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Let’s face it: Retailers need millennials, not the other way around.
Millennials spend nearly $600 billion every year on retail alone. By 2020, they are expected to represent nearly a third of total retail sales in the United States. Their sheer numbers and strong online presence mean merchants big and small are dependent on this customer base now more than ever. Take Amazon Prime, for instance, where close to 40% of users were between the ages of 18 to 34 in 2017.
But while they may be flexing their muscles in retail, millennials are highly budget-conscious. Even amid a strong economy, they tell pollsters they’re concerned about the state of their personal finances. The majority of them worry about debt every day, and with good reason: Millennials owe an average of $42,000 each, mostly in the form of credit card debt.
In response to these financial woes, millennials are keeping debit cards alive. This generation uses debit cards for purchases more than any other form of payment.
Meanwhile, millennials are enamored of online retail giants like Amazon and Alibaba. Fewer than 1 in 4 millennials will proceed with a consumer tech purchase if it’s not available on Amazon. Then there’s Alibaba, whose Singles Day — a hit amongst millennial shoppers — exceeded $1 billion in sales within just 85 seconds.
But such promotions aren’t an everyday occurrence. Given their affinity for top-notch deals and their persistent anxieties about debt, how can merchants help millennials get the most out of the retail experience without busting their budgets?
As avid Netflix viewers, millennials keenly appreciate the value of personalized recommendations and customized experiences online. Shopping should be no different. This is where retail tech comes into play: Thanks to artificial intelligence (AI) and predictive analytics, retailers are developing better insights into what their customers actually want, and millennial shoppers stand to gain.
Startups like Dynamic Yield and Twiggle are using AI to improve retailers’ personalization capabilities. Dynamic Yield harnesses machine learning to automatically personalize customers’ recommendations and messages in real time based on their online behavior, while Twiggle uses natural language processing to optimize search results, helping them better reflect a shopper’s true search intentions.
Retailers embracing personalization technologies will reap big rewards. The Boston Consulting Group forecasts that between 2017 to 2022, there will be an $800 billion revenue shift to the top 15% of personalization performers. This shift will be driven in no small part by younger shoppers. According to a recent survey, 67% of millennials and Gen Zers expect offers from companies to always be personalized, compared to only 51% of Gen Xers and 35% of baby boomers.
Provide Loyalty Programs
Millennials understand the value of a good loyalty rewards program — that’s why they’re members of 6.5 on average. But for shoppers on a budget, loyalty programs are especially valuable.
Among millennials, 55% say that some type of reward card would keep them most engaged with a given retailer. By offering a loyalty program, merchants are ensuring conversions and guaranteeing their millennial customers return. But make sure to implement an omnichannel rewards approach, as 54% of millennials report that a mobile app alone is not sufficient when accessing loyalty rewards.
Despite perceptions to the contrary, there’s research suggesting that millennials are the most brand-loyal generation. For retailers vying to win high-value, brand-loyal customers, a loyalty rewards program is an ideal place to start.
Time Equals Money
In shopping as in so much else, time equals money, and this holds particularly true for digital-native shoppers. Retailers who help speed up the shopping and checkout process, then, are a millennial shopper’s best ally.
According to data compiled by Statista, one in five shoppers have abandoned their online shopping carts because the checkout process was too lengthy. Fortunately, millennials have a growing number of options for pain-free checkouts. Walmart, for example, has begun rolling out technology that allows customers to ring in and tally items as they shop, helping customers stay within their budgets while avoiding long checkout lines. Nordstrom Rack, meanwhile, has also introduced mobile checkouts, while the popularity of Amazon Go’s cashierless stores is spurring retailers to begin offering more efficient checkout solutions, including “scan and go” technology. To make checkout and payment even easier, a growing number of retailers are introducing payment plans that offer greater flexibility and are better-suited to customers’ budgets.
There are few shopping experiences less pleasant than long lines or sticker shock at checkout, but through new technologies and payment options, you can help millennial shoppers save both time and money.
Know Their Value
Since 2016, millennials have been the largest living generation, and they’re also the largest segment of the labor force. Such statistics — and millennials formidable spending power online — prove they are a force to be reckoned with in the modern marketplace.
But millennials are still quite a ways off from reaching their peak earning years, which most college-educated workers enter in their 40s and 50s. That means retailers hoping to reach this indispensable demographic can’t afford to ignore the unique financial needs of young shoppers.
Retailers should know and respect millennials’ value.
March 6, 2019 at 08:58AM
Forbes – Entrepreneurs