Millennials determine future of retail
It turns out that the Baby Boomer generation was just the opening act. The Millennials are here, and the world changed overnight, at least for marketers. Brand loyalty is out the window, transparency rules and convenience is king. Millennials are savvy about marketing, and they want what they want when they want it.
The Millennial generation is roughly defined as those born from 1982 to 2001. These are the children of the Boomer generation, and are sometimes referred to as “Echo Boomers” or “Generation Y.” They outnumber the Boomers, the oldest of them are just hitting 30, and they are beginning to flex their economic muscles. There is little doubt that over the next decade the Millennials will be the driving economic force.
Everything that we used to know as marketers appears to be up for grabs, from flavor profiles (this generation was raised in restaurants from which they developed very sophisticated palates) to packaging (cans are old-fashioned, but pouches and cartons are hip) to the shopping experience (the “fun” factor is a critical element in the shopping decision).
Digital media — which gets a lot of attention on its own — is important, but as a medium rather than a novelty. This is a generation that grew up with computers and online access, and sees connectivity as just part of daily life. Digital access is an expectation and cost of entry.
Price remains a primary component in the Millennial decision-making process, but with a twist. This group came of age in the worst economic times in recent history. But in addition to low price, there’s now an expectation for an emotional connection as well, and price is viewed more holistically as part of an overall value equation rather than a stand-alone determinant.
All of these factors are enough to keep even the most experienced marketer awake at night. The good news is that there is time to experiment, learn and adjust. The hard part for most marketers is in making the necessary changes to their thought processes and being willing to adapt to the needs of this challenging new market.
For drug stores, opportunity abounds. Drug stores already have convenience going for them, which is a big plus for Millennials. In fact, according to a recent SymphonyIRI study of Millennials, drug store spending is currently about 13% above average. This generation is just beginning to form shopping rituals, so there is time to influence those patterns before they are set. Despite their relatively modest financial status today, according to Pew Research, Millennials are expected to generate about $65 billion in consumer packaged goods sales over the next 10 years.
There are three major initiatives that drug stores can begin to undertake today to capture more of this market:
1. Pay close attention to Millennial shoppers. This cohort is very much still developing in terms of loyalties, behaviors and rituals. As with the Boomer generation, this growth will happen in ways that are unexpected in many cases, and the best strategy is to be open to those changes and willing to respond accordingly.
For example, Millennials are currently very value conscious, but as the economy improves and they move into higher-paying jobs, this behavior may change. Financial adviser Jefferies recently coined the term “YEMMie,” for young, educated, millennial moms. They will be a driving force for the entire generation, and will set the direction for much of the shopping behavior.
2. Combine digital/mobile media with other media. Make sure all communications are integrated, consistent in their message and relevant to this audience. They will check the price, but will also include convenience and other value-added considerations into the decision process. Focus on making an emotional connection via all media elements, including the store itself.
3. Partner with CPGs on packaging and product. Green, sustainable and out of the ordinary pay big dividends here. Take a look at store brands and make sure they reflect this direction as well; that will help to set the tone for the store overall. Think outside the can and box, and look for innovative packaging that stands out and provides unique benefits.
The next few years will show which retailers are going to prosper with the Millennial generation and which will be seen as part of the “old guard.” The challenge will be to keep up as this generation matures both intellectually and financially, and remaining part of the consideration set will be an ongoing learning experience for all retailers. The good news is that drug stores are already ahead of the game, so now is the time to get proactive and keep that advantage gap.
Jeff Weidauer is VP marketing and strategy for Vestcom International, a Little Rock, Ark.-based provider of integrated shopper marketing solutions. He can be reached at firstname.lastname@example.org, or visit www.vestcom.com.