Hip Gen-Y’s Shopping Habits Reveal Price Sensitivity
Retailers and retail real estate companies are paying close attention to Millennial shoppers as they progress. After all, 80 million consumers (one-quarter of the U.S. population) with annual spending power of $600 billion are not to be ignored. Although over half of Millennial households currently live on under $50,000 per year, their prime earning period is on the horizon and some will inherit assets from their Boomer parents.
And though it may come as a surprise, hip Generation Y loves Wal-Mart. A recent study by InfoScout indicates that Millenials spend 32 percent of their annual purchases in the grocery, cleaning and health/beauty categories at Wal-Mart. This is more than their elders – overall, Americans plunk down 24 percent of all dollars spent on those product categories at the Bentonville Behemoth’s big box stores.
Hipper Target is a close second on Gen-Y’s list, with 11.6 percent of their spending on groceries and related items funneled to that chain. The total average US household’s annual spend in the same category at Target is 8.6 percent. When it comes to fashion and home accessories, Target tops the list, especially at the younger end of the demographic range. Twice as many in the 18-24 age cohort say they often shop for fashion at Target as in the 25-plus group, reports BIGresearch.
Two Factors Drive the Latest Millennial Retail Trend
Wal-Mart executives credit the company’s aggressive commitment to online and mobile as a driver of their appeal to Millennials, the first generation of Americans born and raised in a computer-centric world. They also cite the impact of a distressed economy during the formative years of this group. “The Millennial customer grew up with a lot of hardship. They see Wal-Mart as a place where they can save money,” observed Matt Kirsten, Wal-Mart’s SVP-Consumer Insights and Analytics. Mix that experience with a less-than-robust job market plus heavy student debt (currently standing at a total of $1.2 trillion) and it’s easy to see why Millennials are price sensitive.
Millennials’ List of Go-To Retailers Also Includes Macy’s and JCPenney
When Moosylvania, a St.Louis-based digital ad agency, surveyed 1,500 Millennials regarding their brand preferences, Wal-Mart and Target again scored near the head of the list of 50 favorites, at spots five and six. Other retailers among the top choices were JCPenney and Macy’s, both in the top 20, and both catering to price-conscious consumers. Further down were Forever 21 (36), Victoria’s Secret (38) and Aeropostale (46). Only two luxury brands, Chanel (43) and Ralph Lauren (30), made it as Millennial favorites. (http://moosylvania.com/millennials/Moosylvania_Millennial_Study_2015.pdf)
Millennials and the “Experience Economy”: Another Retail Trend
Gen-Y may be flocking to the above retailers for another reason. They are pinching pennies on commodity purchases and clothing to splurge on “experience.” A recent survey conducted by Harris for Eventbrite reported that 78 percent of their Millennial participants said they would rather have experiences than material things (tech is the notable exception). Instead of acquiring high-end possessions, this group said they would choose to splurge on concert and sports tickets, travel, hobbies, dining, fitness, cultural pursuits and various special events. Called “the experience economy” by Eventbrite, this trend is growing across virtually all generations, supported by sharing on social media via mobile.
Tech-Enabled, Price-Conscious Gen-Y Will Continue to Drive Retail Trends
Will Millennials then move beyond Wal-Mart, Target and JCPenney to Neiman Marcus and Nordstrom? Become fans of the aspirational brands? At this point, that’s hard to predict, but it’s a safe bet that these digital natives with frugal habits and the tech power to find deals and compare prices will continue to set a new pace for bargain-hunting.
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