The Millennial generation, the demographic currently between the ages of 18 and 34, is the largest generation in American history, comprising approximately 24 percent of the U.S. population. By 2017, as the last of these young adults come of age, their purchasing power is expected to overcome that of Baby Boomers.
However, this generation has been labeled by many as fickle—browsing but not buying and spending unpredictably. As retailers enter the holiday shopping season, the question becomes "How do we reach this elusive, yet important demographic?"
According to new data from CFI Group's "2014 Holiday Retail Spending Report," which surveyed 1,000 U.S. consumers, low prices, promotions, and mobile shopping options are key to reaching this audience. The retailers who come out on top this year are those who leverage a multichannel shopping experience that captures the attention of Millennials throughout their shopping journey on Black Friday and Cyber Monday.
As a whole, 27 percent of the total survey sample in the "Holiday Retail Spending Report" said they'd spend more on gifts this year. However, that figure increases for Millennials, with 48 percent of 18- to 24-year-olds and 43 percent of 25- to 34-year-olds planning to spend more this year.
But this doesn't mean they're not expecting a bigger bang for their buck. Millennials are approaching the season as hunters on the lookout for the best deal. Popular items such as toys and electronics are bound to fill carts across the country, and low prices are crucial to wooing those with bigger budgets.
The data show that all shoppers will be driven by holiday promotions this year and plan to spend more than 50 percent of their total budgets between November 28 and December 1, the Black Friday/Cyber Monday shopping weekend. That number is up 27 percent over the same weekend in 2013. For Millennials, this holds especially true. Those in the early stages of family and career development showed a greater likeliness to seek sales and promotions than other demographics. A full 40 percent of 25- to 35-year-olds reported being motivated by sales and coupons, as opposed to just 29 percent of the entire population.
Mobile coupons are a key convenience for Millennial shoppers visiting brick-and-mortar stores this season. Overall mobile application usage for shopping purposes saw massive year-over-year growth. CFI Group's "Retail Satisfaction Barometer 2014" found mobile devices were reportedly being used by 21 percent of consumers during the shopping experience, with the majority of that usage, 68 percent, focused on price comparisons. The 2014 RSB results show a marked increase in mobile app usage while shopping, with overall mobile application usage rising to 41 percent. While price comparisons still lead application usage at 47 percent, nearly 45 percent took advantage of mobile couponing apps.
Additionally, Millennials' propensity for sharing information about their purchases on social media can make or break a retailer's brand and its ability to build trust and foster customer relationships within this important age group.
The Mobile Advantage
Smartphones and tablets largely have transported shopping and transaction experiences to the digital neighborhood instead of Millennials' current surroundings. Rather than browsing a sales floor, members of this generation are more likely to browse online, click their choice, connect to a digital wallet, and expect their order to be on their doorstep within a couple days, if not a few hours.
Mobile apps are a popular way to connect with shoppers across a variety of channels. The RSB study found that 67 percent of 18- to 34-year-olds use mobile apps during their shopping experience, but this isn't a trend limited to one generation. The majority of consumers of all ages indicated that they have two to four shopping apps installed on their devices.
This year, 51 percent of consumers surveyed in the "Holiday Retail Spending Report" said they would spend 40 percent or more of their holiday gift-giving budget online, a 13 percent increase from last year. For those unwilling to buy online, shipping costs are typically the biggest hang-up. More than half, 55 percent, said the high cost of shipping caused them to abandon an online cart in the last six months.
Millennials will continue to be an all-important target. The season's most successful retailers will lower prices and offer deeper savings through coupons and apps, touching mobile Millennials at every point from initial interest to the completion of the sale. In today's customer-driven marketplace, the difference between the holiday winners and losers is likely to be based on who is able to best attract this key demographic.