Millennials (those born between the early ‘80s and mid ‘90s) and Gen Z (born after 1996) now make up America’s largest consumer base, so their preferences will shape spending patterns for years to come. Despite the financial headwinds facing millennials, such as student loans, they have already helped drive spending this holiday season over Thanksgiving. According to the National Retail Federation, eight in ten millennials shopped over that weekend, but more so online. A PwC survey discovered similar findings, as millennials prefer to shop online rather than visiting stores. They also learn about brands and deals on the web or through social media, not traditional mediums like TV unlike most consumers. While millennials favor experiential gifts – think travel or entertainment – Gen Z prefers tangible gifts, such as electronics more than any other cohort. These groups are more heterogeneous than one may think. For consumer preferences of everyone from a hipster to a millennial parent, please read on for the details.
Note from Nick: Got a tough-to-shop-for millennial on your Holiday list this year? That’s not just your problem. Marketers, retailers, and consumer product companies feel your pain. What do these younger consumers want, anyway? Jessica unravels that puzzle here.
If you have a kid under the age of 12, you’ve probably heard of this year’s Christmas gift craze: Hatchimals. For those who haven’t, it’s a furry animal that comes in an egg and hatches after a child “nurtures” it for a period of time, according to the product website. They can then help the Hatchimal grow up through different life stages, such as a baby (care for its “wants and needs”), toddler (teach it to walk, talk, and dance), and kid (play games). Bottom line, these take stuffed animals to a whole new level.
The problem for parents is ever since Spin Master – also the owner of Etch A Sketch and PAW Patrol – released the toy in October, it’s nearly impossible to buy since the company didn’t expect such huge demand. So what are your options for getting your hands on a Hatchimal besides waiting for the spring when the company promises to deliver more?
- Anticipate when retailers are getting more in stock and arrive before the store opens. Target, for example, was rumored to be receiving another shipment this past weekend, but they’re likely already sold out.
- If you can’t find it at a store, look on Amazon and Ebay, but expect to pay a sizeable premium. While the retail price is just $59.99, sellers on those sites fetch upwards of three times that amount.
- Some people have even resorted to buying lottery tickets in the hopes of winning enough to afford a black market Hatchimal.
- If you’re out of luck this year, the Hatchimals’ site created an “online resource center to help kids and their parents during the wait.” It includes games, coloring pages, and instructions on how to build your own Hatchimal nest. Here’s the link: http://www.hatchimals.com/northpole.php?loc=us
Hatchimals certainly lured people out to retailers in droves over Thanksgiving week, but another cohort also helped lead the charge: millennials. According to the National Retail Federation: “millennials (aged 18-34) continue to drive the increase in shopping during Thanksgiving Weekend. Eight in 10 shopped over the weekend, of which 25-34-year olds shopped the most in store (56 percent) and online (62 percent).” Here’s a link to the report: https://nrf.com/media/press-releases/retailers-made-black-friday-irresi…
This is an important demographic to track because they will shape American consumer preferences both this Holiday season and for decades to come. So how will the rest of the month shape up? PwC released an exhaustive study that breaks down the holiday spending plans of millennial parents, hipsters, and even Generation Z. After surveying over 2,300 consumers and 200 retailers, here are the findings from their “2016 Holiday Outlook”:
- Millennials favor experiential gifts, such as travel and entertainment, which PwC said they can see “more clearly than ever this year.” Travel and entertainment as opposed to gifts will make up nearly half (42%) of holiday budgets for all shoppers, while the balance they spend on gifts will “increasingly prefer gifts of travel and entertainment.”
- As for millennials with kids, smartphones heavily influence the way they spend as 90% of all millennials always have one with them. For example, they’re more likely than other consumers to “let retailers track them while instore in exchange for discounts and promotions” and “to comparison-shop for the best deal while in-store.” That’s why stores should ensure wi-fi access, which millennial parents “rate on par with convenient checkout—unlike other shoppers, who want convenient checkout first of all—and by a 15-point margin.” Most millennial parents (57%) also plan to spend more this year than last compared to 37% of all consumers.
- Here are important insights for companies to save their ad dollars: eighty percent of millennial moms “won’t respond to traditional advertising,” but rather look for deals online and “rely on social media to connect with brands.” As for millennial dads, they’re more likely than moms to shop online (40% vs. 25%) and “respond to mobile ads.” One thing both moms and dads can agree on is that “more than any other demographic, time-crunched millennial parents use alternative delivery options such as click-and-collect, curbside pickup, and third-party-location pickup.”
- Hipsters plan to spend an average of $500 more than other shoppers, even as shoppers overall plan to spend an average of $1,121 each or 10% more this holiday season than last. PwC zeroed in on “hipsters” by surveying over 200 of them which they define as “upwardly mobile, college-educated millennials living in enclaves such as Austin, Brooklyn, Oakland, and Portland.” They also “lead shoppers overall by a 20-point margin in using their mobile devices to find products and deals.” They shop online (57%) rather than visiting a store (43%) consequently.
- They’re also likely to spend a large portion of their money – or a third – on themselves, “most likely on footwear and apparel; personal and home electronics; and vacation travel.” In fact, hipsters will spend “twice as much on travel as consumers overall.” If retailers want to attract this group, they should send discounts, promotions, and coupons by email, they’re preferred choice as “their discovery of brands via television lags consumers at large by an almost 20-point gap.” And of course, “as with younger consumers, hipsters are drawn to brands with a clear sense of social and environmental purpose.”
- What about Gen Z, or those born after 1996? PwC found that they like physical gifts more than millennials, and like to shop “in-store for personal electronics, clothes, shoes, and toys.” They even rank “personal electronics higher than any other demographic, by far” in terms of what they want over the holidays. For Gen Z, “shopping is social” from visiting stores with friends to relying on “reviews from actual product users rather than corporate advertising.”
- Companies should enlist “influencers—such as public figures, entertainers, and athletes with whom they feel kinship due to background, values, or experiences” to promote their products to reach this demographic. Ninety percent of this group said “they relate to their favorite influencers on a personal level” and more than half said “they have purchased a product promoted by one of their influencers.” What’s more, “the majority of Gen Z (60%) and more than half of millennials (54%) learn about brands via influencers and peer recommendations on social media.” Additionally, millennials and Gen Z increasingly learn about brands in online videos rather than television like most consumers (59%), as “many have never subscribed to cable television.”
- One thing is certain, millennials love their pets. They will spend more on animals than other cohorts: millennials ($81 each), Gen X ($79), families with children ($71), and singles ($70).
In sum, there are a few overarching themes about the consumer patterns of millennials and Gen Z. Millennials favor experiential gifts and scour the web for deals. Gen Z appreciates tangible gifts and the experience of visiting stores with friends. As for both, they learn about brands and deals online or through social media. Companies should save their ad dollars by ditching TV and channeling that money towards other mediums, like online videos or celebrity promotions. Millennials and Gen Z now make up the bulk of the consumer base, so these are trends that will likely persist for years to come.
On the plus side, most consumers are spending more this year, including millennials despite their budget conscious stigma. We now know at least what millennial parents are after this holiday season: Hatchimals, if they can find one.
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Full PwC report below: