Younger, much-sought-after shoppers are sending retailers into a tailspin with their purported habit of spending more on “experiences” rather than “things,” but the trend might be little more than an acceptance of the economic hand they've been dealt. Yes, consumers born between the early Eighties and the early Nineties (aka Millennials) spend more money on groceries than apparel. Yes, they like to eat at restaurants and yes, they’re more health-conscious. Where would SoulCycle be without them?But it’s also true that, when adjusted for inflation, the average white male working full-time in 1973 made a salary of just over $54,000 and in 2016, that number has fallen to $51,600, according to the most recent census data. Meanwhile, Consumer Price Index data shows the average cost of consumer goods now is about six times what it was in 1973.This may go some way to explaining why fast-fashion chains like H&M and Zara continue to thrive while a string of the biggest specialty and department stores in the U.S. have been forced to shrink, and bespoke studies continue to show that Millennials, and even the younger Generation Z, are less interested in accumulating “things” than their forbears — but they still spend money.Historical government data shows overall retail spending has risen steadily every year since 1992, including more moderate gains for specialty apparel stores since bouncing back in 2010 from the recession. Department stores, on the other hand, saw sales start to flatten in 2003 and they’ve fallen every year since 2006.Mortimer Singer, chief executive officer of retail and brand research firm Marvin Traub Associates, said despite an overall increase in retail spending, “people are becoming more economical about how they spend their dollars.”He said shoppers are becoming increasingly fond of a more casual but quality daily uniform that can be worn many times over, contributing to a decline in unit sales and trips to retailers, and spending by Millennial and Gen Z shoppers is increasingly being diverted to other things.“If you’re a devotee of [exercise] classes and you do that three times a week, that’s easily $400 a month, which otherwise would have gone to our industry,” Singer said. “It’s money that has to come from somewhere, but that’s the equivalent of a Kate Spade handbag each month.”Extra money that previous generations of shoppers may have had is being eaten up by other things as well. A J.P. Morgan Chase consumer study from last year found that Millennials are dealing with student debt that’s doubled just since 2005 and a housing market that's 250 percent more expensive than it was in 1980.Although fast-fashion retailers seem to have been spared a dip in retail sales despite shifting habits and increasing expenses for younger consumers (who claim to be more aware of the negative effects of cheap manufacturing), Singer said there’s a growing acceptance and appreciation of alternative shopping methods like rental and resale that may soon change this.“Things like Gwynnie Bee and Rent the Runway, they’re just the tip of the iceberg with these things,” Singer said. “There are services arriving that, I’d say, have not yet eroded [fast-fashion sales], but you layer on these paper cuts and it will add up.” Shireen Jiwan, founder and ceo of brand consultancy Sleuth, said shoppers in the U.S. in the first part of the decade reached peak clothing accumulation that had been fueled by a long period of impulse purchasing, something retailers rely on, but the pendulum has finally swung back to a desire for “fewer, better things.”“Suddenly, the aspiration is that minimalist closet with six perfect, impossibly versatile, impeccably crafted pieces,” Jiwan said.This urge for a type of workable minimalism also folds in with what Jiwan calls our current period of “time famine,” where things like social media, mobile tech, a more fluid but longer workday and global connectivity are sapping time from consumers.“Those [companies] that give us precisely what we want when we want it, and nothing else, are of the highest value,” she said.She pointed to Uber, Netflix and Amazon, which now has delivery offerings for apparel and groceries and, of course, media and perks through its Prime membership, as being explosively popular, not least for their time-saving quotient.Amazon and its online ilk are generally pointed to as the root cause of foot traffic declines claimed by many retailers and mall operators, but even the undeniable growth of online sales over the past few years doesn’t fully make up for the declines seen at many retailers, even those with robust online operations.“A major reason for this is that a lot of apparel buying is impulse-driven and not [to fulfill] any dire need,” Ravi Dhar, a professor of marketing and management at Yale and director of the school’s Center for Consumer Insight, said. “The online channels haven’t figured out how to drive impulse sales. [They] tend to be goal-driven and not set up to explore and discover.”Emanuel Chirico, chief executive officer of PVH Corp., which operates Calvin Klein and Tommy Hilfiger, earlier this year spoke to this lack of impulse shopping. He said retailers need to get better about creating “romance” for online shoppers and likened today’s typical online experience for apparel to “buying a bar of soap.”The still-developing idea of “experiential retail” focused on branding rather than sales alone is intended to be part of changing that utilitarian perception. Nordstrom is opening stores offering manicures, but no clothes; Prada has a dedicated performance space in its New York flagship, and Lululemon’s biggest stores are offering free yoga and “community” space. But Dhar doesn’t see it as a cure-all.“The promise of experiential retail in brick-and-mortar will have a few successes, but it's like rearranging deck chairs on the Titanic. There is a secular shift to buying online,” he said.While the whole idea behind experiential retail is to create physical spaces that will ultimately drive purchases, whether in-store or online, Dhar also pointed to a recent “big shift” toward, or at least a renewed interest in, minimalism.“The Life Changing Magic of Tidying Up” by Marie Kondo, a Japanese organizing consultant with methods on everything from de-cluttering an office to folding clothes, has been on the New York Times best-seller list for almost three years and has sold more than seven million copies worldwide. Dhar admitted that support for the theory of younger consumers starting to spend more on experiences is “largely anecdotal,” since a good data-driven breakdown of spending in recent years doesn't yet exist, but he said the behavior comes up frequently in his research and consulting work.Malinda Sanna, a consumer ethnographer and founder of consulting and research firm Spark, noted that some declines in retail can be explained by the fact that women in the Baby Boomer generation, whom she says “built” the modern department store, are now over 55 years old, an age group that typically shops less.When it comes to Millennials and their predecessors, Gen X, Sanna said they’re not any less interested in fashion, but she agreed they are shopping in different ways and wanting different things.H&M and Zara and even T.J. Maxx and Marshall’s still have cash-strapped or budget-conscious shoppers coming to them in droves, but research Sanna has done on women who are classified as high earners but not rich yet, or “henrys,” shows a “dissatisfaction with fast fashion, even a bit of a stigma around it.”She said henry Millennials in particular are increasingly interested in a “higher order of sustainability” and are asking more often “why” a brand or a business exists.Brands like Reformation, which is committed to sustainable production along its supply chain, and The 30-Year Sweatshirt collection by Tom Cridland, made with sustainably sourced materials and sold with a 30-year guarantee, are getting more and more popular with consumers, Sanna said.She also said the luxury second-hand market is “exploding” through online retailers like The Real Real and Tradesy, which not only offer easy access to luxury brands, but often at a much lower price point.“There is more pride in buying a Céline sweater on Tradesy than getting the knockoff from Zara that can’t be worn more than a few times before it falls apart,” Sanna noted.She’s also found in her research that when given the hypothetical choice, women would rather shop in their favorite department store than in any online environment, but again, the realities of a modern, constantly connected world has these shoppers “more time-starved than ever,” Sanna said.“Sometimes they have to shop late at night, or on their phone on the train or during a conference call,” Sanna added. “This is not the ideal shopping ‘experience’ — it’s a compromise.”A compromise that, when mixed with deflated wages and more expenses, makes it easy to buy and be sated with less.For More, See:
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