The new year will bring a new round of one of the hottest games in the payments-and-commerce world: What makes millennials tick?
The goal? Sift through the ambivalent reports about that consumer segment — steadily advancing toward their peak earning — to figure out how to best sell to them, serve them up worthwhile transactional experiences and keep them coming back for more.
The first key to success in that game? Recognizing that not all millennials are the same, even though the word has become shorthand not only for an entire, expansive generation, but a phrase used by some older people as an insult akin to “these darn kids today.”
As defined by the U.S. Census, millennials are 25 to 34 years old. However, PYMNTS research describes a consumer segment that goes beyond that official government definition, one that includes the meeting point of the millennial and Generation X generations. The reason for that is because data shows a significant difference in payments and commerce between this segment and the Census view of millennials.
Among the most influential drivers of retail change is a subset of consumers PYMNTS identifies as “Bridge Millennials.” Between 30 and 40 years old, this group is more likely to have a college degree, be employed and earn higher salaries than other consumers. This segment also spends approximately $2,225 per year on retail purchases, which is about $830 more than baby boomers and nearly $300 more than younger millennials.
Need more persuasion?
Consider apparel, on which U.S. consumers spend $400 billion annually, and where Bridge Millennials are having a significant impact, according to the PYMNTS Connected Consumer Report™. Among the findings: 25 percent of Bridge Millennials that buy online prefer Amazon, and 50 percent of consumers prefer omnichannel shopping experiences. That means apparel retailers must offer something Amazon does not (or otherwise find a way to deal with the Amazon preference) or provide the type of consumer experience demanded by these consumers, or risk losing their businesses.
After all, Generation X, millennial and Bridge Millennial consumers want more from their favorite stores than just clothes — they want experiences. Better yet, meaningful experiences. Top apparel retailers are doing their best to provide these for them, inventing new and interesting ways to engage with consumers, both online and in stores.
Retailers are also taking note, for both traditional millennials and Bridge Millennials. For instance, Walmart-owned Jet.com is broadening its selection and rolling out same-day delivery in the Big Apple for the kinds of items millennials purportedly crave, like craft beer and local foods.
Were one playing millennial bingo, that effort would fill at least two spaces: As a group, millennials are attracted to artisanal products from local (and organic) producers. Further evidence for that comes from a potentially unlikely product: canned tuna, the latest item that millennials are accused of killing off. A study from the Organic Trade Association (OTA) said that 52 percent of consumers who prefer organic products are millennials, and that such consumers eat vegetables 52 percent more often than older generations.
Perhaps one reason millennials — all of them, not just Bridge Millennials — are so easy to scapegoat is the seemingly contradictory nature of information describing their income and consumer potential. (A lack of clarity always encourages the propagation of theories that bend toward the accusatory and even conspiratorial.) Just before the Christmas holiday, for instance, reports from Pew and the U.S. Federal Reserve seemed to give competing views about the household incomes of millennials (higher than many observers might think, it turns out).
Yet, no matter what, millennials will certainly become an increasing force in payments and commerce in 2019 — a trend confirmed by PYMNTS research.
Take those Bridge Millennials again. They are the consumers coming into their peak earning years, after all. PYMNTS found 48 percent of them prefer to buy products online, and 17 percent use mobile phones to purchase apparel and accessories. While most love shopping in stores, Bridge Millennials also use their mobile devices like a compass, researching products and making decisions on the go.
Smartphones, too, are getting the millennial treatment.
Samsung is overhauling the company’s smartphone strategy, lowering the price point of its handsets to appeal to more of those younger consumers. CEO DJ Koh told CNBC that the company plans to bring cutting-edge features to the lower-end models, with the first of the new devices slated for later in 2018.
Another Japan-based company, Toyota, aims to turn more millennials into car owners via the brand’s redesigned Corolla Sport hatchback and its newest Crown model. They are reportedly Toyota’s “first generation of fully connected cars,” featuring technology that enables such tasks as closing car windows via drivers’ mobile phones and virtual assistance services that offer navigation guidance, among other benefits.
Retailers and payment services providers risk falling behind if they ignore those preferences. After all, PYMNTS found that Bridge Millennials are more likely to abandon a merchant than other consumers, lending significant weight to securing their loyalty, and putting tremendous pressure on retailers to pursue strategies that can keep these influential consumers happy.
Gas Station Commerce
While Bridge Millennials are proving to be powerful bellwethers in retail, they also wield just as strong an influence elsewhere — including the gas pump. They use their mobile phones for a wide range of purposes related to gas purchases, such as finding a nearby station, searching for the cheapest prices, getting directions and accessing discounts.
For the recent Paying at the Pump Report™, PYMNTS surveyed more than 10,000 consumers about their mobile app usage during their most recent gas shopping experiences. Twenty-two percent of the sample respondents were Bridge Millennials.
One requirement to understand those consumers is getting rid of inaccurate stereotypes — in this case, millennial ownership of vehicles and purchase habits when it comes to gas. PYMNTS found that 64 percent of Bridge Millennials reported buying gas at least once per week, compared to 58 percent of the sample. They also buy gas daily at twice the rate of other consumers, 12 percent compared to 6 percent.
In addition, mobile plays a big role in fuel purchases and related tasks for millennials — a trend that promises to gain even more energy in 2019. Roughly 39 percent use mobile apps to find the best gas prices, 31 percent use them to find gas stations and 21 percent use them to get directions, regardless of the apps’ abilities to enable payments at the pump, according to PYMNTS research.
There’s no time like the present to figure them out better as consumers — and respect them as such. The sooner the better, with their loyalty up for grabs as their incomes increase.