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07/02/2012

Pulse report: Millennial shoppers are living well for less

CPGs and retailers should target millennial shoppers much the same way they have targeted other large groups of consumers during the recession, with a definition of value weighted heavily, but not exclusively, toward price and convenience.

John McIndoe,
senior vice president of marketing, SymphonyIRI Group

In the latest edition of Times & Trends, "Millennial Shoppers: Tapping into the Next Growth Segment," SymphonyIRI Group explores the shopping behavior and attitudes of Generation Y, also known as the millennial generation, and defined as adults aged 18 to 34.

This report highlights insights from SymphonyIRI's MarketPulse survey series, which found the millennial generation to be significantly more cautious and frugal than shoppers in the 35-to-54 and 55-and-older age ranges. This group represents the future of the CPG and retail industries. In fact, Pew Research reports that millennial shoppers will generate an estimated $65 billion in CPG sales growth during the next decade. But to tap into this market, retailers must understand what drives loyalty for these shoppers.

Though millennial shoppers will see their purchase power grow as they become more established in the adult world, today this group is struggling. Two-thirds of millennial shoppers live in a household of three or more, and household income skews to $25,000 to $99,000 per year. Unemployment is higher than average among this group and underemployment is another issue, with many millennials unable to find full-time employment in their field of choice. As a result of these and other factors, 32 percent of millennials are having difficulty making ends meet, compared with 22 percent of the population as a whole.

Despite their struggles, millennial shoppers are looking to live life to the fullest. They appreciate innovative products, packaging and promotions that will help them live well for less. Instead of eating out, for instance, budget-conscious millennials want to save money by entertaining and cooking at home, the research suggests. And, they have the knowledge and means to shop for these occasions smartly.

Like other shopper groups, millennials choose retailers based upon price and convenience. But price isn't the only consideration when assessing a retailer. In fact, 43 percent of millennials seek a store that is fun to shop, 14 percent higher than the average shopper. And as the first generation to be "always connected," millennials are more than 200 times more likely than the average shopper to be influenced by smartphone apps and information from blogs and social networking sites when making brand decisions.

"Millennials are very savvy shoppers. They have the means and they have the information, and they are using both to make smart, informed decisions," said John McIndoe, senior vice president, marketing, SymphonyIRI Group. "The great news for CPG marketers and retailers is that millennial shoppers are very open to communications and conversations–as long as they are relevant and targeted. The key to achieving ongoing success in serving millennial shoppers is keeping a finger on their pulse as they go through the various life stages associated with adulthood."

Look first, then leap
Like many other consumer segments, millennials have adopted a range of frugal behaviors during the past few years. They are on the lookout for deals and value that will help stretch their CPG budgets and are shunning expensive personal-care services to do more for themselves at home.

Economy-Driven Actions
% of millennial consumers
 
Share index vs. total panel (Average=100)
I eat out less often than I did before the economic downturn began.
52%
115
I go to hair salons or spas less often.
48%
131
I cook from scratch or with limited convenience foods to save money.
47%
131
I am self-treating where possible to save money of doctor visits.
38%
118
I use at-home beauty treatments more to save money.
33%
146
Source: SymphonyIRI MarketPulse Survey Q2 2012

Make it frugal, fast and fun
Millennials value convenience and affordability when selecting a retail channel to shop. In fact, this group weighs these factors a bit more heavily than the average shopper. But they are also more likely than other shoppers to search out "fun" retail environments and expect a shopping experience that is tailored to their wants and needs.

Millennial Shoppers–Key Retailer Attributes
% of millennials identifying factors
 
Share index vs total panel
Has the lowest prices everyday
86%
104
Has best selection of products
83%
101
Has everything I need (i.e., groceries and non-grocery)
56%
109
Fun to shop at
43%
114
Has the latest technology to improve shopping experience
38%
105
Source: SymphonyIRI Retailer & Brand Loyalty Survey, Q2 2012

Let's make a deal
As avid deal-seekers, millennials are more heavily influenced by money-saving opportunities than the population as a whole. Interestingly, this group indexes quite high in its propensity to be influenced by in-store kiosks, which clearly demonstrates their hesitation to spend on products that are not "tried and true."

Millennial Shoppers: Factors Driving Brand Selection
% of millennials identifying factors
 
Share index vs. total panel
Item price
87%
110
Previous usage and trust of the brands
70%
92
Coupons from home
68%
129
Shopper loyalty card discounts
53%
131
Requested by a household member
52%
130
In-store circular
51%
122
Newspaper circulars from home
48%
103
Signs or displays in the store
38%
136
Product/label packaging
26%
129
In-store kiosks
16%
177
Source: SymphonyIRI MarketPulse Survey, Q2 2012

Early adopters armed with information
As the first "digital native" generation, millennials are looking outside their immediate circle of influence (friends and family) to shoppers in similar life-situations for assistance in making smart purchase decisions. This phenomenon is not reserved for high-ticket items only, as the study's results show. Millennials are turning to user-generated content in a range of new media when making CPG brand decisions as well.

Millennial Shoppers: Influence of New Media on Brand Selection
Index vs. total panel (average=100)
Smartphone apps
362
Recommendation or information from blogs or social networking sites
347
In-store touch screen digital signal
316
Mobile advertising
294
Recommendation or information from manufacturer website or email
258
Recommendation or information from other website or email
229
Online advertising
221
Source: SymphonyIRI MarketPulse Survey, Q2 2012

of millennials seek a store that is "fun" to shop.


TIP: Make an emotional connection with millennial shoppers through innovative products, packaging and promotional programs that reflect this generation's quest for living well for less.

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