Don’t worry about the future of brick-and-mortar — Millennials still prefer to buy in a physical store, but it’s where and how they shop that retailers need to understand.
In a survey of more than 500 individuals between ages 18 and 34 and those over 35 years old, Wells Fargo Securities concluded that Millennials and non-Millennials similarly value price, brand, quality and fashion. It’s everything else about shopping that’s different. Ike Boruchow is the lead analyst in the Wells Fargo report.
The survey results show that the off-price channel — the number-one destination for Millennials and a high priority for non-Millennials — isn’t likely to risk losing customers over the next few years as younger shoppers become an increasingly important consumer base. But since only 60 percent of Millennials choose department stores compared with their older counterpart — where 80 percent prefer the channel — there is “potential risk to the department store model over time as a smaller proportion of shoppers prefers this option compared with older generations,” the report said. The risk factors include not seeing the same level of loyalty or traffic from Millennials as they get older. There was no surprise that 35 percent of Millennials — compared with 13 percent of non-Millennials — said they preferred fast-fashion stores, most likely due to the lower pricing compared with specialty apparel competitors.
As for malls, one key takeaway from the study was that this channel is a primary destination for 43 percent of Millennial respondents. Less than 30 percent of the non-Millennials surveyed felt the same way. The spread becomes greater as 55 percent of Millennial respondents shop the mall stores and web sites, compared with less than 40 percent of non-Millennials who took the survey.
“While the [mall] channel has faced its challenges, and while traffic data continues to reflect declines, the survey results indicate that the audience for softlines retailers still exists, and Millennials continue to shop in physical stores,” Boruchow said.
As for how they shop, 64 percent of Millennials said their inspiration is from social media, compared with just 27 percent of the non-Millennial respondents. Further, the influence by social media is more important than any other traditional form of shopping inspiration, whether store content, friends or magazines. In addition to the importance of strength of brand equity, Millennials in the survey — at 41 percent — also cited having a social media presence as an important factor when it comes to shopping for apparel.
And while digital touch points provide the initial inspiration, the next phase involving researching the product — education, price comparison — is also a big component of the Millennial buying process before they walk into a store to make their purchase. Sixty-five percent of Millennials said they do research — reading reviews, shopping trips or web site visits — before they buy. More than 80 percent of both Millennials and non-Millennials said they prefer to shop in stores. That said, the large Millennial base does represent a higher proportion of online shopping when compared to other demographic groups.
The survey’s data also showed that Millennials “shop” 3 or more times per month, compared with the majority of non-Millennials who said they only shopped once or twice a month. Further, the survey found that when the Millennial respondents said they shopped online — nearly 60 percent said they bought more than 20 percent of their apparel purchases online — less than half made a significant level of purchases on their smartphones. And while most Millennials currently seem to have an affinity for going into a store, the expectation is that a greater proportion could likely shift to online particularly as technology continues to advance.