With so many purchases to make for others every holiday shopping season, is it any surprise that some consumers stray from their gift lifts and indulge in some retail therapy for themselves every once in a while? Pushing shoppers toward last-minute impulse buys is a time-honored retail tactic, but new beacon tech – along with a new generation of millennial shoppers – is turning this into a science.
According to research from beacon marketing firm inMarket, proximity marketing with beacons will spur approximately $7.5 billion in spending from millennials alone during the 2015 holiday shopping season. If this were simply a result of normal holiday shopping behaviors, inMarket might not have much to point to in the way of new insights, but the report found that the Top 5 categories driving the beacon-enabled spending increase weren’t related to traditional holiday gift categories like electronics or toys at all. Instead, the top product categories included:
- Deli items
- OTC medications
- Wine and spirits
- Non-alcoholic beverages
What do these product categories say about how millennials are interacting with beacons? Retailers might have thought that beacon technology would initially help them create traffic where none existed before, but Kevin Hunter, president at inMarket, explained in an interview with Luxury Daily that the prevailing merchant opinion on beacons has matured to view them more as supplementary tools to drive incremental increases in purchase size and frequency for already engaged customers. Now that retailers have begun to unleash targeted promotions through beacons to tech-savvy millennial shoppers that don’t mind peeking at their phones while elbow-deep in clothing racks, Hunter believes that the demographic and the tech are close to becoming a match made in retail heaven.
“Millennials are the most desirable demographic for marketers, and beacons plus proximity tools — when coupled with app scale — can provide access to interested shoppers at their most receptive times,” Hunter told Luxury Daily. “The significance of $7.5 billion really is that marketers can impact this millennial spending while the shopper is in-store, ready to buy.
“We’re essentially taking marketers as close to the end of the purchase funnel as possible, and helping them make connections when shoppers are most interested, on their preferred device.”
Achieving any kind of market penetration with beacons doesn’t come cheap, though, and making $7.5 billion worth of inroads with millennials certainly doesn’t come with a discount for buying in bulk. However, the cost of marketing to millennials might be climbing too high for some brands already struggling with profitability. According to a report from advertising tech firm Turn, millennials draw 500 percent more marketing dollars than all other demographics combined. While advertising spending on display and social account for four times more activity, mobile rises to four-and-a-half while video sits at six times above the allocation for baby boomers, Generation Z and others.
While the number might draw its fair share of eyes, Max Knight, vice president of marketing services at Turn, told Adweek that the predominance of spending for millennials should key advertisers into a fact that seems to keep getting lost in the weeds: Millennials are too large a consumer segment not to warrant closer looks.
“People keep thinking millennials, millennials, millennials – but there are different types,” Knight said. “People keep saying this word, but it can’t just be this big group.”
True to form, Turn broke down the monolithic millennial generation into four distinct subsets, including “Struggling Aspirationals” (57 percent), “Successful Homeowners” (18 percent), “Active Affluents” (17 percent) and “Comfortable TV Watchers” (8 percent). While the majority of millennials earn incomes of $49,999 and under, the report indicated that at least 30 percent of this demographic earn upwards of $100,000 and are actively engaged consumers in the automotive, travel, investing and electronics industries.
Sooner or later, marketers had to dig deeper than media stereotypes on what makes millennial shoppers tick, but if that insight comes at the expense of advertising costs several hundred percentage points above the rest of the industry combined, it won’t be long before marketers have run their war chests dry.