Millennials are blamed for killing modern industries by not spending or blowing their cash on frivolities. Could it be that they just like to buy differently?
When it comes to spending money, millennials are murderers, as the thinking goes. They’ve been blamed for “killing” industries from big beer to fast food, casual dining chains to department stores, starter homes to hotels, napkins to diamonds.
But the assumption that millennials are blowing all their cash on frivolities like iPhone apps and avocado toast simply isn’t true. Though they do value instant gratification, and are influenced by information they find online and via their social networks, they’re still picky. They can be counterintuitive in their consumption habits—they’ll shell out for a pair of Nikes or a Starbuck’s latte, but they also love to feel like they’re part of a bigger movement, or a community, and they savor experiences above all.
“Millennials value authenticity more than any other generation has,” says Heather Johnson Dretsch, a marketing professor in the Department of Business Management at NC State’s Poole College of Management who researches millennials’ spending habits and consumer behavior. “Baby boomers tended to trust brands more and go with the marketing message. Millennials want the brand to be real, from the inside out, from product quality to sourcing and ingredients.”
For millennials, education is key, in itself and to inform their spending. They’re optimistic and confident, and strive to be good people.
“They grew up inspired by their parents and grandparents, as well as the heroes they watched,” Dretsch says. “Millennials seek self-fulfillment and welcome motivation and support from friends and family, brands, influencers and social media. They believe that they can better themselves every day and through every consumption opportunity—products, services and experiences enable them to become better versions of themselves. They were taught that they could do anything, be anything, and thus, are always learning.”
Here’s a look at how millennials’ spending habits are changing a few key markets.
They’re blamed for the deaths of Applebee’s and the McWrap, but millennials haven’t stopped eating out. In fact, they spend more money dining out, and less time cooking at home, than their elders. But they opt for healthy foods—read local, organic or sustainably sourced—from transparent manufacturers. When it comes to groceries, millennials want great shopping experiences, and love health-conscious, creative stores such as Whole Foods, Wegmans and Trader Joe’s, as well as no-frills, high quality options like Aldi and Lidl, and, of course, the local farmers market. Convenience is key; millennials buy healthy frozen meals or pre-made deli dishes, plus lots of snacks, instead of cooking from scratch. Services like Seamless and Uber Eats are increasingly popular. Meal kit services like Blue Apron and Hello Fresh are popular too, but they face a more uncertain future, partly because they’re pricier.
Source: The Robin Report
You probably won’t catch them drinking a Budweiser or a Coors Light, but you need look no further than Raleigh to see that millennials love a craft brew or two. “Millennials like to be part of a movement, and Trophy Brewing, for example, is creating a movement around craft beer and developing it as a part of who Raleigh is, which is why millennials gravitate to companies like that,” explains NC State’s Dretsch. Generally, though, millennials prefer wine, spirits and cocktails. They like old-school or travel-inspired cocktails and the Instagram-worthy theater of making them, as well as discovering new liquor brands to share with friends, especially vodkas and whiskies. Overall, millennials spend less than baby boomers on booze. But they definitely drink more rosé. Source: Business Insider
Experience-driven as they are, it follows that millennials also are adventure seeking. They use social media to plan their vacations, often spontaneously, and won’t think twice about taking an Uber or Lyft in an unfamiliar city, or staying in an Airbnb instead of a hotel. They want to experience places like the locals do, learn new things, meet new people, try new food. “They’re not skeptical in the same way baby boomers or golden oldies would be about renting someone else’s house, or getting into a stranger’s car,” says Dretsch. And they take every opportunity available to mix business with travel; it’s called “bleisure,” or business-leisure, and it helps them balance working with enjoying life. Source: Forbes
While boomers wouldn’t dream of buying a sofa “site unseen,” millennials have fewer hangups about buying furniture online. Direct-to-consumer companies, including Article, Yardbird, Burrow and Revival offer designs with a clean-lined, contemporary aesthetic. These companies don’t overwhelm with too many options and they’re happy to mail wood and fabric samples in advance. They source responsibly and use recycled materials; many companies ship their (often modular) furniture to customers for free. Clients can send pieces back if they don’t like them for a refund or exchange, and, by cutting out the middleman, customers get higher quality products at reasonable prices relatively quickly. Win, win, win.
Source: The Wall Street Journal
For years, they fueled fast fashion chains like Forever 21, Charlotte Russe and Zara, at the expense of pricier, higher quality shopping mall standbys such as J. Crew. But, as they’re aging, millennials’ tastes are also evolving. They’re becoming more aware of the havoc fast fashion wreaks on the environment and, as online influencers gain more traction, millennials want to try their hands at cultivating their own unique personal styles. Now, they’re willing to spend more on fewer quality basics, and they’re increasingly spending time shopping for clothes online, at websites like ASOS, Fashion Nova and, of course, Amazon, rather than in brick-and-mortar shops. Swedish retail giant H&M recently announced it’s closing more than
100 stores after accumulating more than $4 billion in unsold inventory. We can likely expect more Marie Kondo-influenced magic in the years to come.
To see how millennials are changing the housing market, check out our real estate story here.