A growing web of digitally connected Millennials is putting engagement with products, brands and services ahead of their actual purchasing, creating opportunities for creative marketers while complicating the challenge of converting young browsers into buyers.
The Intelligence Group, a division of Creative Artists Agency, used online polling to reach 1,300 Millennials, aged 18 to 34, and a subset of Gen Z’ers between the ages of 14 and 17 and found what Intelligence Group president Joe Kessler termed “tectonic shifts in purchasing patterns.” The survey found that Millennials employ all the tools of brick-and-mortar shopping, e-commerce, m-commerce and social media to engage in almost nonstop shopping that isn’t necessarily aimed at — and doesn’t necessarily result in — purchasing merchandise.
Jamie Gutfreund, chief strategy officer of TIG, noted, “It’s not doom and gloom, it’s a shift away from the legacy ways of doing business to a consumer that’s in transition. After the recession, these customers got used to being more careful about spending money. A lot of things have popped up to fill the gap.”
Appealing to this group is crucial as they represent 90 million of the nearly 318 million people in the U.S. and about two billion of the world’s more than 7.1 billion inhabitants. Their spending, about $200 billion a year today, is expected to double by 2020.
And in its entirety, Gen Z, while less acquisitive, directly influences about $600 million in U.S. consumer spending every year. “They’re frequently the ones doing the research,” Gutfreund said.
More than a third of the respondents — 36 percent — said they only buy things they deem necessary. In a clear threat to the passive practices of window shopping and strolling through malls, 72 percent said they research their options online before buying in a store. Forty percent of them have wish lists for the products they want to own.
“There’s a broader landscape of where they’re getting their purchase information,” Gutfreund said. “It goes well beyond just paid advertising. And once they’re in the store, you have to give them more ways to be inspired.”
Young consumers are showered with offers on their phones, tablets and computers and they exchange product information and pictures through their phones, various social media sites, on marketers’ sites and pages and increasingly through a new generation of social shopping applications like Kickscout.
The study refers to this generation’s preference for shopping over buying as “fauxsumerism” and its devotees as “NOwners.” They view e-commerce and m-commerce as being as much about entertainment as acquisition and are increasingly open to renting merchandise, trading, bartering and using online marketplaces like eBay and apps like Airbnb as they turn more often to what TIG called “a whole new sharing economy.” Many are inclined to use the democratic nature of selling online to become entrepreneurs themselves.
The research found that more than a third — 35 percent — would pay full price to have access to an item when they need it as opposed to owning it themselves.
“These so-called NOowners….prize access over ownership and prefer renting, sharing and bartering above buying things,” the report said.
And, with GPS and near-field communication technology well developed and their commercial implementations for retailers gaining momentum, Millennials’ phones aren’t just being used for research but also for direction while they’re in the midst of shopping.
“These customers sleep with their phones,” Gutfreund said. “They can get the best deal, sometimes an extraordinary deal, in a second. Their reasoning is that they can get something at a great price that also happens to be fabulous.”
She conceded that, as in the world of brick and mortar, merchandise at the high end and the low end of the price scale has an advantage online over items in the middle, citing the idea of “value in scarcity” on one hand and “just great value” on the other.
While TIG’s study offers an explanation for some of the softness that has beset a number of teen retailers in the past year, some of the findings align with fashion trends that have been difficult to ignore.
“If you’ve noticed over the last 18 months to two years, customers have shied away from significantly branded items with limited utility,” she said of the trend referred to internally as “de-branding.” “In the denim category, for instance, customers want dark or plain jeans, and not a lot of heavy logo visibility. This gives the customer more options for accessories and other add-on items.”
Gutfreund noted that savvy marketers at all price levels are picking up on the new Millennial modus operandi and incorporating technology in ways that simplify and elevate the shopping experience. She cited Karl Lagerfeld’s new store in London, which integrates iPads into display racks, allows for online viewing of the collection while in store, “registers” guests digitally and even provides for communication with the designer and selfies of the shopper clad in Lagerfeld. Eliminating the annoyance of getting to a store only to find one’s size not in stock, Gap Inc. has now logged 500,000 transactions through its Reserve in Store program as it looks to dissolve the barriers between its brick-and-mortar and e-commerce activities.
While not overwhelming, there’s a hint of youthful idealism in the shopping habits of the Millennial customers, too. Just under one-third — 32 percent — said they’ve stopped buying from companies when they’ve become aware of social practices they deem unacceptable.
Creative Artists Agency represents a large number of individuals in the fashion field and, through joint ventures, has had investments in firms including J Brand. It acquired The Intelligence Group in 2003.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)