Goldman Sachs recently released a report that projected how a tidal wave of new moms in the millennial generation will reshape the economy, an impact that will partly be driven by pure numbers. Millennials are the largest U.S. generation of all time, and now account for 90% of all new moms. In case you were hesitating, now’s the time to buy stock in baby formula and ironic onesies.
The investment banking giant drew conclusions about how the values of this new generation of parents will determine which brands succeed and which fail. Goldman Sachs pegged Starbucks, Whole Foods and Chipotle as well positioned because “they serve foods millennials won’t be embarrassed to feed their kids” (wow), and have authentic brand narratives (because millennials can’t see right through that). Also singled out, were premium services brands like TaskRabbit and Blue Apron that offer time-saving options for tasks such as cooking and cleaning, a luxury that millennials may aspire to, but, then again, how many 20-somethings can hire some guy named Jared to come assemble their Ikea furniture for $65 an hour? Better idea: read the instructions*.
Oh, Goldman Sachs. What’s missing from your crystal ball?
These predictions don’t acknowledge the collision millennials are experiencing between their ideals and their need for financial pragmatism. Too many of the brands Goldman Sachs homed in on come with a premium price.
This is a generation of parents facing harsh economic conditions. A recently released assessment by Young Invincibles says this about the vice-like squeeze on millennials’ finances and buying power: high unemployment, potentially repressed earnings for years, and unprecedented levels of student debt (which, at over $1 trillion, now far surpasses credit card debt and auto loans in the U.S.) means millennials are the first generation in modern history with higher poverty rates and lower incomes than the two preceding generations.
Millennial idealism and aspirationalism, meet our stone-cold friend, reality.
A few facts show this collision in action. The Young Invincibles study pointed out that despite millennial parents’ desire for a situation in which both spouses have jobs and both take care of the house and children, they actually maintain a traditional division of paid work, childcare, and household maintenance.
Goldman’s report showed 70% of millennials rate home ownership as “important” or “important but not a big priority,” yet only 40% of 25- to 34-year-olds are homeowners. The report also notes that, in general, while quality is key for this group, price is a more important factor than it is for other generations.
Considering these facts, I’d project some alternate brand success stories. For example, I’ll take Aldi as a winner with millennial parents versus Whole Foods.
Aldi is a standout in value rankings and has a model steeped in cost efficiency. The shopping experience is minimalist, with one brand, size and price offered per item. Because of this, time in the store is hyper-efficient, a relief for many who want to eliminate the decision-making merry-go-round faced in zillion-SKU stores.
From an idealist and aspirational standpoint, Aldi offers a lot of organic and locally sourced foods. It shares the benefit of sourcing best practices with its corporate brother, Trader Joe’s. When stocking up on kitchen staples, millennial parents can find plenty of gluten-free options, craft-quality German Pilsner, award-winning wines, and items like almond butter and coconut milk. Not least of all, Aldi’s small standard footprint can easily work in urban settings.
Even though the current profile of a typical Aldi shopper is a woman over 60, I’m confident that persevering and creative millennial parents will discover Aldi and other affordable options like it that allow them to keep tabs on their finances while living the lifestyle they envision for themselves and their families.
*Assembly instructions may not account for missing parts, mind-boggling illustrations, and those tiny screws that you inevitably drop on your pile carpet and can never find again, no matter how hard you look.