Millennials by the Numbers
Retailing is an exciting and dynamic arena where consumers vote everyday with their money. Technology, social media, and intense competition have elevated expectations while expanding the horizons in the art of possible.
In ten years, Millennials will make up 75% of the world's purchasing class. Because of their fast-growing economic potential, companies are eager to understand them, and the characteristics of Millennials have become the subject of many debates. There are roughly 80 million Millennials in the U.S. today spending approximately $600 billion a year, making them an undeniable economic force and a treasure trove for retailers. For those who are able to tap in to this savvy group of consumers, it will only get better as they come into their own. By 2020 Millennial spending in the U.S. will grow to $1.4 trillion annually and represent 30% of total retail sales, according to a recent study from SAP partner Accenture.
All the chatter and speculation surrounding Millennials has resulted in stereotypes and misconceptions that mislead retailers trying to attract their business and maintain their loyalty. For example, the prime difference between Millennials and previous generations is that they grew up with personal computers, mobile devices and the Internet as part of their daily lives. They are digital natives, and retailers need to understand the impact this will have on their business strategies. As industry leaders, it is important to engage in this discussion, separate the myths from reality, and help all stakeholders understand what's really going on.
Myth #1: Stores don't matter anymore. Many Millennial shoppers actually prefer to shop in-store, primarily for the same reasons as previous generations – they want to be able to see, touch, and feel exactly what they're buying. Showrooming is an increasingly common practice among Millennials, meaning that they check online prices after visiting a store, often on their smartphones while they're still on-site. Millennials will ensure that they're getting the best deal possible, and will expect any promotions available online to also be conveniently available in-store and on their mobile device. According to Accenture's report, 68% of Millennial shoppers demand an integrated retail experience. Stores are a vital component of the consumer relationship retailers are trying to establish and core to making the experience more memorable than ever before. Delight the Millennial in your store, and the experience will be valued and shared immediately!
Myth #2: Loyalty is so passÉ. Retailers often assume Millennials lack loyalty, are easily distracted, and as soon as they receive an email promotion from a competitor, they'll be gone. This is a misconception. Millennials can be loyal customers, but it's a game of give and take. In exchange for their continued business, Millennial shoppers expect customer service that's more than just pleasant and accommodating. They expect fully customer-centric experiences, personalized to their unique needs and preferences. Retailers must have a clear and detailed picture of who each Millennial customer is and what draws her interest in order to build rapport and loyalty through engagements that feel personal and relevant.
Myth #3: You can take a social media 'Like' to the bank. While there is no question that social media is an important and integral part of Millennials' lives, retailers struggle to understand how to use it to engage them. Millennials view social media connections with retailers as transactional. The real goal for retailers when it comes to social media should be to build buzz and become part of the conversation – for Millennials to recommend them to friends and family through their online interactions. Retailers should monitor social conversations, take them seriously, and proceed with caution and tact in this space. Just like social media can allow a satisfied customer to become their biggest advocate, a disgruntled customer with 6,000 Twitter followers and a snarky hashtag can become their worst nightmare. What next?
Retailers can benefit from the fast evolution of technology as they strive to keep pace with this hyper-connected generation. Undisputable megatrends such as big data, mobility, the Internet of Things and cloud have given us tools that provide retailers real-time information on their customers and their business simultaneously. Armed with the right technology tools and knowledge, retailers can turn this tough crowd into a vocal network of advocates and loyal customers.
Pat Bakey is global head of consumer industries for SAP.