Millennials—born between 1980 and 2000—are both the 20th century’s last generation and its first truly digital one. This old century/new technology dichotomy gives pause to marketers attempting to understand and connect with this key demographic.
But are Millennials really a unique new breed of plugged-in, networked savants? Or do these prized consumers share critical similarities with previous generations?
To find out, Accenture conducted proprietary global market research on the shopping behaviors of 6,000 consumers, of which 1,707 were Millennials, across eight countries (see Sidebar). We also looked at the capabilities of 60 retailers worldwide to determine whether they were providing the customer experience this generation demands.
To give some idea of the stakes involved: There are roughly 80 million Millennials in the United States alone, and each year they spend approximately $600 billion. While originally typecast as financially dependent teens, today’s Millennials include young adults in their 20s and 30s. Many have careers, are raising kids and live in their own homes. While Millennials are already a potent force, they will truly come into their own by 2020, when we project their spending in the United States will grow to $1.4 trillion annually and represent 30 percent of total retail sales. Millennials will have a major economic impact in other markets our research covered as well.
Although Millennials have earned a reputation for viewing the world through a uniquely digital lens, our results found some remarkable similarities between them and their predecessors: the Baby Boomers (born from 1946 to 1964) and Generation X (1965 to 1979).
- More than half (55 percent) of the survey respondents, in all three demographics, said that they seek out “the cheapest return option.”
- Forty-one percent of all three groups said they practice “showrooming”—examining merchandise at a nearby retail store and then shopping for it online to find the lowest price—more often than they did a year ago. This shift is due, in part, to the current high penetration levels of smartphones, which can enable customers to search for an item easily, even while in a store.
- Thirty-six percent of those surveyed from all three generations said they will go online to buy from a retailer’s website if they want a product when the company’s stores are closed.
- On average, 89 percent said having access to real-time product availability information would influence their shopping choices in terms of which stores they would frequent.
The many similarities we found across generations led us to challenge three enduring myths about Millennials.
Myth #1: It’s all about online shopping
Millennials are certainly very savvy online customers, but that doesn’t mean they’ve stopped frequenting brick-and-mortar venues. In fact, interviews conducted recently at one of America’s largest shopping malls confirmed our survey findings that many members of the digital generation actually prefer visiting stores to shopping online. What’s more, our research findings in the United States were reflected in the other countries where we surveyed as well. Echoing countless generations of canny shoppers, one Millennial told us, “You want to touch it; you want to smell it; you want to pick it up.”
Make no mistake: Online and mobile channels are important to Millennials, providing the information and insights they need to find the best products and services. Many hone their shopping skills on the Internet, checking product ratings and reviews or feedback on retailers, for example, to confirm that both product and vendor provide the best value and service, respectively.
One challenge for retailers is the Millennials’ seemingly omniscient grasp of prices and promotions, which this generation expects to be the same in stores as they are online. To cash in on in-store retailer promotions, Millennials also want mobile coupon scanning capabilities, and having to print out coupons prior to shopping could be a deal-breaker. One summed it up this way: “When I get to the store, if I haven’t printed out my coupon and I can’t use it, I walk out.”
When it comes to shopping, we found that 68 percent of all Millennials demand an integrated, seamless experience regardless of the channel. That means being able to transition effortlessly from smartphone to personal computer to physical store in their quest for the best products and services.
Millennial Myth #1: It’s all about online shopping
Myth #2: Loyalty is lost
Millennial Myth #2: Loyalty is lost
In a recent survey of retail industry leaders, nearly 40 percent said the No. 1 concern they have about Millennials is their lack of loyalty. But we found that Millennials can be exceptionally loyal customers—provided they feel they’ve been treated right.
They demand a customer-centric shopping experience—one tailored to their wants and needs as valued customers. As one shopper put it, “You want to feel welcome when you go to the stores.” In describing the ideal shopping experience, a Millennial noted, “There is [something] about the product and its cost, but there’s also a big part about being treated like a valued customer.”
Many seek personalized, targeted promotions and discounts as the price for their loyalty. “Loyalty programs are big,” confirmed one interviewee.
We found that 95 percent or more of Millennials say they want their brands to court them actively, and coupons sent via email or mailed to their homes currently (or will in the future) have the most influence on them. Other channels, such as text messages, have an influence on just over half of all respondents in terms of their shopping behaviors.
We define seamlessness as the ability to deliver a consistently personalized, on-brand experience for each individual customer, at every touchpoint—anytime and anywhere. A seamless customer-facing retail experience will typically include the following four components.
- To reflect customer demand, retailers need to customize their offerings across channels in the ways Millennials want, which typically boils down to providing better, faster, more memorable service.
- Retailers also need to integrate their operational elements so that they can have a single “conversation” with customers, not one that changes from smartphone to PC to physical store.
- IT platforms should be integrated to unify their sources of data and boost cross-channel transparency.
- Finally, retailers will need to team up with technology, data, analytics and process partners to provide the service performance Millennials want, since they will not be able to deliver it all themselves. As a result, successful players are collaborating to strengthen their customer value propositions. For instance, a third-party logistics provider can supply same-day delivery services for online purchases, enabling retailers to offer a service customers want without having to invest in an expanded delivery fleet or new routing capabilities.
To improve their capabilities as a seamless organization, we suggest that retailers consider the following five steps.
- First, integrate the company’s merchandising and marketing departments with a unified position, making the customer experience just as important as product and price considerations within the company.
- Second, retailers should consider ways to consolidate single channel teams in order to serve customers on an end-to-end basis across the enterprise.
- Third, retailers can organize their store employees on two specialized tracks, one tasked to serve customers and the other focused on fulfillment, since the two disciplines differ dramatically from each other.
- Fourth, companies should explore ways to evolve their supply chains to gain the capability of managing their inventory holistically. That means “forward” to the stores, “backward” for returns and “sideways,” which involves sourcing from other stores.
- Finally, many retailers should think about how to expand the metrics they use to keep track of the company’s customer handling performance, as well as the incentives that drive it. Normally, retailers look at same-store performance, but that dynamic changes when companies use stores to fulfill orders initiated online. Questions arise, including which channel should receive credit for the sale? Who covers the cost of fulfillment? And how do you encourage stores to support these shifts when each is responsible for its own profitability?
Our research shows that Millennials are not only transforming their own shopping behaviors but those of their parents, who are increasingly mimicking the demands of their children for seamlessness as they climb the digital learning curve. One consequence of this evolution is that the retail environment will probably change faster than many companies expect in the coming years, and many retailers will find themselves falling further and further behind. That’s because delivering products and services in a truly seamless fashion will require companies to make profound changes across their entire organizations—changes that many seem either unprepared or unwilling to make.
To close this emerging consumer generation gap, retail leaders need to take action now to provide the seamless end-to-end experience Millennials demand.