3 Consumer Megatrends – We’re All Millennials Now
The expanding influence of the millennial generation is undeniable. They’re changing the culture, and the ways that we shop and do business.
Recently, retail executives from Insight were briefed by investment advisory firm Evercore. Analyst Omar Saad presented some key concepts that illustrate the depth and breadth of the millennial phenomenon — introducing the notion that “we’re all millennials now” with three accompanying consumer megatrends that retail execs should pay attention to:
- Decline of the impulse purchase
- Shift toward specialization
- Shift to experiences
A key point Evercore makes is that these megatrends are driven by digital. Let’s take a deep dive into each trend and explore the implications for retailers, and in particular digital and omnichannel.
Megatrend No. 1: Decline of the impulse purchase
Since 2012, data shows retail sales are lagging predictions, and that pedestrian browsing traffic in U.S. shopping centers is falling — which is to say that if nobody is strolling through the mall, the chance for them to make impulse purchases is greatly reduced. Take American Eagle Outfitters, for instance. While its direct-to-consumer business has grown rapidly, thanks to the proliferation of smartphones and tablets, they’ve lost more from a fall in foot traffic than they’ve gained from incremental online sales.
Everything from extra socks, to lattes at the food court simply isn’t on the consumer’s mind when they’re shopping online. Data suggests that nearly 40% of clothing buys are impulse-driven, so online and omnichannel retailers need to develop strategies that incorporate the tangibility, urgency and instant gratification that are delivered by the best in-person shopping experiences. These include “now” messaging in online messages, chat enablement on your website, online sales with the ability to download their purchase instantly (i.e., Software as a Service, or SaaS), and detailed information and resources.
Megatrend No. 2: The shift toward specialization
The millennial generation is truly digital — and as such, a millenial’s online persona is very important. Social media confers status and belonging. And the pressure to be unique, interesting and special, combined with unprecedented access to specialized information via the Internet, says Evercore, drives consumer behavior.
Consumers can now dig deep into subjects and shopping experiences that match with their personality and interests. Buyers like to be experts in their own hobbies. For example, the Internet enables bike-riding enthusiasts to join online communities, use specialized apps, and to search enthusiast and retailer sites for the latest tips, tricks and information. Because these resources are at hand, niche retailers — who really understand and embrace this hyper-educated and enthusiastic consumer — will outperform.
Evercore concludes that consumers will pay more for uniqueness, quality and innovation, and that big brands should develop sub-segments to specialize more within their broader framework. From a technology perspective, this means that Web content needs to be relevant, accurate and highly detailed — educated consumers won’t expect anything less, and they’re looking for credibility from the brands that want their dollars.
In fact, 49% of retail marketers say rich media content is critical to gaining consumer attention, according to Zmags 2015 State of Digital Marketing Survey.
Megatrend No. 3: The shift to experiences
Key financial metrics showing that “experience” companies who offer travel, dining, entertainment and gaming are financially besting firms that provide only “things” like apparel, personal and durable goods, and cars/trucks.
The Internet as a linchpin in this change, because detailed information on experiences has created a new paradigm for buyers. Historically, purchasing an “experience” like a vacation could be risky and intangible. Uncertain outcomes — bad hotels, crowded attractions and a myriad of other pitfalls, for example — could spoil the experience. However, instantly available digital information about destinations, lodging, restaurants and more makes these purchases less risky, more tangible and ultimately more fun.
Disney gets the omnichannel experience right, down to the tiniest details. It starts with your first experience on its mobile-responsive website. Even its trip-planning website works well on devices. Once you’ve booked your trip, you can use the My Disney Experience tool to plan it — from where you’ll dine to obtaining your FastPass. The mobile app helps you find attractions you want to see and view the wait time for each of them. And Disney’s MagicBand allows you to check in at FastPass+ entrances, enter parks, unlock your hotel room door, store photos and order food.
Photos, reviews and social communities make pre-shopping easy and reduce the risk of making the wrong choice, while contributing to anticipation and excitement. Greater price transparency is helpful to consumers, and can also lead to trading up to more expensive options, because the consumer can leverage readily available technology – including smartphones – to see the additional value in spending more, as well as to stay informed, share experiences and obtain purchase reassurance via social media.
Evercore’s assertion is that all of these factors create a virtuous cycle whereby vendors improve quality standards, service levels and marketing engagement, which in turn causes more consumers to pay more for great experiences. Brands — even from companies that make “things” — are going experiential, and for technology pros (and marketers) this means you’ll need a sophisticated, mobile-friendly website and to offer your customers the ability to share their “experience” across the social channels that are part of the fabric of their lives.
For example, digital showrooms save floor space, and enhance the retail sales and customer shopping experiences from home to store.
Since “we’re all millennials,” it behooves us to understand and embrace these trends — because evolving your business and brand will enable interactions with the kind of customers that spend more on higher-margin goods and services. This means your website, social and e-commerce efforts need to be top-notch, and you’ll need to integrate the in-store experience, in order to truly deliver on the promise of omnichannel.
At Insight, we’re here to help you engage with these new consumers, and have a range of solutions for retailers pursuing omnichannel. Please contact us to learn more, or drop us a line at 1.800.INSIGHT.