Laura Gurski is a partner in the retail practice of strategy and management consulting firm A.T. Kearney, and is also the author of a forthcoming book, “
What About the Consumer? Getting to the Real Point
Retailers and manufacturers have been receiving the message that millennial consumers aren’t buying. Along with this, industry observers have been suggesting that millennials do not want to own, that they are somehow more content with a “carefree” lifestyle that involves renting everything, from living quarters to evening gowns.
I strongly suspect that some of this is myth, and almost any excuse that companies use because they haven’t yet figured out how to connect with this generation. And it’s not just that millennials don’t want to own — they may not be able to.
I’d also suggest that despite the persistently difficult jobs situation and reported lack of savings, that there is some invisible Millennial spending done under cover of ecommerce. Then, data shows that millennials bought 27% of the 16 million new cars sold in 2014. Moreover, this segment has also started to ramp up on buying houses. According to Redfin, 34% of first-time home buyers in 2014 were Millennials.
In trying to understand misrepresented millennials and how retailers can bring them back into the fold, it may also be useful to look at some of the research we’ve recently done at A.T. Kearney.
In a broad survey of consumer sentiment, we found that millennials don’t want to be talked down to, and that they hold a strong ethic of environmentalism and sustainability. And though they’re interested in and conversant with technology, they’re not won over by frills.
In our interviews with millennials, they were concerned with hard questions, such as whether they would ever “catch up” with their parents economically; whether they’d be able to retain enough purchasing power to keep their economic status; and even how much influence they will exert over the generation behind them — Gen Z, belying the myth that they’re not ready for “adult responsibility.”
Given the values they exhibit, it’s clear that millennials seek products that last — which puts an onus on manufacturers to make high quality products. Planned obsolescence is still built into many of the products we buy, whether it’s a mobile phone, tablet, car or cooking aid. With technology, you pretty much have to buy a new device whether you want to or not, because in a couple of years, all the supporting software and other technology that surrounds it will be so outdated that it won’t be usable.
But milliennials have sensed that much of the planned obsolescence is wasteful, notwithstanding their infatuation with the iPhone6, and have done all in their power to refuse to engage in it. Whether for millennials or all generations, if we’re looking for lasting products, the pressure is on manufacturers to make higher quality goods.
For example, some apparel manufacturers have found success in using higher quality materials for wardrobe classics, even if they use lesser quality materials for fast-fashion items on trend, because expectations are different for staples that may carry you through decades.
In the world of retail technology, as electronics become more readily updatable through the Internet of Things, there will be less electronic waste and more sustainability in the manufacturing of hardware and appliances. Marry this to the nontraditional career paths that vast numbers of millennials have chosen, and their hunger for information, and there’s a perfect opportunity for companies not only to build quality into their products, but to teach customers about what goes into making that quality.
It’s possible that millennials hold a certain shame about spending on themselves, but I think it’s much more a matter that they think pragmatically, along the lines of “Do I really need this? And if so, which manufacturer is offering me the best product for the best price?”
One study showed that millennials spend more than 17.6 hours researching a car online before buying one. But as a general rule, they’re not going to buy themselves a lavishly expensive Marc Jacobs bag.
Eduating millenials — who already routinely take in all the free information available on the internet — on quality and craftsmanship, encouraging them to take the time to discover why a product is long-lasting and therefore (in millennials’ definition) sustainable, may help them become the discerning spenders this generation has the capacity to become.
And I think small data can help retailers understand how to get there.
How can small data help unravel the millennial myth?
Retailers are able, at an unprecedented level, to tune into how consumers make their purchasing decisions. By asking defining and refining questions, they can focus in, moving from big data to small data. Looking at smaller segments and analysing what’s happening just in that smaller group, a retailer can hone in on what’s actionable, and what they could do to better serve that smaller group.
One hypothetical example is that of the online shopper who makes purchases at midnight or later.
We might ask the question, why? It may be the only time she has to do enough online research to figure out which is the best product to buy — the only time quiet enough for her to use the power of data to become more discerning, to catch the nuances that are extremely important to determining value, quality, and brand authenticity.
This type of questioning would help high-end manufacturers trying to connect with millennials and other online-friendly customer segments. They could operationalize it by trying to understand what makes certain products stand out; by connecting shoppers with legitimate stores, and aggregating the findings for them; even by building in links within their websites to outside information sources that lend credibility in a way that doesn’t feel like marketing spin.
Feeling “marketed to” will spell the death of most any deal for a millennial consumer. But creating a bridge with, for example, valid authoritative sources that will give background and explanation about what makes a product lasting and high-quality will act to make the consumer feel like an instant expert on what she is about to buy.
This would involve changing the way retailers market and sell, and tweaking some of their products to improve their quality — even if the price point has to follow.
Millennials are saying they want it to last, and they only want to buy it once — for now.
The author can be reached at [email protected]
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