The latest research on Millennials from L.E.K. Consulting urges retailers to target the behavior and focus on “subgroups” of this generational cohort, and not their specific age.
“Retailers who’ve successfully adapted to new generations of consumers now need to adapt again,” researchers at the firm said adding that consumers born in the Eighties and Nineties “behave like young consumers always have,” but in other ways “they differ sharply from past young-consumer populations.”
And it’s these differences — often subtle — that make it hard for retailers and brands to woo these shoppers.
The consulting firm said retailers looking to court Millennials “should think more about sub-segments than the whole population, and remember that at the end of the day it’s individual consumer behavior that counts.” Rob Haslehurst, managing director in L.E.K.’s consumer products and retail practice and co-author of the report, said “Millennials are sometimes treated as a monolithic group, although they’re not, and it’s often assumed that they behave the way young consumers have always behaved, which is a half-truth at best.”
Haslehurst said to meet the needs of any new generational cohort, “retailers need to understand the differences between qualities unique to the generation, behaviors that are common to that life stage and individual preferences.” The research was based on a survey of over 3,800 consumers, which includes 2,200 Millennials. The firm noted that at 75 million, Millennials garner about 30 percent of the total U.S. population and account for “approximately 90 percent of first-time mothers today.”
These shoppers also spend roughly $1.2 trillion a year, which L.E.K. said was “one-fifth of the nation’s total consumer expenditure.” And while they spend a lot of money, individual circumstances determines how much they spend — and on what categories.
“By far the most important distinction among Millennials is whether they have children, and their level of education,” said Shang Saavedra, a consultant at the firm. “Millennials with children and at least a college education spent sharply more than the next-highest spending group in several categories — most notably home (68 percent more), but also footwear (56 percent), electronics (52 percent) and apparel and personal care (49 percent each).”
Researchers also said that it was important for retailers and brands to know that Millennials “don’t shop the way Boomers or Gen Xers did when they were younger.”
“Millennials are far more likely to pay a premium for convenience than older generations,” the report stated. “Millennials are pressed for time and will spend aggressively for convenience options such as fast, free shipping, prepared meals and ride-sharing. Millennials spend much more time researching their purchases. They grew up with online research. In categories such as apparel, footwear and personal care, they spend 30 minutes more on research per purchase than Gen Xers do, and nearly an hour more than Baby Boomers did.”
Aside from targeting sub-segments and focusing on behavior, L.E.K. consultants said figuring out the specific needs of these shoppers is critical. Personalization is also key.
“Retailers have always had to adapt to new generations of consumers,” Haslehurst said. “In the case of Millennials — because they’re a large, high-spending group — the need to adapt is particularly important. But the lesson is timeless — only those that adapt will survive.”
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