It seems that retailers continue to underestimate the size and purchasing power of millennials, despite forecasts that this most important generation will outspend baby boomers by 2017.
According to a new study, “What Happens When Millennials Get the Wallet,” retailers do not fully understand the needs of millennials, and are employing marketing strategies that do not apply to them.
“Millennials have different motivations, attitudes and behaviors than previous generations, and retailers need to adjust their business strategies accordingly in order to thrive,” said Les Berglass, CEO of Berglass + Associates, the research firm that conducted the survey along with media brand Women’s Wear Daily.
Berglass believes that for the first time in decades, “we will see a new member of the C-suite, who will be responsible for driving two-way communication between the Millennial customer and the brand and for developing initiatives that will deliver long-term growth.”
Additional key findings unveiled in the survey include:
- Approximately half of respondents are unaware that millennials are expected to outspend baby boomers annually within five years.
- Millennials rely most on their friends to make buying decisions, yet more than a quarter of respondents mistakenly believe that online advertising is the number one influencer of millennials' purchasing activity.
- Of the executives that were surveyed, more than 30 percent are CEO’s or presidents, who plan to significantly increase their digital leadership over the next three years.
- 60 percent of respondents are not conducting any research or analysis of the millennial customer.
- Only 36 percent of respondents from companies with both physical stores and e-commerce sites offer a seamless customer experience, yet millennials expect the channels to be integrated
Some of the commonly held beliefs about millennials’ brand attitudes, shopping habits and preferences are, as it turns out, not as true as once thought, according to a recent study by CPG research firm Concentric Marketing.
“As marketers, we must find a reasonable level to cluster diverse populations like these into meaningful groups,” said Bob Shaw, president of Concentric Marketing. “We must recognize true differences and nod to the nuances to find the right balance of segmentation and generalization.”
Key insights include:
- Although this generation is digitally adept and shows a bias for convenience, millennials still prefer a traditional brick and mortar shopping experience over e-commerce for the majority of their regular purchases. When asked for the type of store they prefer to shop the most, nearly 60 percent cited the traditional grocery store and mass merchants such as Target and Walmart.
- The health-consciousness and pragmatism of the college millennial is evident in the categories they shop most often in the grocery store. Dairy, produce, meat and frozen topped the list.
- While over 96 percent of college-age millennials have a Facebook account, nearly half of them stated they didn't believe brands should be on social media. Nearly 70 percent report following three or fewer brands across all social media channels.
- In the face of being dubbed a “brand agnostic” generation by former studies, 17-32-year-old millennials are surprisingly pragmatic in forming their perceptions around brands and are heavily influenced and loyal to brands introduced to them by their parents.
- Despite studies showing that more than one-third of this generation is considered obese, millennials in the study were very nutritionally knowledgeable. Nearly 60 percent cited the importance of monitoring caloric intake, protein, fat grams and sugar grams in their diets. They are also eating out less and cooking at home five or more times per week.
“This study opened our eyes to some remarkable insights that provide a foundation for smart segmentation of Millennials,” Shaw added. “These insights lead to micro targeting, improved messaging and efficiencies in reaching this coveted consumer.”
The study was completed on behalf of hago, an experiential and sampling firm with a specialization in reaching college students across the U.S. It was conducted through an online panel format and included nearly 900 respondents representing 54 college campuses.
