S. Department of Labor: ftp://ftp.bls.gov/pub/special.requests/ce/standard/2010/age.txt
Deloitte. (2012, January 13). Store 3.0: Overview. Retrieved February 12, 2012, from Deloitte: http://www.deloitte.com/view/en_US/us/Industries/Retail-Distribution/aec014cf4e33b210VgnVCM1000001a56f00aRCRD.htm
Greenleigh, Ian. (2012, January 24). Infographic: Millennials will change the way you sell. Retrieved February 12, 2012, from Bazaarvoice: http://www.bazaarvoice.com/blog/2012/01/24/infographic-millennials-will-change-the-way-you-sell/
Jones, R., Cox, D., Cook, E. (2011, August 29). Generations at odds: The Millennial generation and the future of gay and lesbian rights. Retrieved February 12, 2012, from Public Religion Research Institute: http://publicreligion.org/site/wp-content/uploads/2011/09/PRRI-Report-on-Millennials-Religion-Gay-and-Lesbian-Issues-Survey.pdf
Nielsen. (2011, October 14). How social media impacts brand marketing. Retrieved February 12, 2012, from Nielsen: http://blog.nielsen.com/nielsenwire/consumer/how-social-media-impacts-brand-marketing/
Pew Internet and American Life. (2011). Demographics of internet users. Retrieved February 12, 2012, from Pew Internet and American Life: http://www.pewinternet.org/Static-Pages/Trend-Data/Whos-Online.aspx
Smith, A. (2011, Jul 11). Smartphone adoption and usage. Retrieved February 12, 2012, from Pew Internet and American Life Project: http://www.pewinternet.org/Reports/2011/Smartphones.aspx
Taylor, Paul, and Scott Keeter, eds. (2010, February 24). Millennials: Confident. Connected. Open to change. Retrieved February 12, 2012, from Pew Research Center: http://pewsocial-