Born between 1980 and 1999, millennial consumers make up the largest U.S. demographic group among the generational groups widely used by marketers. They shop quite differently than their elders, and e-retailers have to learn to relate to capture their loyalty.
The typical millennial lives on her smartphone, connects with friends and family on several social networks and has an attention span just long enough to watch a 6-second Vine video. For e-retailers, those pieces add up to a puzzling consumer who no longer follows the traditional path to purchase.
But that puzzle is becoming increasingly important to solve. The millennial generation (also known as Gen Y)—generally described as those born between 1980 and 1999, although there’s no official range—is now the largest age demographic in the United States with about 80 million consumers in its ranks, edging out even the baby boomers.
Millennials are just entering their peak spending years, but taken individually at this time they have less money to spend than young adults of previous generations. A study from Georgetown University’s Generations Initiative found that men between 18 and 29 years old in 1980 earned 85% of the median wage for all age groups. In 2012, they made just 55% of the median wage. And millennials’ median wage last year was $35,300, down 6.1% from $37,600 just in 2010, according to the Federal Reserve’s “2014 Survey of Consumer Finances.”
Having less money means millennials are pickier when it comes to where they spend their money, says millennial Christine Epps, who works as a marketing consultant. She says millennials are more loyal to themselves, rather than to brands or retailers, and the web has made it easy to search out the best price online. That can make it harder for retailers to turn a one-time customer into a repeat, loyal shopper. “Being able to read reviews and search for products on Twitter and Facebook means there’s no reason to be loyal,” she says.
But it’s important for merchants to find a way to engender loyalty among millennials because by 2018 their collective spending power will exceed that of baby boomers, according to Javelin Strategy & Research. The shift will come as boomers retire and scale back their spending, while millennials increasingly buy homes, raise children and spend accordingly. Merchants who understand that this generation’s shopping preferences change nearly as often as Facebook’s news feed algorithm, and relate accordingly, will be poised to capture repeat sales. Online retailers that target millennial-age shoppers today say the key is to speak the generation’s language and appeal to its values.
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ABBY CALLARD 