Millennials Have Taken Over Retail: Now What?
By Joe Skorupa
We know Millennials are the biggest generation in U.S history and are entering their peak income years. They are eagerly adopting the sharing economy (car transportation and home rentals) and have a strong interest in wellness. But more than anything else, their affinity for technology, especially the smartphone, is a defining characteristic that is reshaping retail. Here’s how.
As the largest segment of shoppers, Millennials are the biggest opportunity for retailers. The problem is that they are also their biggest headache. The reason is that of the three major selling channels (stores, online and mobile) mobile commerce delivers the lowest marks for customer satisfaction, as found in the “RIS Shopper 360 Insight” study. This means that retailers are representing their brands in the mobile channel in a way that is turning off their biggest block of shoppers.
In addition, the study discovered that retailers are also disappointing Millennials in the social media channel. The study found a strong preference for Millennials to do such social activities as taking photos of products to share, posting product and brand messages on social networks, posting comments about stores on social media, and becoming a social media influencer for a retailer to earn rewards.
In fact, the study found that more than half of all shoppers (62%) post online reviews or comments about retailers. That’s a big majority, but what is really interesting is that only 2% say retailers actually respond to them when they do it.
This figure isn’t just for Millennials, it is for all age groups, but the point is clear – retailers need to up their game in digital commerce so that they stop disappointing their largest group of shoppers.
Getting Digital Retailing Right
Retailers have been rolling out downloadable mobile apps and using social media since at least 2008. This is more than enough time to make mistakes, figure it out, and get it right. But since it didn’t happen, the question is: do retailers really care about optimizing these channels and attracting Millennials or are they just giving them lip service?
According to the just released “RIS Millennial Makeover Custom Research” study, the answer is “yes,” retailers care about Millennials and recognize the impact they are having on strategic planning. The biggest impact is on mobile strategy, where 69% of retailers describe it as “large.” The online channel comes in second (50% say it is “large”) and stores are third at 31%.
Retailers also understand that Millennials have a big impact on sales: mobile is most impacted by Millennial shoppers (according to 47% of retailers), online is next (34%) and stores are third (22%).
So, if retailers truly care about Millennial shoppers the question is: how are they responding? To find out, we asked which technologies have been elevated to appeal to Millennial shoppers? Topping the list are social media (84%) and improving the mobile user experience (78%). Not far behind is mobile app development, chosen by 63%.
When we asked retailers how well they currently meet challenges and seize opportunities created by Millennial shoppers, we discovered retailers are lagging in execution. Only 19% say they are ahead of the curve while zero say they are far ahead. More than half (54%) say they are behind.
We dug a little deeper in this area by asking about specific technologies and functions. Of those who say they are ahead of their competition, the largest group is in POS but it is just 29%. For every other technology the numbers are lower and in some cases much lower.
The technologies and functions that are most behind the curve include: mobile app development (according to 61%), mobile devices in stores (65%), click and collect (60%), and a single view of shopper profiles (63%).
Other Key Findings
The study uncovered several other key findings including:
- Should retail fundamentally change how it does business to better serve Millennial shoppers? The answer is “yes,” according to 91% of retailers.
- If retail should change, how? By investing in mobile commerce services and functions ( say 76%). Other ways include investing in social media functions/analytics (62%), unifying channels for consistent and seamless shopping experiences (62%), and focusing on innovation and experimentation (59%).
- And what about the generation of shoppers coming up right behind Millennials, the Centennials or Gen Z? Most retailers (59%) say they are in the early planning phase for dealing with this new generation of shoppers while a fifth (22%) say it is “not on the radar.”
- How much of the retailer IT budget is influenced by the goal of meeting expectations of the Millennial shopper (i.e. mobile development, social media, unified commerce, etc.)? The median figure is 7%.
- Finally, the areas of change that will cause the most organizational pain during the transition phase to meet expectations of the Millennial shopper are: simplifying the mobile user experience (61%), unifying or integrating customer-facing applications or databases (58%), and processes and tasks in stores (48%).