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.
Making 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.
Jerry 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.
Mike 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?
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