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Millennials Rule the Future of Retail

There’s been a lot of talk lately about the Millennial Generation (a.k.a. Generation Y) in the U.S. (those born roughly between 1980-2000). Some have deemed them soft, self-centered babies who expect a trophy just for showing up, while others feel they are the most eco-friendly, socially adapted, and connected citizens in today’s world. But let’s set aside generalizations and opinions and look at Millennials through a business lens, as consumers, to see how they are changing the game.

Millennials.jpgMaking up about one third of the U.S. population, Millennials are a huge demographic with enormous buying power. They were born with mobile phones in hand and think computers and the internet are about as complicated as a toaster. They are also highly educated, globally connected tribes people who are always turned on and tuned in. They know what they want, can easily navigate the barrage of information thrown at them online (an overwhelming task for most others), and instantly tap into like-minded crowds of thousands for opinions and guidance along the way. Yet they also have a very strong sense of identity and want to be treated as unique individuals.

So what does this mean for companies competing for the Millennial market share? It means a lot and is greatly impacting the way they do business. During a panel discussion at SAPPHIRE NOW titled, Deliver a Better Shopping Experience: Consumer Products and Retail, Lori Mitchell-Keller, SVP and Head of the Global Retail Industry Business Unit at SAP, invited Millennial, Lauren Shanley, from the SAP Graduate Academy, to join in on a retail and consumer products industry panel with some SAP customers.

When Mitchell-Keller asked Shanley what a personalized shopping experience meant to her she replied, “It’s about my immediate needs and using technology to make it easier and cheaper for me.” Shanley is often inspired about what to eat or wear by things she sees on Pinterest or what her friends post on Facebook. She doesn’t want to buy groceries from a list; she wants to be guided through the entire process of making the delicious meal her best friend just posted to her timeline.

McCormick.jpgJerry Wolfe, CIO of McCormick & Co. Inc., the 120 year old, US$4 billion food flavoring company responsible for tantalizing our taste buds daily, explained that brands need to adapt and reach Millennials differently. The previous two generations are heavy list users, making 80% of their buying decisions before going to the store. Millennials don’t shop that way. They are triggered to an experience by peers via social feeds. They don’t respond to mass marketing and they don’t respond to temporary price reductions at the shelf. “Brands need to shift from being a destination to being part of the solution, found everywhere the consumer is looking in a relevant and personalized context,” said Wolfe.

When asked how social media impacts her buying behavior, Shanley acknowledged that Millennials use social media a lot when looking to make purchases, but says they are not trying to be “friends” with the brands. They want a very personalized experience, but want it to remain a business interaction. Shanley told a story of her friend’s broken sandal that was a perfect example. When her friend posted a picture of her broken sandal on Twitter and said how sad she was, the retailer that sold them saw the Tweet and offered to send her a new pair. This retailer gets it. They aren’t trying to have a back and forth friendship with customers on social channels, but they are listening and responding quickly at a personal level when needed, which is good for business. That retailer certainly made one loyal customer and most likely made loyal customers of all her friends.

Kingfisher.jpgMike Bell, CIO of Kingfisher plc, one of the largest home improvement retailers in the world, said his company is also moving from selling and mass marketing products to offering services and personal connections through social media. Bell explained that when you buy a new home in China you buy it unfinished. So you need to buy the electrical system, plumbing, flooring, etc., and finish the home yourself. To make this process easier, Kingfisher assigns a curator to each home buyer to offer design ideas and help through the entire home-finishing process. Kingfisher delivers the products to the home as they are needed and takes photos of the progress every step of the way. Customers proudly share the photos of their home building projects via social media, which brings their friends into the experience, and hopefully into Kingfisher stores.

Edward Kenney, VP of the Consumer Products Business Unit at SAP, added that socialization, mobilization, and ‘consumerization’ of IT are rapidly changing our lives. All buyers, not just Millennials, are becoming less predictable, reliable, and loyal. They are empowered individuals who move in and out of buying channels based on convenience and value, expecting the experience to be consistent along the way. The store they walk into off the street needs to extend seamlessly into the same store they pull out of their pocket. Brands need to come to the customer on demand, and realize that a wealth of information that may sway their decision is only a click away at time of purchase. Quality, relevance, and ease of use must be built equally into the product and the overall buying experience.

The opportunity for retail and consumer products companies to grab market share by connecting with buyers at a more personal and emotional level is huge. Millennials are much more open and relaxed about privacy than previous generations and will happily give their life’s measurements to companies that can deliver products and services that fit in return. Sounds like a fair trade to me – what do you think?

Click here to watch the video replay of the panel at SAPPHIRE NOW.

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  • Hi David,

    excellent blog, and I totally agree with you.

    Us generation Xer's have got to keep our eyes on the ball, because the channels are changing and therefore the infrastructure is changing and we need to embrace it to be able to lead it.

    In a smaller sub area, in this blog,  Lets Move on from Mobility and into the Enterprise

    I tried unfortunately in a very long winded way, to promote the thought, that for Generation Y's and Millenials (who some argue can be put in the same catagory regarding technology) there will be no distinction between Mobile and Enterprise, because everything will be mobile, and it will be a subliminal question which device(tool) is used in which scenario.

    Everybody, from SAP strategists to us Basis Administrators in the Engine Room need to embrace the contempory technologies (I mean the smart devices) and applications (I mean the social software and web consumer software) if we want to be part of this change and still be around in the future and even more, if we want to have any chance to influence the change.

    If ever there was a time not to resist change, this is it.

    Thank you for writing the blog.

    All the best,


    p.s. for any techies reading this, Social Media integration to SAP is there....

    • . OSS 1859791 - CRM Social Media Integration in Interaction Center 
    • . OSS 1832482 - How to calculate social sentiment on HANA as primary DB
    • . OSS 1832462 - Master Note: CRM Social Media Integration
    • . OSS 1832480 - How to implement Twitter API for CRM Interaction Center
    • . OSS 1832481 - How to implement Facebook API for CRM Interaction Center
    • Hi Andy,

      Thanks for the read and I agree with your comments. These changes are inevitable because they are natural and make sense - resistance is futile.

  • Great post, David. Have you also noticed that millennials don't like to communicate verbally? When my teens want pizza, they can choose from 4 local stores, but they always order from Papa John's because they can order online, and pay online. They don't want to call in an order, and they want to pay online so there's limited interaction with the delivery person. I've also noticed if I text them, I usually get an immediate response, but phone calls to them are often ignored. Did this change in verbal communication come up in your discussions?

    • Hi Carolyn,

      The change you mention - Millennials preferring to communicate digitally vs. verbally - did not come up during the session but I think it would have been a great question to ask Lauren while she was on stage. I completely agree with you and am curious to know the real reason why. I'm guessing it's not because they are lazy or don't want to talk to people, but because it's faster, more reliable, and a more enjoyable experience. And I recently read that texting still gets the highest response rates by far, for any digital comms, which also validates your last point.

      Thanks for the read and your non verbal comments! 🙂

    • Hi Carolyn,

      This is certainly true!  As a millennial, I appreciate the non-verbal offerings companies give me -- I can often opt to "Chat Online" with a specialist instead of sitting on a customer service call, I can order meals online and pick them up without having to speak to an employee at all, and I can obviously online shop.  I think the reason behind it is that Millennials have grown so accustomed to having everything with a similar interface; we use our phones, tablets, and laptops for everything.  Like you say, it's faster, more reliable, and more enjoyable.  I'd also throw in that it enables me to multitask 🙂

      Thanks for your comments!

      • Hi Lauren,

        It was great to hear what you had to say at SAPPHIRE. Thanks for jumping in on this blog and providing your comments. Your point about multitasking is spot on. Millennials are multitasking ninjas! The companies that are easy to deal with while you are in multitasking mode, on any device, are more likely to get a few seconds of your time and your business.

      • Thanks, Lauren! I wish I could have seen you at SAPPHIRE. It's probably obvious (since I mentioned my 3 teens) that I am in my 40s. One of my first jobs out of college was to build an intranet site, and I had no clue what HTML was! It was an exciting time, and I've spent years working on various .com projects. I am amazed at the advances in technology in just the last 20 years. But with technology advancing so quickly, and our attention constantly divided, I am curious to know if you foresee a time when it just gets to be too much? How do you deal with the neverending barrage of content and information? How do you sort through it all? How do you distinguish "noise" from legitimate information?

  • Thanks David for sharing this insight and your thoughts.

    I find it interesting to read about the more relaxed mindset towards privacy in that generation. I've personally seen different behavour mostly depending on where individuals are coming from (I am a German living in the US - so seeing two totally different privacy-cultures). Europe is much more concerned and restricted in general, making it very difficult for businesses to even provide such a custom experience in a large scale.

    Let me give you an interesting example (generation Y): My nephew for example did not join facebook just until recently because of the privacy policies (facebook is constantly stirring up privacy discussions in Germany, so does Google), but now he did and what was one of the first things he posted? A photo of his temporary drivers license (he's only 17, and in Germany you can only drive under supervision until aged 18) showing his name, data of birth and all approved driving supervisors with name, title and birth date. And I wondered why he was concerned about privacy in the first place :-).

    Another example (not generation Y): my husband told me about a fellow conference attendee who tweeted something and was waiting for his tweet to show up on the featured tweets wall: well, his privacy settings were so private, that only he could see his own tweets :-).

    I as a customer actually like the personalized ads, because it leads me to stuff, I may not have found (or even looked for?) otherwise. Much better than throwing totally irrelevant offers at me all the time. And I never book a handyman or car repair shop without checking the social sites and ratings first (always reading the comments, because people might dislike companies for things that are not as relevant for me). If nobody writes about your company, you're irrelevant pretty quickly.

    And I have to agree with the previous comments: ordering and paying things online is so much faster, more reliable, and it's documented (I can go back to it or save it for future reference). Much more convenient to chat online with a customer service rep than having to wait on the phone for the "next available agent". I don't even consider stores, dentists, etc that do not have a decent online presence (even though I still remember a world with very little internet).

    • Hi Iris, thanks for your comments and funny stories! 🙂

      Opinions of privacy indeed vary by country/culture. It will be interesting to see how things change over time as younger generations become the leaders, law makers, and politicians who frame the privacy policies and laws.

  • David,

    Wonderful write-up on a very timely and insighful keynote session at SAPPHIRE!

    As an industry, Retail becomes the proving grounds for the latest consumer technology trends, and discovery of generational behaviors and expectations on what constitutes good business and socially appropriate. 

    The potential for truly amazing and revolutionary experiences exist, but so does the spectre of abuse and intrusion into our personal space.  Yes, different countries and cultures (in addition to age groups) may view these differently, but underlying it all there is a growing concern over who owns and benefits ( cui bono?) from one's private data and behavior.  I imagine the discussion will become more refined (sharpened) in the coming months and years on multiple levels. 

    I believe that as long as consumer see relevant and concrete value (financial, convenience, personal, saving time, making life easier) from sharing private data, then we'll see the upside of potential of big data and personalization.  It's just important to keep iin mind that "unintended consequences" do happen despite the best of intentions.

    • Great point, Mohamed. Consumer value and trust are key factors to the model. If I trust a retailer and feel the data I share about myself benefits me more than them, or some other business, then I'm usually a happy camper. 🙂

  • That's a big change because the generation controlling retail and marketing are not the "generation-Y" people.  Look at high street in the UK ... it's going through a slow death.

    Maybe things are actually just moving from production based MTO to customer centric MTO where a retailer will show off a product and then a consumer will add and change as they like to that product and 1 week later they pick up their new dress!!



    • Hi Waza, I think we will definitely see much more customer centric make-to-order in the future as people are more willing (and able) to share precise details about their preferences and personal info (such as precise body size dimensions for apparel). Imagine how much better online clothes shopping would be if every clothing retailer knew your exact body size dimensions down to the millimeter in every direction? They could tell you exactly what will and will not fit you as soon as you start browsing, could offer alterations to items that are slightly off size before the item ships, or could offer to make something you love in your size if alterations aren't possible. I imagine we'd see a rise in online sales and a drop in returns and costs, across the board. Sign me up!

      • Come to China, Taobao & 1haodian are just taking over the place.  Everythibg I wear has been bought on Taobao!!  Though it hasn't gone MTO yet.  But I feel especially in clothing there are more ranges & colors available.



        • I'd love to come China but its a long way to go for shopping. I live a short walk from Canal Street in Chinatown, NYC, which is pretty much the same though. 🙂

          Taobao is a pretty good success story beating out eBay. Their B2C platform, Taobao Mall is cool too. It's always nice to see new tech enabled retail business models pop up and succeed. Gilt Groupe is one of my favorites here.I'm sure it will be copied in China if it hasn't been already.

  • As a Millennial, all I can say is I certainly agree with your blog! Definitely enjoyed the read and the focus on the social and mobile aspects of the retail industry.

  • Hey David,

    Being born in 1980 and a "tweener" between Gen X and Y, I find it funny that my thoughts are in between as well.  One of the biggest drawbacks for me working for a global company is the lack of facetime with colleagues and teammates (like you).  The phone doesn't cut it, not even telepresence (although it's very cool).  I'm much more comfortable in person for sure.  Having said that, the "Gen Y" in me does love certain amenities like the chat on-line feature that others have mentioned.  And shopping in a mall, I mean what guy does that anymore?  All I need to do is click on the (insert app name here) and I'm golden 🙂 .

    • Ryan, I hear you. Those of us who work online in virtual teams are subjected to pretty heavy doses of digital isolation at times - but don't expect to bump into me at the mall either. 🙂