Understanding and Harnessing Millennial Purchasing Power
Millennials in Canada are mighty in size, but data suggests that they’re spending less than their size suggests they should. According to Statistics Canada, there are roughly 10.1 million consumers across Canada, representing 27.5% of the total population. Despite the big numbers, however, this generation accounts for just 12% ($13.2 billion) of the country’s fast-moving consumer goods (FMCG) spending. The upside for manufacturers and retailers, however, is that Millennials lead all generations in dollar spend per trip.
For purposes of our recent Millennials on Millennials report, Millennials range in age from 18-38 years old, and that means that not all Millennials are key decision makers in their households. As Millennials age and progress in their careers, more households will be led by this dynamic consumer group, and their purchasing power will grow with them. Across generations in Canada, Millennials are the most financially optimistic, with 28% stating they are better off financially today than they were a year ago.
But being financially comfortable doesn’t necessarily boost shopping, however, as Nielsen research shows that they are making fewer trips to the store than the average shopper. In fact, they’re driving trip declines in Canada, making 43 fewer trips than the average Canadian household on an annual basis. This means manufacturers and retailers face fewer opportunities to capture shoppers at the shelf and influence decisions in-store.
So why are they shopping less? Partly due to their increased trips to restaurants, as Millennials led other age cohorts in trips per capita to restaurants in 2017. Canada now has an abundance of restaurant options with eclectic cuisines, which makes dining out a desirable and easy alternative to cooking at home.
The news isn’t all bad, however. Even though Millennials make fewer trips than other shoppers, they spend more per trip than any other generation. Millennials spend $55.45 per trip, up $2.11 from last year, and more than $7 above the national average.
So what can manufacturers and retailers do to pull Millennials back into the store? One strategy involves identifying what Millennials are seeking outside the store and finding ways to meet those desires in store. For example, by offering ready-to-go meal kits and a variety of deli-prepared foods from different cultures in store, retailers can provide a new shopping experience that encourages consumers to spend on items that they might otherwise purchase at other out-of-home channels, like restaurants.
As the Canadian grocery retail landscape evolves, the road is filled with new and unique opportunities to align to consumers’ growing interest in new services and product offerings. Retailers that provide consumers with a variety of high-quality, convenient prepared foods will help ensure that consumer dollars stay in the grocery store.