Georgea Kovanis / Detroit Free Press – Angela Hernandez, who is 26, works as a social media specialist and has a lifetime of shopping ahead of her, is just the sort of person retailers want in their stores this holiday season.
And to pique her interest and that of her peers, retailers — who for years catered to the older, baby boomer generation — are updating the way they do business. They’re embracing social media, stocking merchandise made by small and local companies, featuring work from independent artists, selling hip items that give back to charitable causes and trying to turn a trip to the store into a real experience, in a good way. Which impacts the way all shoppers shop, changing everything from merchandise selection to customer service.
Hernandez is a member of the millennial generation — the largest, most racially and ethnically diverse, best-educated and most tech-oriented generation in history. Millennials, who have been heavily impacted by the recession, are known for being super-informed, value-oriented shoppers who are slow to buy. And as their baby boomer parents age out of the shopping game — people buy less as they get older — and pass along their accumulated wealth, millennials are being targeted as the big spenders of the future.
With so much money and power at stake, “millennials increasingly are going to determine what’s in the marketplace, how it’s going to be sold, what negotiations are going to be had,” said Mike Bernacchi, a University of Detroit Mercy marketing professor and retail expert. “They have the power of the present because they have the power of the future.”
Said Ken Nisch, a retail design and branding expert based in Southfield: “If you don’t bring new customers in, pretty soon you end up being not relevant to the people who are spending the most money. If you miss them now, you don’t get them later.”
The problem, he said, is “this customer is a lot more complicated — not because they’re being difficult, but what they want is more difficult.”
At no time is retailers’ wooing of the eclectic millennials more obvious than during the busy and ultracompetitive holiday shopping season.
Here’s what stores are doing:
■ Stores are upping their digital presence on social media because millennials have a tendency to detail almost every aspect of their lives on Facebook. They have more Facebook friends than baby boomers and rely more on them when shopping — 82% rely on input from friends when making purchasing decisions, compared with half of boomers. And the social media channel that helps millennials make most of their buying decisions? Facebook.
Stores also are improving their mobile apps because millennials are more tied to their smartphones than older shoppers — 83% of millennials sleep next to their phones compared with half of boomers. Almost three quarters of millennials plan to shop via mobile this holiday compared with just more than half of older shoppers.
Retailers are advertising sales and special deals on Facebook and on mobile apps; millennials don’t just like discounts, they love and expect them. For example Target’s Cartwheel program offers special discounts that are not advertised in store circulars. Cartwheel can be accessed via computer or mobile app.
But that experience needs to be a fast one because more than two-thirds of millennials say they will move on if a mobile site takes longer than 5 seconds to load, according to a 2014 study by Instart Logic, a web consulting company.
■ Stores are increasing their stock of handmade merchandise and products that have a mid-century modern aesthetic because millennials are drawn to those things, too.
It’s no coincidence that West Elm, the younger sister to Pottery Barn and Williams-Sonoma (they’re all owned by the same parent company) sells papier-mâché animals that are handmade by artisans from Haiti. It also has a huge selection of furniture made in the mid-century modern style.
It’s also no coincidence that Nordstrom — which has a partnership with Etsy, the e-commerce site that sells the work of independent artists and crafters — has pumped up its selection of handmade goods on www.nordstrom.com just in time for the holiday shopping season
“I don’t like to get people generic gifts,” said Sadie Quagliotto, who is 31, lives in Rochester and shops frequently at www.etsy.com because it’s full of stuff “you can’t buy everywhere else. … I’m not going to buy you something from Walmart. I don’t even need to shop there. I don’t like the idea that everybody could get this gift.”
■ Stores are selling more cause-related products because millennials have a commitment to giving back to society in some way — 37% of millennials are likely to purchase an item associated with a cause, compared with 30% of non-millennials, according to a 2012 study by the Boston Consulting Group. (That may not seem like a big difference, but millennials also are more likely to help raise money or do volunteer work for a nonprofit than any other generation, according to a report by Nielsen.) At least 70% of millennials have purchased a product that supports a cause. And they’re more willing to pay extra for a product if it supports a cause they also support.
Last week, Target unveiled its limited edition partnership with Toms, a company that uses sustainable or vegan materials in the shoes it makes. For every pair it sells, the company gives a pair to someone in need. The Target/Toms collaboration — which includes shoes, sweaters, hats, scarves and more — works the same way. For every Target/Toms item purchased, someone in need will receive a meal or a blanket.
■ More stores are featuring local brands because millennials are drawn to small companies that are specific to a certain city or region of the country.
That affinity for local also can be seen in Lord & Taylor’s new Birdcage department (you can see it at www.lordandtaylor.com). According to the retailer, it features works from emerging designers and brands buyers found when they scoured the streets of New York.
Plus, “I think that’s the reason Shinola is doing so well,” Nisch said of the Detroit-based watchmaker. “It’s a small brand. It has an interesting Detroit story. The aesthetic is very sort of mid-century. They don’t have pictures of the products and celebrities, they have pictures of the people who make the watches. Which is totally different than Louis Vuitton. That resonates with that audience, it’s not over-distributed … it’s not celebrity-driven. It kind of fits with their world.”
Said Hernandez, who lives in Allen Park: “I think that the Detroit-made products are really something that’s more unique. I check out the craft fairs. … Going to those kind of holiday bazaars is much more attractive to me personally because you get to meet people who are much more passionate about Detroit, because they’re entrepreneurs. That’s much more interesting to me than standing in line at Target.”
The millennial affinity for local also may explain the phenomenal success of Small Business Saturday, the Saturday after Thanksgiving. Started in 2010, it’s a movement that encourages shoppers to shop local.
“They’re definitely fueling it,” Jeff Green, a Phoenix-based retail consultant, said of the generation. “We’ve talked about Black Friday for 30, 40 years, but this Saturday phenomenon … the fact that it is as well-known as it is among shoppers, I think is pretty amazing.”
Millennials tend to be willing to spend more at retailers and on products they believe in. Even though Quagliotto figures items may cost a few dollars more at her favorite independent store than at a chain store, she’s fine with that. She likes a store that has roots in the community: “A lot of time the owner of the stores is there. I like the idea the owner is there.”
Quagliotto likes that interaction. It makes her feel like the business cares and relates to her better. And when the retailer does something like wraps her gifts for free, it’s more personal.
Of millennials, Green said, “They were the first people to shop online, but they also do like brick and mortar shopping as long as it’s experiential, meaning as long as it’s fun, interactive, up-to-date. Think of Apple. Millennials love to shop Apple because it’s cool, because they can play around with the product. Because the music is up-to-date and because the employees are the same age as them.”
If more stores can make shopping the experience that millennials appreciate, all shoppers, no matter what their generation, will benefit.
Who are millennials?
That depends on whom you ask. Most demographers report its 80-million members were born between 1980 and 2000, which means millennials would range in age from 14 to 34. Other studies indicate the generation covers 18-to-34-year-olds, which means they would have been born between 1980 and 1996. And a White House report lists 1980 through the mid-2000s as their birth years.
One thing on which everyone agrees: the millennial generation is the largest generation ever. Its members currently spend about $600 billion a year at stores. But by 2020, their buying power is expected to grow to $1.4 trillion, or 30% of all retail sales, which will be more than any other demographic, according to Accenture, a management consulting company.
By the numbers
57: The percentage of millennials who make a purchase during a shopping trip.
69: The percentage of baby boomers who make a purchase during a shopping trip.
300: The average number of friends in a millennial’s Facebook network.
85: The average number of friends in a baby boomer’s Facebook network.
60: Percent of millennials who focus on price over brand when making buying decisions.
46: Percent of baby boomers who focus on price over brand.
Sources: NPD Group, ArchPoint Consulting.
Millennials’ experiences, characteristics
■ Grew up with e-mail, Internet, cell phones, and immediate access to information
■ Violence and terrorism in U.S.: Oklahoma City bombing, Columbine High School, 9/11
■ Most-scheduled childhoods in U.S. history
■ Very short attention spans
■ Attuned to and appreciative of diversity