Is all this catering to millennials a waste of retailers’ time? That’s what a new report from Forrester Research suggests. The problem? Millennials and other consumers under the age of 45 don’t have much money and don’t respond to conventional marketing, while older consumers have money to spend, according to Bloomberg News.
“The Future of Shopping” report by Forrester analyst (and former Saks Fifth Avenue marketing director) Sucharita Mulpuru, which was released on Thursday (April 9), also points out that the shift in who has spendable dollars isn’t just a result of the recent recession. Real incomes have fallen since the 1970s for many households, and younger consumers are now saddled with more student debt.
“There’s this obsession with millennials,” Mulpuru told Bloomberg. “The truth is, millennials aren’t spending any money with anybody because they don’t have any.”
That’s a recommendation that defies current conventional wisdom, which says that millennials — consumers born after 1980, who now conveniently fit into the 18-to-35 age group that’s been a darling of retail marketing since the rise of the baby boomers — should be the primary target of retailers, especially big retailers.
Retailers must also keep costs down to stay competitive, but have to do that without hurting customer service in what’s an increasingly competitive retail environment, the Forrester report said.
That means retail chains should be looking to a different kind of technology than the current retail-tech fads are offering such as beacons that detect a customer’s smartphone and location in a store and use that data to instantly send the customer a coupon for a nearby product, Mulpuru said.
Instead, retailers should be looking for equipment that helps stores stay open earlier and later without extra costs, such as self-checkout kiosks, and taking their cues from chains like Trader Joe’s, Home Depot and Nordstrom, which have better-trained associates who focus on keeping shelves stocked and keeping customers engaged, according to Forrester.
Not everyone looking at the data comes to the same ditch-the-millennials conclusion, though. A separate whitepaper out this week from Synchrony Financial found that boomers make up 50 percent of retail sales, compared to 10 percent for millennials, but adds that “retailers who do not fully understand and engage the millennial customer may eventually find their strategies out of touch with their future core shoppers.”