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Conquering That Pesky Millennial Generation

Jason Dorsey

by Kristen Cloud/staff writer



Millennials, as retailers have come to discover, are a tough collective nut to crack.

The group includes those born between 1977 and 1995 and also is referred to as Gen Y. There are 79.8 million Gen Yers and, while they may be the children of Baby Boomers, they pose a challenge for those older generations, according to Gen Yer Jason Dorsey, a leading generational speaker and expert in Millennials strategy. He spoke at the California Grocers Association’s Strategic Conference in Palm Springs, Sept. 29-Oct. 1.

“My generation has the least established loyalty of any customer you can find,” Dorsey said. “…People think we’re disloyal; not true. We haven’t established any loyalty.”

It can present a problem for retailers, both as a shopping destination and as an employer.

Retailers now have five generations of shoppers in their stores and four generations of employees.

“This has never happened before and it wasn’t supposed to happen, but it has created all sorts of new issues,” Dorsey said.

Among those issues: life stage, something commonly seen as “delayed adulthood” in Gen Y, which also is the most diverse generation and often feels the most entitled.

“Today’s 28-year-old may be three to five years behind other generations in work and life experience,” Dorsey said, “and this changes everything.”

In addition to graduating from college and entering the workforce later than previous generations, Gen Yers also postpone marriage. Some even live with their parents until their late 20s or into their 30s.

“We’re the first generation to make it normal to get married after the age of 30, it’s socially acceptable now,” Dorsey said. “The age at which you have your first child, which really is a defining moment of how you shop, how you think about risk and everything else, is older than ever before since we’ve been keeping records.”

Logan Gallogly, analyst for RetailNet Group (RNG), echoes that sentiment in the company’s “U.S. Shopper Landscape: 5 Generations In-Store” report, presented via webinar in late October.

“Major life events like buying a home and having children generally trigger higher consumption of pretty much everything, from CPG products to furniture and home goods,” she said. “Deferral of these events is pushing Millennials’ peak spending years into a smaller window.”

Despite the complexity of the generation, Gen Y is “more predictable than ever before,” according to Dorsey, and could be a retailer’s greatest opportunity in a commoditizing space.

“My generation is completely up for grabs—Millennials change and adapt and learn and shop around,” he said. “But it’s not a technology solution. It’s not a payment solution. It’s not any of that. What it is…is understanding our mindset.”

 How to win this ‘unique’ shopper

Many, retailers included, think the Gen Y generation is tech savvy. Dorsey disagrees.

“Gen Y is not tech savvy; what we actually are is tech dependent,” he said. “That’s a critical distinction. We have no idea how technology works. None. We just know that we can’t live without it.”

He points out that a Boomer, Steve Jobs, invented the iPhone.

“The generation we make fun of for how they use their phone invented the phone,” he joked.

He notes that Generation X, the generation between Boomers and Millennials, is the tech-savvy cohort.

“By the time technology rippled down to Gen Y, it was all about making technology simple…user interface, user experience,” he said. “We don’t care how the phone works. We just know we can’t live without it. And that’s a big jump from being tech savvy.”

So how does this relate to winning the Gen Y shopper?

Gen Y prefers text messaging and email, not face-to-face communication or phone calls, which Gen Y, according to Dorsey, considers an “invasion of privacy.”

When it comes to email, however, Gen Yers read only the subject line, which determines whether they will open or delete the email. Retailers also should take into account their social media efforts and use their Facebook pages and other outlets as “a resource, not a sales pitch,” he said.

Dorsey stresses that Gen Y is a visual generation, and “we learn everything on YouTube.”

“If I’m in your aisles I don’t want to see some printed recipe,” he said. “I want a picture or text or scan and it just suddenly shows up in my phone. All free. The stuff Gen Y uses is all free.”

Gen Y also is an event-driven group, and this gives retailers an opportunity to use their social media outlets to attract Millennials to their stores.

Videos are a good way to do this, but Dorsey says Millennials don’t want to see “untrustworthy,” prepackaged marketing.

“What I want to see is you with the grill in front of the store cooking something…,” he said. “…One of the things we see missing is events—not samples, but what you do in the parking lot; rethinking all the space so people want to show up, want to be there.”

Lastly, and perhaps most important, Gen Yers consider themselves unique.

“This is your new tagline for connecting to and engaging Gen Y consumers: ‘As unique as you are.’ Everyone Gen Yer thinks they’re unique,” Dorsey said. “We think we’re special. Tell the story about how this unique person will use the product; it’s about the experience and all about customization.”

Who’s doing it right

RNG’s Gallogly says the current macro environment has led to enormous income polarization among Millennials.

“The delay of marriage and childbirth, particularly among wealthy Americans, has given rise to young, dual-career households with significant disposable income but, at the same time, many Millennials have been unable to find full-time employment,” she said.

In fact, in 2012, 36 percent of Gen Yers made less than $25,000 a year.

“Many of them don’t even make enough money to move out of their parents’ houses,” Gallogly said.

“…So this income polarization has had a huge impact on spending habits, with some Millennials focused on prices, deals, comparison shopping, really focused on savings, while others prioritize convenience, new products and the latest trends.”

There are still a number of ways to win with the Millennial shopper, though retailers are required to position themselves either as low-cost or differentiated in order to win retail spend.

Gallogly says that retailers like Target, Trader Joe’s and beauty store Sephora are all examples of companies who are doing this successfully.

She also says that retailers and brands must invest in supply chain and inventory management capabilities to give Millennials the integrated online/offline experience they demand.

“They’ve grown up with technology, they’re very comfortable with online shopping and we’ve seen a lot of recent development in this area with retailers like Home Depot and Best Buy providing complete transparency in terms of store inventory on their e-commerce sites,” she said. “You can go to the site and you can browse around and look at products and then see if a store nearby carries that product so you can go and pick it up immediately.

“Inventory management is something that’s really complicated,” she added. “It requires huge investment but it’s essential, as Millennials will come to expect it. It also gives store-based retailers a big advantage over e-commerce players because it has a sense of immediacy that Millennials really appreciate.”

Why You Should Care About Millennials

• Gen Y has the greatest lifetime value of any consumer group today in the retail grocery space.

• The generation has the least established loyalty, meaning there is no real barrier to entry. The group is not disloyal, but it demands to consider its options before demonstrating loyalty.

• Gen Y was expected to spend approximately $1.2 trillion in the U.S. in 2013. In 2017, the group is forecasted to outspend Baby Boomers.

• Gen Y is entering the wealth accumulation phase—where it starts to consume and buy more.

• Millennials are the most likely to tell their friends if they had a good shopping experience. They will post to Facebook, Instagram and other social media outlets.


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Featured Photo PLMA Annual Private Label Trade Show
Donald E. Stephens Convention Center
Chicago, Illinois
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