Store of the Future: Next-Gen Shoppers

From speeders to grays, the true story of how consumers shop and buy

Generational identity impacts everything from workplace dress choices and preferred shopping channels to a retailer's technology focus. Do you know who wears the throw away clothes or who spends the most on luxury travel? One generation is dictating the evolution of retailing practices while another will be causing revolutionary changes. Retailers need to understand the different drivers behind these five active generations' shopping and buying habits and how they impact our industry.

Knowing what your target customers care about will help you leverage your marketing activities and technology resources on systems that are really meaningful to the customers and will build the business bottom line. Classifying consumers by generation is the first level of customer segmentation. It's not the ultimate in niche or psychographic segmentation but rather segmentation by broad fundamental behaviors that clearly separate one generation from the next. These generational behaviors can be applied by every retailer to maximize customer loyalty and build more profitable sales.

First take a look at the generational divides, notice that they are not evenly divided (see Demographic Overview chart). Generational start-and-stop years are defined more by historical events and major lifestyle shifts than by even decade years. The birth years and generational nametags that define the five generations making up today's consumer population are Spedders, Generation Y, Generation X, Boomers and Grays.

By the way, remember that these nametags live forever with their generations. Boomers will never become grays — and it's not just because of the volume of hair dye sold. As the generations age, their behaviors will change. Here are the significant behavioral aspects for now and the next few years. Retail revolutionaries of the future; ages 14 and younger.

SPEEDERS
Born in 1990 and after
Retail revolutionaries of the future; ages 14 and younger.
Right now it's the speed with which they acquire data and spread their opinions that counts. They are in the home with knowledge and a preference for every brand and item that is brought into the house...or sitting in the driveway. They are the home helpdesk and selectively edit the information they uncover to get what they want, making very pointed cases for their choices. Brand and style preferences come early for this group.

Here's what to expect as they speed through their adolescent years. They will truly use all the functionality in their cell phones and will be the first to scan an item with the phone's scanner and place an order. They will have lists of their favorites and do automatic ordering and online price comparisons for everything. Their world is their eBay and more things will be bid and bartered. Better change those store environments quick, their boredom factor is mind boggling to the current generation of retail management.

GENERATION Y
Born in 1990 and after
The "I want my own way" generation; ages 15 to 27.
These arbiters of style control the making of most consumer brands. What's in and what's out travels from their fast moving network of communication to the older generations. The teens in this group control 23 percent of clothing and shoe sales and spend $60 billion on fashion and accessories. They also have decided to make their bedrooms "home" and consequently they spend their money, or just harass mom, to spend extraordinary amounts on bedroom accessories.

Avid IM-ers and Internet surfers, they still gobble up both mainstream and niche magazines. They look at brand ads to see that the brand is true to its identity and read the copy in a nanosecond with a very skeptical eye.

They want to see it, buy it and wear it...and all in the same day. The "see it" isn't in the store but rather on a friend, on television or in a magazine. Even though they have the most capability to navigate quickly and find an item online, they have no patience and want immediate gratification. Hence, they want store-level pickup for items they see and order.

GENERATION X
Born 1977 - 1989
The new baby makers; ages 28 to 39.
It's no boom (it's that ticking clock), but they are buying lots of things for the first time and they want the best they or their parents/grandparents/stepparents/etc. can afford. Brands Mom purchased aren't relevant. It's about product selection based on the features and functions they have read about or their friends have told them about.

This is a relatively small generation at 17 percent of the population. They represent approximately 19 million households and for the first time in recent history the number of working women with children under age 3 is dropping.

Whether they have children or are clones of the Sex and the City single guys and gals, this generation is accumulating possessions and upgrading their digs. They value their time and are truly knowledgeable shoppers. If worth the price in their mind, they will pay up. Look for them to mix mass and class in their apparel and their homes. Their homes will be wired and the first impulse is to check online for information about everything.

Their mothers worked and the kids spent minimal time in the nest as soon as they could be scheduled for their first after-school activity so they haven't learned to cook, clean or decorate. Now as they look to upgrade their transient lifestyles and settle more, the retailer must be the teacher and the Web sites must provide information and instruction for product use. Content is king with this generation.

This is also the generation where the Hispanicization of America is most felt. The Hispanics of childrearing years are a large segment of this group and have more children per household. They may be acculturated in their communities but they still watch Hispanic television and buy the household brands of food and other commodity items they grew up with.

These are mega multi-channel shoppers. They are interested in loyalty programs and expect stores to have up-to-date inventory locator systems. Even though they use the Internet as a major resource, they are demanding of personal service from store sales staff.

BOOMERS Born 1946-1964
The "I need more time and less aggravation" generation; ages 40 to 58.
They have parents that need more attention, kids that barely speak to them, aches and wrinkles that seem to mutate and grow every month and the prospect of working more years than they ever thought they would. Rather than asking "where's the beef" they are asking "where's the fun?"

For retailers, it's a boomer woman's world. She owns the spending dollars, controlling 80 percent of household spending — and will for the next decade. This is the largest active group of consumers at 28 percent of the population because they have a lot of birth years in their group. They procreated less than their parents, made more money first and then outspent all other generations on dollars purchased-per-child (adjusted for time and price inflation). Right now, households with teens spend 42 percent more than average households and this is the bulk of the boomer population.

Boomer women feel more burdened than powerful as they have the responsibility to buy for everyone. As long as there are school-age children in the household, their personal needs are not the first priority, and time comes at a premium price. What works for them is filling up that SUV with commodity inventory and future purchase needs. She buys that Mother's day present for his mother now when she sees it, as it takes one thing off her list for later.

You can't find the bargain shopper in this group by income level, but rather by past behavior. To some, the dump display is her entertainment and relaxation and to others it's avoided at all costs. They all tend to have a strong view about brands and seek them out as reliable sources for their taste in fashion.

The big box stores cater to her sense of order, reliability and ability to get a lot of things that are on her shopping list. She shops specialty stores because her kids tell her they will only wear clothes from certain ones and because she relies on her favorite brand stores to coordinate her outfits...it's faster and easier that way. The money you spend on standardized sizing will payoff with this customer.

Make her shopping tasks more expedient and she will be loyal to you. Those fancy Internet sites of whirling pictures only slow things down for her. Online inventory status and quick clicks to complete the buy are driving her to make more of her purchases online. E-mail offers are valued and used if they are targeted to her based on her past purchase behavior. Junk offers will get you only demerits from her. She is an active magazine scanner for home ideas, celebrity gossip and to experience her interests, e.g. she reads more about gardening than she actually does it.

Male and female boomers are active second-home purchasers and updaters in existing homes. They are major consumers of lifestyle home furniture and accessory items. Their personal interests (sports, hobbies, etc.) drive their style selection and the good news is that it changes over time. This causes them to be in the buying and replacing mode frequently. These boomers cause a boom in sales as they make major life shifts. Right now, the focus is on menopausal products, vitamins and anything age defying.

They want their stores entertaining and sometimes soothing, well stocked and with the ability to get information about the product where the product is displayed. Big-ticket purchases are almost always researched online first and referrals from friends are more important than advertising.

GRAYS Born 1945 and earlier
The "I don't need anything" generation; ages 59 and above.
At 22 percent of today's population they represent the second largest generational group in pure numbers but not in spending on consumer products. Of course I am not counting pharmaceuticals in consumer products. This is the single-serve generation where there are three women for every two men. And given the longer life expectancy for women, there will be more women in this group as they age. There are 36.2 million households here who are more concerned with going out for activities and socialization than buying things. They are in the "decumulation" mode, which means they are downsizing the volume of possessions and acquiring things for their enjoyment or for the enjoyment of their grand kids.

This World War II generation is still frugal and will trade their time for finding the lowest prices. After all, time is a resource they have a lot of and money is the resource they seek to conserve. If you think that those loss leader products will bring them into the store and then they will also buy the higher margin items, then think again. They will cherry pick your sale items and move on to the next place where their favorite items are on sale. Steeped in tradition and loyalty, they purchase the same brands and items repetitively, switching only if there is a cheaper price or entertainment value to a new item.

Entertainment is the magic motivator for this generation. Obviously the physical limitations increase over time but they do as much as they can. Even though many stop driving at night, their calendars have lots of daily of activities. The range of entertainment activities includes shopping (either window shopping or bargain hunting), sports (yes, golf is the big one), dining out, cultural events, collecting (a good reason to buy products you don't really need) and traveling. They are not all traveling in recreational vehicles either, the majority of the luxury travel market is consumers over 50 years of age.

This is the last great generation for the daily newspapers. They are the regular readers who scour the ads for the cheapest prices and then decide what stores to shop. The tried and true senior discount programs are still big motivators. Another way to target them is through an affinity group, such as a travel group, collectors' society or their housing community. Yes they will read their direct mail, but don't make the print too small and be careful about the promises and claims you make because they will read every word and hold you to them.

The growth in automatic replenishment of medical supplies and medications has trained this group for automatic replenishment of commodity items. This is place to focus technology solutions with their less mobile future in mind.

The Big Picture
By understanding the generational differences and shopping preferences of these five demographic groups, you can tailor your customer-facing technology plans to meet their future needs. Especially for the Speeders, retailers need to be focused on their technology proficiency when planning your stores of the future — across all channels — and the technologies that will drive them. Retailers will need to multi-focus to meet these five different groups with the right technologies in the future.

Cynthia R. Cohen is a frequent industry speaker for groups such as the National Retail Federation and the International Council of Shopping Centers. She is a member of the board of directors of MARS Music, Office Depot, and The Sports Authority, and is a founder/board member of several Internet businesses. Cohen founded Marketplace 2000, now Strategic Mindshare, in 1990 — a prominent retail strategy-consulting firm.