Millennials Reshaping the Retail Industry
In a recent Insights post, my colleague Randy Sauer noted that the Millennial generation, my generation, is a major force in the ongoing evolution of the retail industry. I wanted to dig a little deeper into Millennials’ socioeconomic impacts—and specifically into our impact on the retail industry—to expand on Randy’s observation.
First, the economic side. In 2015, Millennials became the largest generation in the U.S. workforce, surpassing Gen Xers. By 2020, it is projected that we will constitute half of all employees. As a result, Millennials wield tremendous purchasing power, currently some 21% of consumer discretionary purchases (worth more than $1 trillion). A percentage that will only increase as our workforce ranks grow and we mature into our peak earning years. Millennials also have more disposable income because they are more likely to live with their parents (a true cost/benefit analysis). Finally, a third of my generation say they are willing to pay more for a product or service—as long as it supports something they believe in.
And this leads me to the socio aspects of Millennials’ approach to the retail industry, which is community-minded, technologically driven, and incentive-based. We back brands that stand for more than just their bottom line—that give back to society—and value individuality and personal experiences. Smartphones and social media are how we interact and get information, but we also want a seamless web and physical interaction with brands, such as purchasing online and returning in-store (or vice-versa). In short, Millennials want it all. What do I mean by that? Among other things, bite-sized, personalized information, omni-channel deal hunting, and convenience play paramount roles in our shopping preferences.
For retailers, understanding Millennials is vital to future survival. How will this generation of purpose-driven digital natives continue to shape the industry? Watch and see!