Millennials Are the True Post-Aspirational Consumers
Since the start of the Recession, consumers have dialed back sharply on “reach” purchasing — gone are the days when aspirational shoppers earning a $40,000 annual salary are buying a $2,400 Chanel handbag, most likely charging it.
Now even well-to-do consumers are behaving in more frugal ways — such as shopping at dollar stores. They don't much like credit card debt. And everyone seems to be showing a preference for experiences, such as travel and dining out, over stuff, such as … well, that Louis Vuitton bag.
We are calling the person exhibiting this new type of purchasing behavior the post-aspirational consumer. And nowhere is the post-aspirational trend so evident as among the Millennial generation.
On the subject of dollar stores, a recent study from NPD Checkout Tracking showed about 19 percent of spend at Dollar Tree, Dollar General and Family Dollar came from households with an income in excess of $100,000 a year. And the dollar-store phenomenon is even more significant among Millennials. Checkout Tracking found that Millennials with annual incomes of $100,000 or more make purchases at these stores nearly 13 times a year, and spend more than $135 over that time frame.
Similarly, everyone seems to have developed a preference for off-price stores, too. Checkout Tracking research shows that a full two-thirds of all consumers now purchase at off-price retail outlets. Data also shows that some type of apparel is the most likely article in their shopping basket.
How Can Marketers Appeal to Millennial Consumers?
Despite this trend of seeming-frugality, there are definitely opportunities in the post-aspirational world for businesses that don’t operate dollar stores or off-price shops. Encouragingly, many of these opportunities center on today’s young adults.
Going counter to the accepted wisdom, the Checkout Tracking study shows that Millennials aren’t always thrifty — they’ll spend more, but only when certain conditions are met. For example, Millennials shop more frequently at brick-and-mortar stores, but they spend more money when shopping online. In fact, in three categories — clothing, electronics and home/kitchen — Millennials spend more than twice as much per order online as in-store. The gap is even bigger for older Millennials (those aged 25 to 35) than for younger Millennials (18- to 24-year-olds). Our data show that while younger Millennials spent an average of $23.98 in-store and $56.88 online, their older counterparts spent $24.19 in-store and $70.58 online.
Three factors seem to drive this higher online spending, and omnichannel retailers should take note full note of this, and make them available to their customers. When minimum order requirements for free shipping, ease of online price comparison for higher-ticket items, and/or easy return policies for items that often require returns (such as clothing) are in place, a retailer can anticipate higher online sales to Millennial shoppers.
They Want It Unique: The Signature Item
Another post-aspirational behavior we’ve noted is the rise of the “signature item.” We see these items as an attempt by a consumer to stand out in a personally significant manner. One example of a signature item might be a one-of-a-kind coat purchased from an obscure Japanese manufacturer — it becomes the central theme of that shopper’s entire wardrobe.
Or it could be the large-screen TV and soundbar combination that makes one young man’s apartment the go-to destination on game day. Or it could be the pair of vintage collectible sneakers worn by a college student … or the handcrafted leather-bound notebook the young professional carries to the office … or the eco-friendly lunchbox and backpack combo a young mother chooses for her child’s first day of school.
In simpler terms, a signature item is a consumer good that requires careful selection and lots of prior research. An easily found, mass-produced, available-everywhere item doesn’t fit the bill. For example, a recent study by NPD in partnership with Stylitics found that Millennial customers treat a handbag purchase as a multi-step process: 41 percent said they started thinking about their most recent handbag purchase more than a month in advance. A signature item must also have photographic appeal. For Millennials, a generation that records everything and shares it on social media, a signature item’s purpose is to be shown off, as much as it is to be used.
They Want to Nest: The Need to Spend Time Together
There is one place that closes the post-aspirational generation gap — one area where signature items are gaining as much traction among Baby Boomers as among Millennials: the home. While Millennials long for experiences, Boomers want to maintain connections as they age. The home is the common ground for both generational desires. Home cooking, home entertaining and home décor are extraordinarily important to both Millennials and Boomers. And both generations have developed an affinity for signature items around which friends and family can gather.
This nesting trend creates many opportunities both for retailers and consumer project manufacturers. Take for example the calendar of the holiday retail season. Our data shows that in-store purchasing of housewares and small appliances tends to happen on Saturdays in December. Holiday home and kitchen online purchases are concentrated during Black Friday weekend. A retailer seeking their fair share of such purchases among Millennials and Boomers will want to focus their efforts on those time periods.
Another large part of this trend for younger consumers is having fun with friends, or entertaining them at home. Games in particular allow for nesting and expression of individuality.
Keeping an eye on longitudinal data that looks at the same buyers across all channels and all retailers, both online and at brick-and-mortar, over time, allows retailers to find opportunity in the development of buying behaviors. Even post-aspirational shoppers — who appear so frugal, non-materialistic, and self-effacing — have their tender spots when it comes to shopping. You just have to know what they are.