Millennials fascinate marketers and retailers. These young consumers make up nearly a quarter of the population and already spend about $200 billion per year in the U.S. according to the Intelligence Group—a figure that should continue to grow as they age and become more established. But capturing these dollars has proven challenging. In the U.S., this generation has different interests than their predecessors, and marketers and retailers must pay attention to the unique shopping habits of this young generation.
Millennials are young and optimistic about their financial futures. According to the second-quarter 2015 Nielsen Consumer Confidence report, roughly 70% of Millennials indicate their personal finances will be either good or excellent in the next year. However, these consumers have been hard hit by the economic turmoil of the last few years, and 55% still feel like the U.S. is in an economic recession.
With limited money to spend, Millennials are savvy shoppers by necessity. Avid researchers, 42% of them check at least four sources when trying to decide on a purchase, according to Edelman Digital. About a third make purchases only when they have a coupon or promotional code. And roughly 40% buy previously used items online to save money.
While economic struggles are a reality for many Millennials, one subset is thriving. Roughly 27% of this generation qualifies as upscale Millennials, earning more than $75,000 per year. The median liquid wealth value (income producing assets; IPA) for upscale Millennials is $157,500, more than 11 times the median IPA of their generation as a whole. Appealing to the distinct wants and needs of upscale Millennials is vital in capturing this lucrative segment.
Despite having more money to spend, upscale Millennials are deal-lovers as well. Roughly 43% use coupons at least once a month.
Despite their love of a deal, all Millennials are willing to spend on things that matter to them. As a generation defined by their use of technology, the majority of Millennials aren’t willing to delay upgrading their PCs or mobile devices to save money. And while Millennials are spending less on clothes to save money, 35% still make apparel purchases with their extra cash.
Where goods come from is also an important factor when they go to buy. According to Edelman Digital, 40% prefer to shop local, even if it costs more. When they’re not buying from their local communities, they prefer to buy American-made products. Roughly 76% of upscale Millennials and 73% of the total generation say buying American products is important to them.
About 92% of Millennials own a smartphone, compared with 76% of Baby Boomers. Because technology is an integral part of their lives, it’s a key component of their shopping experience. Roughly 19% of Millennials and 31% of upscale Millennials spent over $1,000 online in the past year. The majority (66%) use the Internet to purchase hard-to-find items. Roughly 70% of upscale Millennials scour the Internet for hard-to-find items.
The good news for those looking to reach these young consumers is that, globally, they are most trusting of almost every type of advertising—digital and traditional—compared to all other generations. So marketers and retailers who tap into these trends, and can communicate them, have the opportunity to see big rewards. For example, retailers can entice Millennials to buy with deals and coupons, especially promotions that feel exclusive and customized to them. Sharing the story of a brand can help Millennials feel connected to a brand. And social media and mobile technology can be used to deepen the relationship and loyalty among this group.
For more information, download our report on Millennial retail habits.