How well do you understand your millennial consumer?
For a few years, we have seen many retailers struggle to connect with millennials for a number of reasons. Many have found themselves distracted and left confused by millennial myths floating around the industry, about this supposedly ‘indecisive’ and ‘un-loyal’ market. Others have tried and failed to capture the attention of millennials through traditional methods of advertising.
Millennials represent an increasing percentage of the buying power in our economy, and many retailers are chasing a ‘magic’ formula solution. But unfortunately, there isn’t a ‘magical’ formula as such, especially in this age in which you can no longer define your retail audience by pure demographics.
What or Who Are Millennials?
Millennials are those between the ages of 18-34 in 2015, born after 1980 and before 2000.
Expected to represent an estimated 50 per cent of the global workforce by 2020.
The first digital natives: millennials have grown up with the internet and smartphones in an always-on digital world.
The online world – and social media in particular – have given millennials a platform to reach the world.
Lower employment levels and smaller incomes have left younger millennials with less money than previous generations.
Different priorities: With less to spend, we’re seeing millennials putting off commitments like marriage and home ownerships.
Why are Millennials Important to Retailers?
One of the largest generations in history is about to move into its prime spending years. Millennials are poised to reshape the economy; their unique experiences will change the ways we buy and sell, forcing companies to examine how they do business for decades to come. Millennials’ affinity for technology is already reshaping the retail sector. With product information, reviews and price comparisons at their fingertips, millennials are turning to brands that can offer maximum convenience at the lowest cost.
Millennials have been reluctant to buy items such as cars, music and luxury goods. Instead, they’re turning to a new set of services that provide access to products without the burdens of ownership, giving rise to what’s being called a “sharing economy”.
It is important to acknowledge again that millennials as a market are currently anything from an 18-year-old university student to a home-owning corporate in their mid-30s. Consider the broad range of personality and emotion-based drivers, social, environmental and psychological influences relevant to an individual in this market and it’s easy to see how standard demographical segmentation is no longer a strong basis for a retail strategy… however it is a valuable step in the journey.
A vital step to business success or as we call it, ‘business fitness™’ always starts by truly understanding your customer’s unique needs and drivers by investing in a foundation of your own personalised consumer insights research. Tools such as neuro-psychological consumer personality profiling, focusing on the ‘who’ we are rather than ‘what’ we are, is a good place to start. Standard data will tell us what customers buy, where they buy it and how frequently however what is really beneficial to retailers is why they buy it. Understanding the “Why” provides the missing link to identifying the real drivers of customer behaviour and how this affects brand strategy and retail operations.
How Can We Better Understand Millennials?
Ninety-five per cent of decision making occurs below the radar of our conscious minds, in the limbic system of our brains, by our subconscious… and rationalised after. That is why I purchased my fifth pair of black sparkly shoes that I “had to have” and then regretted it later hen checking my credit card statement at home!
We are not rational beings, we are rationalising beings: Our senses take in about 11 million bits of information every second
Only 40 bits per second can be processed by our conscious brains
The limbic system processes information 200 times faster than the cognitive brain and this is important when we stand in front of a supermarket shelf e.g. – besides habitualised shopping for the brand we always go for, when we don’t have that, we grab what subconsciously immediately appeals to us with all its cues and codes. It decides when we enter a store why we turn around and walk out again because we just feel it’s not for us.
That’s why it becomes harder and harder for brands to cut through all the noise that is out there – because the big question is: how do we appeal to consumers on a subconscious level?
So How Do We, As Retailers, Appeal to Millennials?
While they are certainly the first generation of ‘digital natives’, our research study demonstrates the value of the bricks and mortar store experience to this audience. It also confirms the importance of the multi-channelled ecosystem for both male and female Australian millennials. While they often prefer to shop via bricks and mortar, millennials are channel promiscuous.
Retailers must ensure a seamless customer experience across all touch points, including inventory transparency, seamless offers, pricing and customer service. Evolving your business into a retail ecosystem with complete transparency across multiple channels can be daunting, let alone a challenge internally.
However, beginning this process with a strategic review to establish your internal and external capabilities and current financial forecast, will lead you into constructing a sustainable and strategic implementation plan. We have embarked on this journey with hundreds of retail businesses who’s bottom line, and customers, are now reaping the benefits. This data shows us there is great need for Australian retailers in all sectors to provide a better shopping experience for male and female millennial consumers. Up to 67 per cent of Australian millennials feel the shopping experience they currently receive does not meet their needs, and therefore retailers are losing out in the potential of one of the largest generations in history about to move into its prime spending years.
- What are the needs of my millennial consumer?
- What do they expect from my business?
- What do my millennial consumers value most out of their shopping experience with my business?
- What key personality profiles does my business and product offer appeal to?