While retailers have long been told that America’s Millennials will provide an enormous stream of free spending in the decades ahead, a new study from WSL Strategic Retail points to major shifts in Gen Y’s shopping savvy. It makes sense that they would be more cash-strapped than older generations, of course, with many in the 18-to-34 age group saying they don’t have enough scratch to cover the basics; 24% are in financial turmoil. There are other, more subtle differences, including a growing reluctance to ask for financial help from their families, too. Wendy Liebmann, CEO of WSL, tells Marketing Daily what’s happening with Gen Y’s spending habits.
Q: Does it surprise you to find Gen Y doing so much poor-mouthing?
A: Well, it wasn’t so surprising that we’d hear concerns about money from this younger generation; certainly, we’ve been hearing it for some time. What’s interesting is the magnitude of this. In this survey, which included upwards of 1,900 adults, they were basically recognizing that the aspirations they’ve had, the way they thought about the economic promise in life, have really been changed. And that was true for a significant number of them. The thoughtfulness of their responses was striking to us. For brands and retailers, that means the youth market is not the golden ticket to the future, as it has so often been described. That idea has to be rethought.
Q: Gen Y is often described as “adultalescent.” Does this concern about cash mean they are growing up?
A: What we’re beginning to see is that this group is settling in, and saying that this economic situation isn’t going to go away anytime soon. Their parents can’t talk them, walk them, or spend them out of the problem, because the parents are also struggling, and Gen Y knows it. It’s a reality check, and they’re saying: 'This is what my life is going to look like.’ It may seem like an extreme comparison, but in the same way the Great Depression shaped people’s views about money, this generation has really undergone a big change.
Q: What should brands and stores do differently?
A: Change the way they communicate. The idea that aspirational shopping is still, 'Here’s an expensive handbag, I’ll just charge it or ask my parents to pay for it’ just doesn’t fit. Shoppers of all ages, including this one, are pausing before making any purchase, with 66% saying 'Is this going to be money well spent?’ before they make a purchase. Even among households with $150,000 or more, 47% are using that kind of cautious pause. Overall, shoppers are much more circumspect. For example, 75% of women now say it’s important to get the lowest price on everything they buy, up 12 percentage points from 2008, and 22 percentage points from 2004.
Q: What else surprised you about this data?
A: That so many people earning $150,000 think of themselves as struggling. About 30% of Americansin the $100-150,000 household income bracket claim they can only afford the basics. They don’t feel affluent; they now see themselves as middle-income. Given that the median income is something like $46,000, that’s saying something. Brands and retailers can’t ignore this.