Compared with Generation X and older generations, Millennials are at the start of their adult buying journeys. And as a result, this generation’s spending power is only going to increase over time. So while some of the buzz around this group’s digital savviness has faded, this group’s growing spending prowess isn’t something that marketers should lose sight of.
But simply tracking this group’s spending capacity won’t be enough. That’s because U.S. Millennial homes, which represent 26% of households across America, are the most racially and ethnically diverse of all generations: 20% are Hispanic (the most of any generation to date), 12% are African American, 7% are Asian, and 12% comprise a selection of other races.
With their full growth potential yet to be realized, it’s important to note that Millennials already spend more on fast-moving consumer goods (FMCG) per trip than any other generation, with an average basket size of $57. Despite the big baskets, however, Millennials spend the least in aggregate each year, with each shopper spending an average of $5,716 per year. That’s because they shop less often, making assortment at the shelf even more important. Gen X and Baby Boomers, for example, spend more each year because they make more shopping trips. That said, it’s conceivable that Millennials will increase their shopping frequency as the needs of their families broaden.
Reflective of their entrance to parenthood, Millennials are changing how they spend. Notably, they’re spending a greater amount of their income on baby care and family planning categories. As their families grow, they’re buying more food too. For example, Millennials currently spend more than other generations on easy and convenient products for families. In addition to convenience, Millennials show increased interest in new or emerging categories than their older counterparts. One way we see this come to life is in their spending on alcoholic cider, a category they spend 80% more on than the rest of the population.
But Millennial spending varies beyond basket size and total spend. For example, despite being in the earlier stages of their careers, many are paying full price for FMCG items. In fact, Millennials, perhaps surprisingly, spend just 21% of their FMCG dollars on products they perceive to be marketed as being on promotion, compared with the average household, which spends 23% of their FMCG spend on deals. Millennials aren’t looking for occasional deals; they shop with value retailers frequently. And as a result, they spend a higher percentage of their disposable income in value-related channels rather than convenience-related channels (i.e., drug, convenience and gas stores).
For additional insights, download our Millennials on Millennials: U.S. Shopping Insights in a New Era report.