Retailers have probably figured out by now that millennials are wired differently than pretty much any generation before them. After all, they are the first generation to come of age during the internet era, and most millennials were also among the very first social media users.
Millennials’ need for less material possessions, more freedom to travel and “experience” new things and desire to live in bustling urban centers near trendy dining and entertainment options has significantly reshaped the world of retail and will continue to do so.
“You will certainly find short-term worry about not enough people buying enough stuff, but that worry has always existed. In a society that bases its measures of success in terms of home prices, market values and GDP, there will always be a need to prompt citizens to buy more and more,” according to Joshua Becker, who authors the blog Becoming Minimalist, which is heavily geared toward millennials. “But beyond the short-term unease, there is a long-term anxiety clouding the retail market. This long-term worry is far more significant and can be summarized in one sentence: Millennials don’t want to buy stuff.”
First, this trend toward minimalism or “decluttering” among millennials is manifesting itself in where they want to live, work, shop, eat and spend the majority of their time. According to a 2014 Nielsen report, entitled “Millennials: Breaking the Myths,” 62 percent of millennials said they preferred to live in “mixed-use” urban centers, where local shopping options, restaurants and their work were close by; another 40 percent said they want to live there at some point in the future.
David Lykken, a 43-year veteran of the mortgage industry and president of Transformational Mortgage Solutions, wrote in a piece for National Mortgage Professional Magazine in May that millennials desire for smaller homes in urban neighborhoods is distressing the housing market for larger suburban homes and disrupting the natural flow of young family with children buys large home, children grow up and move out and the now-older couple sells their large home to a younger family with children and buys a smaller home themselves.
“While parents of millennials are downsizing, millennials who start families are not looking for the bigger homes that are left behind,” according to Lykken. “There is a clear trend in the millennial generation toward living in smaller spaces. In the future, it is possible that this may lead excess inventory on mid-sized to larger homes.”
Millennials currently make up about a third of the U.S. population and the majority of the workforce, according to Forbes, and their skill at using technology to find the best bargains and social media to influence their purchasing habits will be factors that retailers will have to contend with for years to come, as Gen Xers and Baby Boomers continue to age and their purchasing clout falls off.
Also, since millennials entered the workforce in the midst of, just before or just after the Great Recession, they also tend to be more bargain-savvy and frugally conscious than most consumers (how else to explain the 7.1 percent increase in the number of under-35 shoppers who make more than $100,000 per year who shopped at dollar stores between 2012 and 2015?).
“This is a generation that is bigger than the Boomers in population, but their wallets are smaller, and they are more into the style of life than the stuff of life. This is a big threat to retail. They’re not into a lot of shopping,” Robin Lewis, of The Robin Report, told Forbes.
The Washington Post even devoted an entire article last year to the flood of thrift shops, consignment stores and auction houses with items like furniture, silverware and other types of collectibles that millennials’ parents would like to pass down to them but that the millennials simply don’t want to be burdened by.
Perhaps Kelly Phillips, a 29-year-old real estate marketer from the Washington, D.C. area who is quoted in that piece from March of last year, best summed up millennials’ attitude toward material things when she told the paper: “My parents are always trying to give us stuff. It’s stuff like bunches of old photos and documents, old bowls or cocktail glasses. We hate clutter. We would rather spend money on experiences.”