Millennial Money & Mindset: Everything Your Business Needs to Know

Who are they? Where is their money going? And how are they different from boomers?

That’s what every business wants to know.

The large cohort of young Americans, including millennials born in the 1980s and 1990s, are on their way to becoming the most influential consumer group in the country. They will soon eclipse the large and relatively wealthy group of baby boomers that stamped their attitudes and habits on the country’s consumer profile for decades, according to a Euromonitor study in 2015 about Consumer Lifestyles.

Customer service consultant and expert Micah Solomon recently wrote in Forbes magazine:

“In spite of the clichés you see in the media about this generation (ramen-eating, impecunious, underemployed, and so forth), millennials are not only the largest generation in US and world history, they’re on the cusp of commanding the largest wallet power as well. It’s estimated they’ll be spending US $200 billion annually by 2017 and US $10 trillion over their lifetimes as consumers, in the US alone.”

The unique preferences, expectations and experiences of this young group are changing the US consumer profile in significant ways. In particular, as most young Americans have grown up with digital technology, their lives as consumers require intensive technological interaction constantly. Beyond retail, their influence is about to be felt in other consumer segments, as well. When Google conducted a survey in 2014 about home buying, it found that those 18 to 34 years old were twice as likely as those 35 to 54 years old to say they planned to buy a home when they were the same age.

Smartphones are their closest friends.

Volume sales of smartphones has increased by 375%+ since 2008. This accelerated curve combined with an ever-growing number of shopping-related apps has boosted mobile online shopping, altering considerably the ways in which millennials, and all American consumers, shop for a wide range of goods and services. But millennials are the driving force behind that trend.

A recent survey by the US Federal Reserve highlighted how mobile devices are changing the retail shopping landscape stating: “The prevalence of smartphones with barcode scanning software and internet access has altered consumer behavior in the retail environment…among smartphone owners, 47% said that they have used their mobile phone to comparison shop on the internet while at a retail store, and 33% have used a barcode scanning application for price comparisons. Consumers are also using their smartphones to obtain product information: 31% have scanned a QR code in a newspaper, magazine, or billboard advertisement to obtain information about a product, and 42% have used their phone to get product reviews or product information while shopping at a retail store”.

Significantly, the survey findings went on to note: “Many consumers who use their smartphone to comparison shop reported that they altered their decisions as a result: 69% who have comparison shopped in a store reported that they changed where they made a purchase after comparing prices, and 79% reported that they changed what they purchased as a result of reading product reviews on their smartphone while at a retail store”.

More dads at home…and they don’t feed their babies processed foods.

A recent article in the New York Times discussed research by baby food manufacturer Beech-Nut which revealed that homemade purées now account for about one-third of baby food consumed. How millennials feed their children reflects their values, so it’s no surprise they want their babies to eat like themselves, whether that includes getting on board the trendy clean food movement in favor of convenient store-bought jars, or blending organic ingredients they pick up at the farmer’s market.

A 2013 Pew Research report revealed that the number of fathers who stay at home with their children (for any reason) had nearly doubled in the last two decades. Of all stay-at-home fathers, 21% said that the main reason they are home is to care for their home and family. That represents a four-fold increase from 1989 when only 5% of fathers that stayed at home cited that as the primary reason.

They don’t trust advertising.

A recent article in Forbes magazine highlighted the power millennials wield as consumers.

“Companies are fiercely competing for millennial mindshare and it’s only the beginning…They have a lot of influence over older generations and are trendsetters across all industries from fashion to food. Companies have been struggling connecting with this generation because many of the traditional methods of advertising have proven ineffective at capturing their attention”.

Forbes found that only 1% of millennials feel that a compelling advertisement would make them trust a brand more. Wow. Further proof that millennials believe that advertising is all spin and not authentic. That’s why they upgrade to commercial-free Hulu accounts to skip commercials regularly and avoid banner advertisements on Facebook and various news websites.

They are spending more on big ticket items than Boomers did.

A report from American Express noted:

“With the millennial generation becoming a little older and perhaps wiser…they’re more likely than older generations…to make a big ticket purchase, like a new home or car.”

In particular, it appears that a greater number of millennials are ready to become home owners.  A Goldman Sachs survey revealed that 40% of millennials think that buying a home is extremely important, and 30% think that buying a home is important but not necessarily a current priority, but soon will be. Similarly, a recent Wall Street Journal survey found that 66% of millennials want to buy a single-family home in the suburbs.

Syndicated TV is boring. Controlled TV is good. Reality is better.

Millennials are eschewing traditional television viewing and preferring to watch programs when and where they want, often on their tablets or smartphones. They also tend to consume more alternative media from newer sources of programming and distribution, such as Netflix, Amazon Instant Video, Hulu Plus and HBO Go. According to the TiVo Millennial Video Entertainment Survey, millennials prefer viewing television series over full-length movies, live events and music videos.  Alan Wurtzel, NBC Universal’s audience research chief, recently commented on this phenomenon saying, “I’ve never seen that kind of change in behavior.”

Millennials also have differences with members of older generations when it comes to judging TVs as “must-have” household products. The Goldman Sachs survey also found that only 15% of millennial respondents view buying/owning a TV as extremely important, 30% believe having a TV is important but not a big priority and 15% may purchase one if really needed, but they’re otherwise indifferent. But in the end, a mobile device is still the first thing millennials gravitate to first when they want to experience entertainment.

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