The generation known as Millennials are now highly influential, representing a high purchasing power worldwide.
With their lifelong exposure to digital technologies, the way this generation shops and interacts with brands is unique compared to previous, and also ensuing generations.
By 2017, it’s thought the Millennial demographic will spend more than $200 billion annually.
Generally, this group is defined as anyone born between 1982 and 1996, meaning the youngest are recent high school graduates students and the oldest around 30. There’s quite a range of life stages within this generation, from those who are already parents, home, or business owners, down to those not yet drinking or driving and perhaps still dependent on their parents.
It’s important not to assume Millennials are a homogeneous group when they are at such different life stages.
Millennials are now joined by Centennials – those born since around the time of the millennium. Centennials are a slightly different generation. Just like their slightly older Millennial counterparts, they’ve grown up with the internet and the constant availability of information.
Like Millennials, this means they are savvy about researching online and getting the best deal. There’s been less research into this younger generation, which is on the cusp of entering the labor force, but already influencing brands that cater to teen audiences.
Centennials – born from about 1997 onwards, seem to exhibit a more pragmatic and less idealistic edge than their slightly older Millennial counterparts. This is the generation that’s about to be pitched into the labor market and, worldwide, represent a population of about 2 billion people.
According to Havas People, the Centennial generation sees the value in brands if they add something useful to their lives. But like Millennials, technology gives them a wide array of buying options and diminishes their brand loyalty.
This really is the information generation: they have grown up with high availability of information and expect to research purchases before they make them.
If brands don’t supply information, they’ll find it themselves. For example, this could mean consulting Amazon reviews if there are none available on the brand’s own web properties.
One of the key characteristics of Millennials, and their Centennial juniors, is the fact that they are extremely digitally savvy and also very active online and on social media. They’ve grown up with technology and their use of it is seamless across different devices. As a consequence, they expect brands to support this behavior via a seamless shopping experience across all touchpoints.
Having lived in a world where information is at their fingertips and it’s easy to shop around online for the best deal, Millennials tend to be willing to put the time in to get the best deal.
Often this is due to necessity. This is a generation facing unprecedented levels of debt from their education before they even enter the workforce, as well as weak employment prospects and low wages, along with high rental costs.
Millennials challenge mid-market retailers
Buzzfeed – perhaps the pre-eminent content platform for reflecting Millennial and Centennial values – identified that these generations are probably behind the ongoing decline of mid-market fashion labels. Reporting its 20th straight month of flat or falling sales, Gap is one of the worst affected. Mid-priced apparel labels, including Banana Republic and Anthropologie, are finding themselves losing out to cheaper brands as the apparel market trends downwards in price terms.
Some commentators see this as a symptom of Millennials wanting to spend their money on experiences and technology rather than on owning clothing. This generation seems to be more individualistic and less interested in buying into fashion trends. This means it’s harder to find ways to market to them.
They’re also interested in values besides what the clothing costs and looks like. Emergent brands such as The Reformation offer options for sustainable clothing and answer other value, such as clothing that make it easy to breastfeed publicly (another hot topic for this conscientious generation, many of whom are becoming new parents). According to Adweek, the majority of Millennials are willing to spend more on brands that support causes.
Other trends are also contributing to the woes of these high-end high street retailers. These include the tendency for workplaces to be increasingly casual. Younger consumers no longer have separate wardrobes for casualwear, workwear, and going out. This reduces the number of clothing items they expect to buy.
The move away from buying clothes
To add to the woes of traditional retailers such as Gap, they don’t even need to buy their clothes at all. Sites such as Rent the Runway, Borrowing Magnolia and Mine for Nine make it easy to rent clothing for major life stages such as maternity or a wedding. Subscription clothing brand Le Tote will even lend you a brand new wardrobe every month.
Businesses are facing a highly-informed, young consumer that is constantly and quickly discovering new brands and products.
This makes them brand-agnostic, with little loyalty. Social media means they are easily influenced by their peers, and easily able to influence others. But although these Millennial and Centennial generations are confident online, they still retain an interest in buying in a physical store. When they get there, they want and expect their purchasing to be an enjoyable experience.
More and more apparel stores catering to this young audience are offering free WiFi to enable social sharing at the point of purchase and some stores even offer beauty treatments and other services. These young consumers also value being able to customize their purchases. Brands are responding to this with customization options for clothing, footwear (particularly sneakers), and monogrammed handbags.
This is a demanding generation to cater to, in the sense that their expectations can be quite different compared to previous generations.
Mid-market brands such as Gap are struggling to cater to what they want. Those fashion brands that do get it right will be able to access an audience with a growing financial influence. However, this audience is fickle and lacks brand loyalty. The fashion industry has its work cut out as it tries to make itself relevant to these young consumers.