Born between 1980 and 2000, Millennials are the first truly digital generation.
With more than 80 million in the United States alone, spending approximately $600 billion each year, Millennials are already the primary target segment of almost every retail and CPG brand.
In the United States, their spending is projected to grow to $1.4 trillion annually, and their purchases will represent 30% of total retail sales by 2020.
Yesterday’s financially dependent teens are today’s young adults with careers, raising kids and living in their own homes, they have a significant economic impact, and to marketers, they are a force to be reckoned with.
Millennials will spend $65 billion on consumer-packaged goods over the next decade, which makes them one of the most important cohorts for grocery stores and retailers. The challenge for most of them, however, is that the 80 million millennial consumers shop much differently than older generations.
For example, millennials have a trade up-trade down mentality, meaning they will spend a modest premium on brands they deem worthy, but buy private label brands when the brand has failed to create a reason enough value to warrant the premium. A millennial shopping cart will be stocked with a mixture of name brands and private labels on the same trip.
To find out, Accenture conducted proprietary global market research on the shopping behaviors of 6,000 consumers, of which 1,707 were Millennials, across eight countries. They also looked at the capabilities of 60 retailers worldwide to determine whether they were providing the customer experience this generation demands.
Although Millennials have earned a reputation for viewing the world through a uniquely digital lens, Accenture research results found some remarkable similarities between them and their predecessors: the Baby Boomers (born from 1946 to 1964) and Generation X (1965 to 1979).
- More than half (55 percent) of the survey respondents, in all three demographics, said that they seek out “the cheapest return option.”
- Thirty-six percent of those surveyed from all three generations said they will go online to buy from a retailer’s website if they want a product when the company’s stores are closed.
- On average, 89 percent said having access to real-time product availability information would influence their shopping choices in terms of which stores they would frequent.
There are “many traps CPG marketers can unknowingly fall into if they make decisions by only referencing generalized information or trends about Millennials,” says Eric Pakurar, Chief Strategy Officer, of Geometry Global North America. “When we took a close look at Millennials’ shopping behavior in CPG categories, we found that very few widely-believed assumptions about Millennials held up. For instance, when they’re going out to buy paper towels, shampoo or makeup, they don’t travel in packs, they don’t research products online and they’re not using their mobile phone as an in-store or list-making tool. This research showed us how critical it is to examine the life stage and shopping goal— such as the categories they’re shopping for— to understand or predict their shopping behavior.”
One important insight uncovered by the research is that digital and mobile play a very limited role — if any — with Millennial CPG shoppers. Retailer apps are competing with every other app on a Millennial’s phone, which means that no marketer should assume that just because Millennials are “mobile,” they will seek out a retailer or a brand app. Most Millennials actually weren’t aware of these apps at all.
Millennial-age shoppers rarely look online before shopping — and even then, the main resource they seek is customer reviews. They avoid manufacturer websites, viewing them as biased. Instead, once in stores, Millennials are task-oriented shoppers. They like to get in and out of stores quickly and they are on the lookout for shortcuts and cues to help guide shopping or alert them to special offers. They like to use aisle endcaps, for example, as navigational tools and are more likely to go down the aisle to “get the best deal.” They want to make the comparison at shelf based on all of the choices they have.
And a recurring theme is that most Millennials tend to purchase products only when they run out. Indeed, these young shoppers do not typically plan their shopping trips or make shopping lists. Only one in five shoppers will set a budget for their trip, and the majority have only a semi-defined, total-trip estimate that they didn’t plan to stick to “strictly.”
In addition to their procrastination, Millennials are loners. Many of these shoppers prefer to shop alone while grocery shopping, a sharp contrast to apparel shopping. And, with a few exceptions, they don’t ask for input from their (Facebook) friends.
Meanwhile, Millennials are typically less driven by defined possessions, and that extends to communal ownership of many household products — although there are still some personal items that are off-limits. Those with roommates were not likely to have set schedules or rules about how purchases for the home were split or consumed. Often, when something runs out, the next roommate to visit the store makes the purchase.
The research also found that although Millennials are very aware of climate change and opt for environmentally friendly products in most categories, few “green” products actually make it into their carts due to confusion about the actual benefit and the fact that most of their purchasing decisions are dictated by price.
“While they didn’t always buy cause products, many were very aware of bringing in their own bags to shop,” says Pakurar. “Bringing your own bag is a more visible sign of being socially-conscious — rather than buying environmentally-friendly toilet paper — and it’s easy to connect using your own bag to a direct environmental impact. The reality is Millennials do tend to rally around causes, but brands need to do a better job of communicating the impact and give Millennials a reason to care.” Larissa Faw
Millennials have a trade up-trade down mentality, meaning they will spend a modest premium on brands they deem worthy, but buy private label brands when the brand has failed to create a reason enough value to warrant the premium. A millennial shopping cart will be stocked with a mixture of name brands and private labels on the same trip. For example, Target’s Archer Farms brand has experienced success with savvy millennial shoppers.
Where Millennials choose to spend their money also differs from older consumers, who are more likely to shop in traditional grocery stores. According to study that polled more than 4,000 millennials, only 42 percent said they shopped at local or chain grocery store compared to 55 percent of those 35 years or older (Disclaimer: These statistics come from the comprehensive American Millennials Report published with FutureCast and Barkley US).
Another way Millennials differ from older consumers is that they see shopping as a social activity, often doing so with friends and family. Lastly, they put greater value on shopping amenities. The study found that 60 percent of Millennials rate delis as a key criteria compared to less than 50 percent for older generations. Millennials are also looking for exotic foods, child-friendly stores, samples of new foods to try, creative menu ideas and online ordering systems.
Retailers need to rethink the shopping experience if they want to better connect with today’s Millennials, according to a new study.
In a survey of U.S. consumers by Toronto-based retail design firm Shikatani Lacroix, nearly half of Millennials (47 percent) said they value the experience a brand provides more than the actual product value, compared to 22 percent of boomers and 38 percent of Gen X.
In addition, nearly 48 percent of Millennials feel more loyal to a brand that provides interesting experiences, compared to 35 percent of Gen X and 17 percent of boomers. And 42 percent of millennials indicated they enjoy experiences that allowed them to feel part of the story, compared to 38 percent of Gen X and 20 percent of boomers.
“[Millennials] are very much experiential driven, and much more about being part of the narrative, so retailers have to start thinking about how to make the consumer part of the story,” said Jean-Pierre Lacroix, president and founder of Shikatani Lacroix. “Being part of an immersive experience is really important for millennials.
The message for the retailer is you have to make [the store environment] more immersive and much more engaging than you are today.” Rebecca Harris,
1) Millennials seek peer affirmation.
How, when and where can you engage their peers?
2) Millennials are “hooked” on social media in much the same way that older generations are “hooked” on email at work.
Does your brand enhance or detract from their social media experience?
3) Millennials are not a homogeneous cohort.
Who within this group is your most influential core target and what is their mindset?
4) Millennials believe in cause marketing.
Is your brand authentic and transparent or just using a cause to sell them something in a disingenuous way?
5) Millennials are in many ways similar to older generations.
Have you identified the common threads that connect them to their parents?
6) Millennials include some of the earliest “digital natives.”
How can you best engage these early adopters of new technologies and emerging social tools?
7) Millennials are interested in participating in your marketing.
Has your brand built a listening and participation strategy that will help you connect with your brand advocates?
8) Millennials are known as content creators and users.
Have you enabled their creation needs in new product, marketing and customer experience design?
9) Millennials crave adventure—often “safer” adventures.
Can you design a sense of adventure into your brand experience?
10) Millennials strive for a healthy lifestyle.
Have you looked at how you balance taste with nutrition or exercise with entertainment?
CPG brands and retailers must redesign themselves and their processes to meet the demands of Millennial shoppers. Below are six must-follow trends that will help CPGs connect with Millennials.
1) Visibly Sustainable
Millennials have stronger connections with brands that promote sustainability in addition to corporate responsibility. The combination of these two values encourages companies to implement viable business practices throughout the entire ecosystem. That includes suppliers, consumers, employees and more. Consumers are at a point where it takes an incredible amount of effort to live a more sustainable life, so winning brands will show them how their products can help them in their efforts.
An example of this is packaging that allows consumers to only open and use what they need. Providing a quality seal for what they don’t use allows Millennials to avoid being wasteful, an important value to this environmentally friendly demographic.
2) Food with Benefits
Unlike previous generations, Millennials are more concerned with the added benefits a product can provide. These “extras” should be more emotionally charged to improve quality of life, energy, healthfulness, etc. Because brands must now make a connection between the benefit and the product, the front product packaging should be a billboard of motivational statements that will showcase more benefits. The packaging for belVita’s Breakfast Biscuits reads, “Nutritious, sustained energy all morning.” The claim is explaining the emotional benefit of the product. It may also tout that it’s made with whole grains, but the leading message is about sustainable energy, which is a benefit most Millennials desire.
3) Eat with Your Eyes
Because Millennials are obsessed with sharing their experiences with one another; they rely on social media sites, such as Instagram and Pinterest, to document their lives. Food is no exception; the increase of food-related content online has created a generation of “visual eaters” and is directly linked to the fact that Millennials look at food preparation as an experience.
To appeal to the image-centric cohort, brands must incorporate photos into their design and packaging graphics. Images of fresh ingredients could be used to illustrate unique and authentic flavor profiles, for example. Designing products that provide plate appeal and are easy to make is key to eliminating the disappoint felt when the package photo and the product inside don’t match.
4) Fresh Faster
Millennials are the first generation to grow up completely in a technological era, so it makes sense that these digital natives have created a “must have it now” mentality, especially when it comes to eating.
Although Millennials want fresh foods, they often don’t have time to cook. That means they are willing to pay more for fresh, convenient food options. For example, refrigerated meals that appear fresher with healthier ingredients but can be prepared quickly will appeal to Millennials.
5) Healthy Not Wealthy
Thanks to technology Millennials can purchase products that previously would have been available only to affluent consumers, such as smartphones, automobiles and furniture. Each industry has developed options that bring luxury to the masses at affordable prices.
Why not CPG? The health food section of most grocery stores are compacted into a tiny little area, while the rest of the store is filled with foods full of preservatives and chemicals. Successful retailers are those that realize millennials are food-smart, demanding higher-quality, healthier foods at a fair price point.
6) Rise of Transparency
The movement to buy locally grown products has created food-smart millennial consumers, who demand to know what’s in their food, who is making it and where the ingredients are sourced. Brands that can bring food knowledge into their product experience could be big winners in the race for transparency.
1) Millennials want to be entertained – Marketers can’t get rid of grocery store annoyances, but they can find ways to make the experience more interesting, exciting or enjoyable for critical and time-strapped Millennial shoppers. We believe that starts with giving consumers the tools to get to a better, more novel, and more entertaining experience.
2) Mobile is a way in – Given that Millennials are already using their phones to complain while in-store, there is an opportunity to entice them to be more productive with those same phones. A critical first step is to create a stronger digital program – with mobile at its core – to establish a close relationship with them.
3) Don’t talk about grocery shopping – A brand’s program must be relevant to Millennials – something that speaks to them in the act of shopping. How can marketers get their attention in a positive way? The answer may have nothing to do with shopping at all; in fact, the social and experiential aspect of shopping is how Millennials are most likely to talk when they are in the store. The idea provides clues to what they will respond to outside of product-centered posts and promotions.
Before: Not all decisions need to be made in-store. Marketers have an opportunity to save Millennials’ time by taking the shopping experience out of the grocery store. A good example of this is when Kellogg’s created a pop-up style store, turning customers’ social currency into real goods and positive sentiment. Passersby could walk into the store, sample the range of new cereal crisps and subsequently tweet about them to purchase a box to take home.
During: Marketers can use mobile devices to take the uncertainty out of purchasing their product by using mobile/tablets to give Millennials richer and more entertaining product demonstrations.
After: The post-purchase period is the time marketers can build loyalty with Millennials. Brands should amplify a product experience. Providing a compelling social or digital component to your product can be the unique point of differentiation that drives repeat purchase. Although not specific to a grocery store, Starbucks Cup Magic app allowed consumers to send and receive virtual Valentine’s Day messages by scanning one of its limited edition themed cups and watching the cup come to life.
There remains plenty of untapped potential for marketers willing to innovate their approach by tapping into the Millennial mindset.
Going small might even be a trend upscale retailers begin to follow as well. Walmart is a good example. Their 2014 bottom line didn’t inspire any champagne popping, but their smaller-format stores – Walmart Express and Marketplace – actually grew their sales last year. It’s a strategy Target, with their City Target locations, has utilized successfully as well. Now, Walmart and Target aren’t upscale retailers, but they are instances in which large brands have urbanized their offerings to meet the changing consumer base.
Retailers must adapt to the changes wrought by the country’s largest cohort. Millennials demand convenience. They want discounts and they want fast fulfillment. Smaller, temporary locations like pop-ups provide retailers those capabilities. They answer Millennials’ demands, and include an inherent excitement factor traditional retail locations can’t offer. Especially as real estate owners open themselves up to the idea of shorter-term leases, temporary retail locations will become a more accessible reality.
Definitions of Millennials:
ECHO BOOMERS – Millennials are often compared with baby boomers because of the birth peak during the 80s and 90s.
NET GENERATION – This generation is definitely dependent from the Internet and social networks, that influence their life choices, from work to spare time, from love to information behavior.
BOOMERANG GENERATION – Millennials tend to delay the assumption of responsibilities in creating a family, becoming independent and considering themselves adults.
PETER PAN GENERATION – People born in this generation tend to delay the typical rituals of passage to adulthood, and they tend to live with their parents for longer.
NEW BOOMERS – This generation begins with the recovery of trust and birth rate (a second boom) during the 80s and ends with 9/11.
ME ME ME GENERATION – The people in this generation use devices and technologies that concentrate the attention on the self, exposing one’s image and ideas.
SUPERPOWER GENERATION – Millennials have great possibilities, compared to their parents, thanks to the new technologies and the progress made by scientific and medical research.
Who are the Millennial shoppers? And what do they really want? by Christopher Donnelly and Renato Scaff
Getting Millennials To Buy CPGs: Bring On The BOGOs by Larissa Faw
How retailers can win over millennial shoppers (Survey) by Rebecca Harris