By Elizabeth Kershaw, Client Services Consultant, Pricing
Millennials represent over 90 million consumers, and by 2020 — just a few short years away — they will account for 30 percent of retail spending in the US. In India, there are more millennials than in the UK and US combined. Demographically, millennials now outnumber baby-boomers. Far from the stereotype of the millennial still living at home, many of these consumers are now in their 20s and 30s with increasing spending power.
What Makes Millennials Different?
Millennials have grown up in an era of massive technological change, and “came of age” during the Recession of 2008 and onward. They have matured alongside mobile technology and use it in all parts of their lives. These realities have shaped their consumer habits, leading to needs and expectations vastly different from those of generations before.
A Gallup study of spending habits showed two key trends which expose how millennials are different as consumers.
- Millennials are 13 percent more likely to make an impulse purchase
- Millennials are 30 percent more likely to compare prices online
This is an interesting finding because it highlights two main features of the millennial generation. One, the delay of certain big expenditures (purchasing a house and car, having a family) have meant that this generation has more discretionary spending available to use on pleasurable experiences. Two, millennials look to solve challenges (i.e. getting the best price) almost exclusively via technological means.
What Does This Mean for Fuel and Convenience Retailers?
Attracting the millennial market means understanding these key behaviors and tailoring the customer experience accordingly.
Capturing the millennial impulse purchase means understanding what they are looking for and then delivering on it at a good price. But for the millennial customer, it’s about more than just getting the right product at the right price; they also look for a positive customer experience.
An example is the recent trend of personalized, made-to-order food and drinks now available in many convenience stores. This option makes for a more pleasurable experience and millennials are more likely to spend additional money on this type of experience because it satisfies their needs; they can get fresh food customized just for them. Affordable luxury is also a key trend associated with millennials, particularly when linked to lifestyle trends such as healthy living.
The smartphone is the center of the millennial universe, even in a brick and mortar store. Mobile phones will be used to pull up a coupon or special offer, pay for purchases or even interact with a brand on social media (for good or ill). Allowing customers to interact with the brand in this way is key to attracting and retaining millennial customers. They will expect to be able to interact with a brand seamlessly online or off. Therefore, alerting a customer to an offer online, but reverting to analog technology like printed discount vouchers, is likely to turn millennial customers off.
Reliance on technology means that immediacy is a key feature of the millennial — they don’t want to wait. They are happy to sacrifice traditional aspects of customer service such as face-to-face interactions for automation if it meets their need for speed and convenience. Offering convenient services such as Amazon lockers can place a retail location at the heart of their daily lives.
It is, however, important to note that there are still plenty of existing consumers from older demographics who must not be alienated in a relentless pursuit of the millennial dollar. These consumers still value traditional customer service, and, although increasingly connected, may wish to interact with retailers offline. Care must be taken not to leave these customers (with their considerable spending power) behind.
As for the next generation, the as-yet-unnamed Generation Z, these fully digital natives are likely to also present a unique set of challenges for retailers in the future. But we'll save that for another day.