By  on September 6, 2013

The Me Generation has given way to the All About Me Generation.

Consider the case of Kate Spade Saturday, which launched in March as a lower-priced, more casual alternative to its 20-year-old sister brand Kate Spade New York.

Key attributes of the brand—which was created exclusively with Millenials in mind—include pop-up stores where merchandise can be ordered electronically and delivered within the hour, an active social-media presence across multiple platforms and products like the best-selling Weekender bag that can be personalized by shoppers in gazillions of ways.

Sales have soared, and already, company executives are prediciting that Kate Spade Saturday's store count could soon exceed that of the original.

For marketers, it seems, Baby Boomers are quickly becoming ancient history, their worries about who will replace beauty's most important generation being allayed by the emergence of a group that shows a budding affinity for the category.

“They are the future,” says Julie Bornstein, executive vice president and chief marketing and digital officer of Sephora. “They are our present and our future.”

Millennials, the generation broadly defined as those born from 1980 to 2000, are gaining increasing importance as a consumer force to be reckoned with, a trend expected to accelerate dramatically in the next decade. An overview of the numbers quickly shows why. According to a report issued by Jefferies and Alix Partners, by 2020, Millennials will double in importance regarding the spend they control in the U.S. The number of Baby Boomers under 60 is expected to decrease to 17.6 million people in 2020, versus 59.8 million in 2010. Conversely, by 2020, Millennials over the age of 25 will be 19 percent of the population, about 64.1 million people, up from 5 percent, or 17.1 million people, in 2010. The report notes that just following a person’s 25th birthday, median income historically jumps 60 percent.

“By 2020, there will be 78 million Millennials,” says Mark Brooks, senior vice president of consumer and market intelligence at L’Oréal USA. “It is the next big generation. It’s not an easy target, but it is something that is absolutely critical.”

The numbers, again, point to the challenges that Brooks references in his remarks. The demographic characteristics of Millennials are as broad as their numbers. “It’s not a one-size-fits-all group,” says Brooks. “A third of them have lower incomes, a third are middle income and a third are upper income. Some are still very dependent on their parents, even when they’re starting to earn, caught between the difficulty of getting a mortgage, the job market and student loans.

“Most of them—38 percent—don’t have kids,” Brooks continues, noting L’Oréal segments Millennials into about six groups, “but almost half have young families. There are a lot of nontraditional families, some live with parents, some with friends and roommates, some have children with no spouses. It’s a very diverse group of people.”

“It’s hard to talk about them in one big lump,” agrees Wendy Liebmann, chief executive officer of WSL Strategic Retail. “You’ve got so many life stages and different things that have happened over that 20-year period. The younger end of the segment are the ones who’ve grown up in the post 9/11 and global financial crisis world with technology at their fingertips, and that has had a huge impact. The older ones have been influenced by that, but less so.”

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Multiculturalism is another defining characteristic. According to Pew Research, Millennials are more ethnically and racially diverse than older adults. In the U.S., of those ages 18 to 29, about 61 percent are Caucasian, 19 percent are Hispanic, 14 percent are Black and 5 percent are Asian; for adults 30 and older, the figures are 70 percent Caucasian, 13 percent Hispanic, 11 percent Black and 5 percent Asian.

Globally, the Millennial generation is growing even faster in two of beauty’s key emerging markets: Latin America and Asia. According to The NPD Group’s vice president and global industry analyst Karen Grant, by 2033, the number of people under 30 will be the same size as the group of those 50 and above in North America. But in Asia and Latin America, those under 30 will form the largest age group.

But savvy marketers aren’t waiting for tomorrow to target Millennials. MAC, one of the most popular makeup brands with younger shoppers, is readying a youth-oriented store format that is scheduled to open at Orlando’s The Florida Mall in November. This September, Shiseido launched Ibuki, its first new skin-care range in eight years, aimed squarely at Millennials, particularly those between 25 and 34 years old. “They are already spending $250 billion annually and their spending power is expected to surpass the spending power of Boomers by 2017,” says Heidi Manheimer, chief executive officer of Shiseido Cosmetics America, who jokingly adds, “I thought we were the big shoppers! What happened?”

Millennials may already have demonstrated their affinity for shopping, but the means in which they like to do so differs markedly from other generations. David Garfield, a managing director of Alix Partners and lead writer of the report, “Trouble in Aisle 5,” which presents an in-depth look at how Millennials will impact food retail, conducted a deep dive into how the group spends its money. “They are different,” he says. “If they behaved just like other segments, it wouldn’t be as big a deal, but their shopping behavior, purchasing criteria and brand preferences are different. Marketers have to adapt.”

The biggest influencer in what differentiates Millennials from older generations is their affinity for all things digital. “They are the earliest adopters,” says Carlotta Jacobson, president of Cosmetics Executive Women. “They are the ones who will push companies to merge the digital into a critical part of the business. They connect with people in a different way.”

Research from Pew shows that Millennials are, literally, always connected. More than eight in 10—83 percent—report sleeping with their cell phone next to their bed, versus the average of 57 percent across all age groups. Seventy-five percent report having a profile on a social networking site, versus an average of 41 percent.

Sephora’s Bornstein says that while some marketers theorize Facebook is past its prime, the reality is that it remains the communications channel of choice for this generation. YouTube, as well, is incredibly powerful, as a learning tool but also as a starting point for shopping.

Figures from MAC crystallize the point. According to the brand, of its six million Facebook followers, five million are Millennials. On YouTube, where MAC generated 7 million views for the last fiscal year, 56 percent of the U.S. views on the global channels are Millennials. On Tumblr, where 67 percent of the users are under 35, MAC has more than 153,000 followers, while on Twitter, where 55 percent of the users are Millennials, MAC has 425,000. When the brand launched its RiRi—as in Rihanna—Hearts MAC collection exclusively online, 35,000 units sold out in less than three hours.

“They were born with a smartphone in their hands,” says Karen Buglisi, global brand president of MAC Cosmetics. “Social media is how they communicate with us, engage with us. It’s how they express themselves.”

One of MAC’s most popular recent programs is MAC By Request, a platform where consumers can vote to bring back products that have been discontinued. Buglisi says in two weeks, the program racked up 1.6 million votes. “They like having a voice,” she explains. “Control is very important to them.”

And if there is one thing that is especially important for this group, it is to make their voice part of a brand experience. This is not a group that wants to be dictated to in a top-down communication style, a fact which Kyle Andrew, senior vice president and brand director of Kate Spade Saturday, has kept top of mind during the development of the label. “Millennials want to be part of the experience. You can’t just put stuff out there and expect her to engage,” she says. “She likes to feel she is in the know. She wants to go deeper and feel like she is part of the process.”

As an example, Andrew explains the brand’s approach towards shooting an ad campaign. In the past, print ads would debut in select magazines on specific dates. Now, the entire process is posted on the brand’s social-media site—in real time. “We’ll show her what we’re shooting for fall way ahead of the launch date and then read the comments,” says Andrew. “We love when she says, ‘I love that skirt.’ If enough people say it, we may make more. It’s a great way to get insight into what you’re doing that may allow you to course-correct as you go along.”

For the launch of Ibuki, Shiseido created a special microsite with product details, education and a rich social experience that allows users to read about the life experiences of like-minded people as well as share their own. “They want a seamless experience between offline and online,” says Manheimer.

Anything less than a completely seamless experience is unacceptable to Millennials, Andrew has found. “When we haven’t had a product in stores that has been on the Web, she gets mad. She does a lot of research online and comes into the store to try on merchandise. You can’t make it hard for her—it has to be easy.”

“They are very unforgiving if you are not allowing them to shop anywhere, anytime, anyhow,” agrees Liebmann. “If you create barriers for them, they will go elsewhere.”

Innovation and newness—both in terms of product and shopping experience—are also key drivers. Liebmann singles out the Japanese fast-fashion retailer Uniqlo as a company that understands this and executes against it better than most. “Uniqlo offers a tremendous value proposition, but they are constantly innovating around product,” she says, citing products such as its Airism collection of innerwear, which absorbs moisture to keep the body dry, releases body heat quickly and imparts a cooling sensation. It also has anti-odor technology. A T-shirt costs about $13. “Uniqlo also has a massive in-store experience, which is dazzling, but at the same time, the product is very affordable,” Liebmann points out. “They’re not saying because we’re inexpensive we don’t innovate or we are not creating a highly emotive physical retail experience. They do all of that, and that’s why they are very relevant to this audience.”

For its part, Kate Spade Saturday’s stores feature iPad signage rather than the traditional variety, and during the pop-up phase of the brand launch, Kate Spade partnered with eBay’s Now program to give shoppers local delivery of products in an afternoon. “It’s important to stay ahead of this customer to keep her interested,” says Andrew. “There is so much noise out there. The pop-up stores were hard to execute—it took a lot of time, money and resources—but we got her attention. Which is hard. Super hard. But you have to.”

Even their expectations for a relatively quotidian retail experience are high. “Of course it has to be lively and engaging,” ticks off Grant. “Millennials like to have help when they need it. They want to be able to price-compare. They want to engage with their mobile device, so they can check the price. They want an environment that will nurture them and make them feel secure when asking for advice and they like to shop with their friends.”

The concept of brand or channel loyalty, however, is largely nonexistent. “Millennials are more willing to jump from one channel or store format to another, whereas Boomers tend to buy the same types of products from the same retail channels,” says Garfield. “Millennials tend to be more adventuresome shoppers, and are open to discovering new products and brands.”

Such an attribute is both a positive and a negative, points out Garfield. Brands with a hot new product can generate trial quickly, whereas those who don’t lose consumers quickly. Says Garfield, “It gives you the opportunity to attract and earn new consumers. It is also a threat to established businesses because it means a greater risk of churn.”

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