The rise of the Millennials and the new age of retail

So who are these Millennials?

They consist, depending on whom you ask, of people born from 1980 to 2000. They have come of age during a time of technological change, globalization and economic disruption. That’s given them a different set of behaviours and experiences than their parents.

For example, they are exercising more, drinking and smoking less, slower to marry, move out on their own and have shown different attitudes to ownership.

Having grown up being bombarded by advertising, Millennials tend to be sceptical about promotional material of any kind. Whether buying products and services or considering employment, Millennials are more likely to listen to their friends and peers than to be affected by marketing or public relations material.  

As the most ethnically diverse generation, Millennials tend to be tolerant of difference. Having been raised under the mantra “follow your dreams” and being told they were special, they tend to be confident. While largely a positive trait, the Millennial generation’s confidence has been argued to spill over into the realms of entitlement and narcissism.

Each country’s millennials are different, but because of globalization, social media, the exporting of Western culture and the speed of change, millennials worldwide are more similar to one another than to older generations within their nations. Even in China, where family history is more important than any individual, the internet, urbanisation and the one-child policy have created a generation as overconfident and self-involved as the Western one. And these aren’t just rich-kid problems: poor millennials have even higher rates of narcissism, materialism and technology addiction in their ghetto-fabulous lives.

Millennials are starting to come into their prime spending years. As they age into their 30s, they will be an increasingly important consumer group.

In 2017 the millennial spend in the US alone was $200 billion, now millennials have more spending power than the Baby Boomers and by 2020 they will have a collective spending power of $1.4 trillion. (Source: Fool.com)

With a changing global environment, it’s no real surprise that consumer behaviours are changing. If the luxury customer journey of the 20th century resembled a linear path, today it’s more like a choose-your-own-adventure novel. Truth is, the young luxury consumer is shopping all the time. Deftly bouncing from phone to tablet to laptop to flagship store to pop-up, where the final conversion occurs is, for the most part, immaterial.

Millennials’ affinity for technology is reshaping the retail space. With product information, reviews and price comparisons at their fingertips, Millennials are turning to brands that can offer maximum convenience at the lowest cost. They are the first truly digital generation but, when it comes to shopping, Millennials are still interested in the in-store experience, as they still represent a more intimate experience of the brand and products than shopping online.

They demand a customer-centric shopping experience—one tailored to their wants and needs as valued customers. As one shopper put it, “You want to feel welcome when you go to the stores.” In describing the ideal shopping experience, a Millennial noted, “There is [something] about the product and its cost, but there’s also a big part about being treated like a valued customer.” (Source: Highsnobiety ‘The New Luxury’ white paper)

With the closure of household names such as Toys-R-Us, Woolworths, House of Fraser, HMV and many department stores struggling, it’s understandable for many to think retail is dead.

Given the retail turmoil in recent years, it’s apparent that some struggle with the challenges. “The ‘old guard’ retailers fall into the trap of ‘we’ve always done it this way,’ rather than identifying changes in retail and how customers shop, then moulding themselves to fit that profile. This is perfectly summarised by Gary Vaynerchuk with the mantra ‘Innovate or die’:

Brands such as Lululemon and Sephora have adapted to the new retail environment and thrived in a hostile environment with a strong omnichannel approach.

What’s interesting is that about 70% of Lululemon revenue is generated within stores, not online. It attracts in-store sales through their concept and a strong sense of community. Upon entering the stores, shoppers enter a community where free yoga classes are offered in an environment that embraces wellbeing.

Catering to the millennial preference of experiences over things and peer recommendations and reviews, beauty retailers such as Sephora offer consumers a shopping experience where they can try, play with makeup before purchasing it, and even return used the merchandise.

Sephora unveiled “Beauty Hubs” in shops in France offering a fun experience to its clients. In the Beauty Hubs, a virtual lookbook with thousands of options are provided via iPad stations or interactive mirrors, where products can be virtually tried using augmented reality.

Beauty recommendations like skincare diagnostics and tutorials are also available, with or without the advice of the in-store expert. Items tested on these new digital tools can be purchased either in-store or online. Sephora has also created the Beauty Board, a social media platform, where followers can like a look, tag the products used and share them with the Sephora beauty community.

And finally, to complete the experience, Sephora also offers Beauty Classes with makeup lessons and workshops led by beauty professionals at the Beauty Hub.

Not only that but they have embraced the digital community. In order to help their customers find the right products, and to create a solid community of advocates, Sephora has just launched a loyalty members-only mobile and online social platform called the “Beauty Insider Community”. On the platform, customers can create a profile to get answers to beauty-related questions through the “Groups” and “Conversation” features, and to find new makeup inspirations and tutorials with the “Gallery” feature.

With this new platform, Sephora has positioned itself as a pioneer in the beauty sector. People will go directly to the platform to find inspiration and recommendations, truly trusting the advice of the fellow customers they will chat with, because it won’t be motivated by a commercial purpose. It will be just like receiving advice from a friend or via social media. Thanks to the new community initiative, Sephora will build trust and have an even more solid customer base. The platform can also provide priceless data. Sephora can monitor which items and topics are trending and create strategies accordingly.

Another great example of a brand catering to the millennial audience is Nike’s Colin Kaepernick campaign. They took the strategic position that a large segment of its fan base (millennials) will not only maintain their support, but will actually strengthen their reverence.

For Nike, that result outweighs the potential for a smaller slice of customers to jump ship in protest. They can bear conservatives, MAGA people [Make America Great Again], and alt-right extremists burning Nike products that they bought and own and causing a stir on social media.

It’s a brilliantly engineered marketing strategy. Brand strategist Phil Chang, summarises the campaign perfectly on how aligning with polarising athletes like Kaepernick and Serena Williams, reinforces the same brand values Nike has had since day one. That is to say: It’s still very much a company for those who “Just Do It.”

“New Nike ads with Serena (Williams) and Colin Kaepernick is why Adidas will never catch up (with Nike). I don’t even have to show you the ads and you know what I’m talking about. Despite (Adidas) doing everything they can to get in their own way as of late, Nike still stands on Just Do It, which is the clearest, most incisive articulation of a company’s point of view in history. The fact that you may or may not agree with what the ads endorse is precisely the point – businesses that are willing to back their values, especially at the cost of potential customers, always win. Strong POV and values = strong brand. Trying to be everything for everyone is how you start losing perspective on why you even exist in the first place.

In giving collabs and visibility in ads to an increasingly broad group of people, Adidas has relinquished control over what its brand is. They let too many random chip away at is equity… Nike is what sticks with you when you think about the historic and ongoing cultural impact of sportswear and sneakers. If you don’t believe me, ask yourself what the last Adidas tagline you remember is.

The takeaway is: hype is unsustainable. Play the long game.”

“Nike’s not a charity organization. It’s not like they’re doing this out of the goodness of their hearts,” Plain and simple—it’s money. It’s a long-term play to court Nike’s largest consumer base: two-thirds of its customers are younger than 35 and they comprise a diverse set of ethnic backgrounds, according to Bloomberg. Nike’s hedging its bets on younger progressives who are more likely to buy its products on a consistent basis, versus let’s say, older consumers who might a pair of trainers once every few months.

Either way, social media-led boycotts are not likely to hurt their bottom line, and Nike’s gamble has already paid off in the form of $43 million of earned media.

So in conclusion, brands need to genuinely treat consumers as people and not just ££’s and sales figures. And as people, they need to recognise that behaviours and trends will change over time. A successful brand doesn’t stand still, they understand and prioritise the needs, wants and desires of their customers, so they identify and embrace those changes and new opportunities to forge better relationships and create more love for what they do. Or simply put… continue to innovate or die!

Bricks & mortar retail spaces are not dead. Nike’s new amazing House of Innovation is testament to that. 

Customers still crave the in-store experience but brands need to ensure they integrate both the online and offline experience and offer and experience beyond just selling their product. Whether that’s politically and culturally motivated campaigns such as Nike or providing yoga classes and peer to peer platforms like Sephora.

Nike, Lululemon and Sephora have all proved you can thrive in a hostile retail environment, you just have to continually look forward and embrace the behaviours and needs of your customer. Sounds simple put like that, doesn’t it?