As we are on the cusp of saying goodbye to the year 2021, the members of the Millenials, among the two largest living generations (another one is GenZ – born between 1996 and 2014), are also at the peak of spending ages.
Retailers can’t ignore them any longer.
Everyone seems to know how to handle Baby Boomers (born between 1946 and 1964) and Generation X (born between 1965 and 1979). However, businesses often fail to understand their millennial consumers.
Hence, we have written this guide for retailers to know everything about Millennials, their spending habits, and how to align your brand to meet their requirements and capitalize on their now immense purchasing power.
Facts About Millenials
Today, this generation dominates in driving consumption demand in the Indian and global consumer markets.
Millennials spend heavily on education utilities, everyday necessities, entertainment, apparel, dining, accessories, and electronics. They also spend generously on personalized customer experiences.
- India has about 440 million millennials, almost 1.3 times the entire population of the United States.
- They make up about 46% of our country’s workforce.
- Millennials’ income contributes to an average of 70% of total household income, making them chief wage earners in most Indian households.
- According to Morgan Stanely estimations, India’s 400+ millennials spend 330 billion USD annually.
- 70% of all Millennials live in small towns and rural India but contributes over 30 to 40% of the total revenues of most businesses
- 60% of all guests booking accommodation via Airbnb are Millennials.
- 79% of Millennials look at sustainability as an important factor while making a purchase decision.
- 75% of Millennials are willing to pay extra for a greater customer experience.
- 73% of Millennials will not change brand loyalty for cheaper alternatives.
Reportedly, Millennials are also driving the “sharing economy” by shedding ownership and adopting services sharing. Consider UberPool.
According to Goldman Sachs, car ownership would be almost dead in the upcoming 25 years, among several other things (3).
Instead, the future purchase will be driven by “digital natives” since the sharing economy itself depends on the internet and other techs for its growth.
Primary Concerns of Millennials
Health Care and Disease Prevention Tops Primary Personal Concerns of Millennials (%)
Millennials are NOT Passive
Millennials Like to take action and drive the change they want to see in the world (4).
% Have Done the Following Over the Last Two Years
Where Do Millennials’ Spend?
From these stats and facts, we can say that millennials commonly spend more on:
- Online Shopping
- Debt payments
- Travel and Experiences
- Streaming Services
- Social Impact
Millennials value time and are more likely to pay extra for conveniences that makes their lives easier.
“Convenience is a big reason millennials spend their money because they aged into adulthood with the rise of applications for almost everything. It includes ride sharing to grocery deliveries, meal kit subscriptions, to ad-free programming. While we don’t say, boomers don’t pay for it. Still, millennials have put a premium on convenience in a different way,” says Erin Lowry, author of Broke Millennial Takes on Investing (5).
While Millennials spend more online, it doesn’t mean they are spending more overall; they are more likely to order things online than older generations. Nonetheless, businesses that are still not running their operations online are at a loss here. According to Statista (6), ecommerce will make up as much as 22% of the collective retail sales worldwide in the next two years!
Millennials’ student loans and other debts are becoming increasingly difficult for them, especially those suffering from unemployment or low-paying jobs (7). These debts take up a huge proportion of their monthly expenses.
As per a June 2020 survey on Indian food delivery apps by Rakuten Insight (9), most of the respondents spent about 200 to 500 Indian rupees per food order, and about 10% of millennials order several times a day, with about 23% of respondents ordering food online at least once a month.
“Millennials like to eat out, and the convenience of food delivers more than older generations. And thanks to these food delivery apps, millennials have even greater access to takeouts,” says Grant Sabatier, author of Financial Freedom: A Proven Path to All the Money You Will Ever Need (10).
According to Sabatier, Millennials are also more focused on living an awesome life, known for valuing experiences over possessions (11); they are less on getting rich and purchasing stuff. “Millennials value loving their life over buying things.”
Millennials also seem to appreciate ad-free streaming content services that offer on-demand access to their favorite movies, music, and shows. They are paying at least two to four of these services. Notably, Millennials are also less likely to pay for cable tv (12).
As per Euclid’s Evolution of Retail report, a data platform for offline attribution and store visit retargeting, more than half of the total millennial population feel it is important that their value aligns with the brands they like.
As we saw in the Deloitte report earlier, Millennials support causes they care about and are more focused on taking action and giving back. Millennials donate to more causes and even prefer purchasing from brands that make an impact.
To move towards sustainability, read our previous stories, Soaring Eco-Friendly Trend is Paving Infinite Ways for Entrepreneurs to Capitalize, The Lucrative Market for Refurbished Products, and Waste Industry: Innovations and Business Opportunities.
While on this topic, let’s also take a look at where millennials are less like to spend on:
Appropriating Marketing Strategies Alone is Not Enough
The facts mentioned above mean that businesses can thrive by targeting Millennials if they:
- Cater to Millennials with customized offerings
- Fit to their values and lifestyles
- Focus on sustainability and accountability
- Focus on their brand’s value systems and extent of customization
- Reinvent themselves to grow with Millennials
- Start paying attention to rural Millennials
Long story short, businesses need to pay attention to the real needs of Millenials. As a brand owner, you can expect to see more positive results with this strategy compared to merely focusing on this generational group as a marketing shortcut.
If you are still unsure about capitalizing on millennials’ spending habits, we have countless examples for you. Multiple businesses have found success by reinventing themselves or revolving their offerings as per millennials’ requirements.
For instance, while Hamadard’s Rooh Afza is over a 100-year-old company, it reinvented the brand and created a fusion drink to target health-conscious Millennials (16). It was an excellent strategy considering that most millennials believe that a healthy lifestyle is essential and that one-third of Indian millennials have fitness apps on their smartphones (17).
In other words, if you are running a business under the Food and Beverage category, you are likely to drive growth by moving into nutrition and health-based offerings and increasing your respective market share.
And if you are, for instance, in a personal care space, you can increase your presence by offering nature-based, vegan, and organic products.
Other excellent examples of businesses changing their strategies to meet Millennials’ demand include reality sector companies like Lodha, Assetz, etc. These companies have started customizing their properties as older millennials have started investing in real estate or purchasing property for themselves. Today, residences built for millennials look quite different from how they used to be about a decade ago (18).
Real-estate companies have realized that this group is tech-savvy, culturally sensitive, well-traveled, and value-oriented, plus they have high disposable incomes. So, they offer residences with wi-fi zones, fitness facilities, including eco-friendly characteristics, and more.
The strong segment with more than 300 million USD of collective spending power looks for low-attention span communication and instant gratification. They want quick methods that can solve their everyday issues. The behavior is quite well reflected in how new-age startups communicate with millennials.
For instance, India’s food giant Swiggy targets them with messages like, “Think Food, Think Swiggy,” or “Cooking gone wrong?,” or even “Working Late? So are we.” Such short messages help businesses connect with their millennial audience faster and also solve their immediate issues.
Three Key Ways for You Can Also Capture the Attention of Millennials
Being Authentic and Transparent
While deciding between different brands, Millennials are more likely to choose brands they know the people behind. It means you need to humanize your brand and focus on transparency, experience, and community instead of focusing solely on your products or services.
In other words, you will need to have excellent products and services and build relationships with your customers, listen to their feedback, and actively engage with them.
Here are some tips for doing it:
- Be transparent and upfront, like clearly post your shipping policies
- Offer full visibilities into your fulfillment process, like notifying your shoppers when their order has been received, fulfilled, and dispatched
- If an order is held for any reason, reach out and explain, tell them what you are doing to fix the issue, and keep them updated.
- Always ask for feedback by sending follow-up surveys after receiving their orders and actually implementing suggested changes.
- Let your Millennial customers know when you consider and implement their opinions.
Build Brand Loyalty by Getting Personal
Getting personal is another key way you can build that brand loyalty with Millennials. This generation craves deeper connections with brands they deal with, meaning they wish to feel valued as individuals, not merely as data.
But the bigger question is how you can make each millennial shopper feel unique and valued if you have so many orders to fulfill?
One reliable way you can do it is by leveraging technology to build personalized and tailored experiences.
More importantly, since millennials have grown up in a hyper-connected world, they are more willing to share information about themselves online, presenting a huge opportunity for retailers to capitalize on consumer data.
As a retailer, you will craft your fulfillment process to align with your millennial customers’ needs and preferences.
Are you looking to build a brand community? Click here to read our previous story, Strong Brand Community: A Key to Success.
Deliver on Shipping Expectations
For Millennials, Amazon Prime-speed shipping is not only the norm but also what they expect. Millennials are also more likely to pay additional (about 32% of millennials) for express delivery than older generations (19). Therefore, if you wish to attract Millennial shoppers and compete with ecommerce giants like Amazon, you need to place proper fulfillment logistics to deliver on these shipping expectations.
On the other hand, if your fulfillment process is messy, slow, and unorganized, it will lead to drawn-out delivery timelines with zero visibility. It will result in a poor customers experience, turning off all your shoppers.
But with a streamlined and efficient process, you will be able to offer end-to-end visibility, expedite the shipping, and satisfy your millennial shoppers. Millennials are also more likely to share their good experiences with others online.
We have created a separate guideline for businesses looking to target GenZ. It is important to know that retailers often lump these two generations together. However, you will realize that they are quite different upon thorough scrutiny. Hence, it is important to play smart and adopt an effective strategy to capture the attention of Gen Z and Millennial consumers.
To know more about targeting Gen Zers, read our other post, GenZ Marketing: Brands Need to Go Beyond Advertising.