Every retailer wants to crack the Millennial code to gain a better understanding of the spending habits, behaviors and values of the cohort born between 1977 and 1992.
And it’s not just because they’re the largest living generation, with 83 million people. Physical stores account for 53 percent of their spend, 39 percent is spent online and 8 percent occurs through call centers.
“The primary myth about Millennials is that they’re all the same. It’s common to treat Millennials like they are a foreign species, worthy of completely new and drastic tactics. If you’re approaching Millennials this way, you need to make some changes. And quickly, before you’ve lost them altogether,” said a new study by Epsilon, “#MarketingtoMillennials: A guide to Understanding Today’s Millennials.”
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Millennials are socially aware, health-conscious and they support causes. They’re socially connected via Instagram, Snapchat, Twitter, Pinterest and Facebook. Millennials are the most educated generation in history, with 71 percent of 21- to 34-year-olds having attended some college or higher.
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Yet, Millennials aren’t the wealthiest generation. The average population is 11.7 times wealthier than Millennials aged 18 to 24. “We’re not surprised. Were you wealthy right out of high school or college?” the report said. “Within the entire Millennial generation, we’re seeing a wide range of income levels, especially between those in college and those five years into their careers.”
Millennials have a much lower average income, which stands to reason, because they’re newer to the workforce. As a result, they’re into savings. The group’s 18- to 34-year-olds are three times more likely to visit couponing sites, 4.6 times more likely to buy items at a discount store and four times more likely to visit comparison-shopping sites.
According to Epsilon, “It’s not about age; it’s about life stage. To effectively market to Millennials, forget about the age, think about the stage.”
The study identifies six life distinct stages: #imanadult, #liveswithmom, #gettinghitched, #momlife, #puttingdownroots and #butfirstletmetakeaselfie.
During the first stage, Millennials go to college, work or take some time off to figure out what they want to do with their lives. Their biggest spend categories (by share of wallet) are apparel, 29 percent; home decor, 17 percent; educational/office supplies, 11 percent, and entertainment, 1 percent.
The report identifies subterraneans as a growing group of Millennials who live with their parents. The rising cost of education and the competitive job market may have sent Millennials back to their parents’ homes. Their values include high-speed Internet for gaming, entertainment, computer use and social media. Since they spend less on rent and household expenses, they have more to spend on themselves.
Married Millennials are 2.5 times more likely than non-married Millennials to have wealth savings above $25,000, the study said. They have higher incomes than their single counterparts ($60,000 versus $34,000). Married Millennials spend 26 percent of their annual income on apparel, compared with singles, who spend 36 percent.
“With the legalization of same-sex marriage, conventions will change,” the study said. “More than ever before, brands will need to think twice before automatically assuming a marriage indicator serves as a rule to market to the other gender.”
Millennials with children spend two times more of their annual wallet on children’s merchandise. Parents spend 25 percent less of their annual wallet on apparel, fashion accessories, shoes, beauty and spa treatments for themselves. “Your old loyal shoppers start to drift away — not because they are less loyal, but because their priorities have shifted,” the report said.
Saving for a down payment on a house is taking longer than previous generations. Millennials putting down roots are spending more of their annual wallet on apparel, 6 percent more than Baby Boomers and 15 percent more than Gen Xers.
“Even though Millennials aren’t as wealthy — yet — as older generations, they have a place in the luxury market,” the report said, citing customers who spend more on exterior signs of success — such as high-end apparel, accessories and trendy modern home decor — than they do on ownership.
While settling down and raising a family was expected of past generations, Millennials aren’t as likely to give into that social pressure. Single-minded Millennials spend 1.4 times more of their annual wallet on apparel than married couples. They’re more likely than other stages to place higher-average orders online.
Millennials’ life stages aren’t static. “They will grow, and their stage will change, so don’t dismiss where they are now,” the report said. “One day, they’ll probably have a yard, and already have an idea of how to decorate it.”
It’s also important to remember that even if Millennials have less income than older generations, they still have buying power. And their power is perhaps even more influential because of their social media use.