Of all the platitudes that pundits use to describe the millennial generation, one of the most pervasive might be that these young consumers just don’t spend like their parents did. While any generation is large enough to defy such simplistic generalizations, there’s often a palpable angst among retailers that are unsure if they can sustain themselves on thin eCommerce margins shrinking thinner still from commercially lethargic millennials.
However, new research from Nielsen into a new class of millennial consumer could help retailers sleep through the night again.
Though millennials contend with the same economic forces keeping other generations from spending their paychecks at the mall or online, Nielsen found that nearly 27 percent of millennials qualify as what the report dubbed “upscale millennials” – young professionals earning $75,000 and more per year. When all of these millennials’ income-producing assets are included, they wield $157,500 in median liquid wealth, putting them 11 times above the average millennial in this category.
According to Nielsen, even though about 73 percent of millennials make less than what would qualify them as “upscale,” the quarter of the generation that does represents a significant opportunity for retailers. Moreover, the shopping preferences of this income bracket don’t appear to differ much from those of their generational peers – 43 percent of upscale millennials use coupons at least once a month despite being able to foot the bills on their own.
While upscale millennials might be bucking a larger trend within their generation as it pertains to their paychecks, data from Deloitte Consulting suggested that it will still take a decade or two before baby boomers and Generation Xers fall off the map in terms of retail spending power. Deloitte found that about 50 percent of public wealth in the U.S. is held by baby boomers, making them the top segment, where they’re expected to remain until 2030, when their share should fall to about 44.5 percent. In fact, it won’t even be until 2030 that millennials pass the 20-percent mark for their share of the country’s wealth.
Val Srinivas, banking and securities researcher for Deloitte, told The Wall Street Journal that this fluid transfer of wealth will have big effects on multiple industries.
“The wealth-management business is going to be huge,” Srinivas said. “There’s a lot of wealth that’s going to be created over the next few years, but who is going to hold this wealth? Generation Xers will see the highest increase in wealth.”
There is something to be said for planning for the future, though, and when the wealth concentrated in baby boomers and Gen Xers’ bank accounts starts flowing toward millennials, retailers should already have codified strategies in place to capitalize on the new spending giant on the block. Fortunately, Nielsen research has shown that millennial shoppers are some of the most trusting of and receptive to multiple forms of marketing, including online and mobile advertising. In fact, millennials were the most trusting segment for 18 of 19 advertising mediums that included television and print media, with 16 of those 19 categories likely to induce research or sales among millennial consumers.
“Millennials consume media differently than their older counterparts, exercising greater control over when and where they watch, listen and read content—and on which device,” Randall Beard, president of Nielsen Expanded Verticals, said in a statement. “But even if they rely less heavily on traditional channels, their trust and willingness to act on these formats remains high. While an integrated, multi-channel approach is best across all generations, it carries even more importance when reaching millennials.”
To capture upscale millennials – and the generation as a whole when it becomes the dominant spending force – brands need to get their names out in front of trusting millennials before their competitors do.