Chain Store Age: Gen Y – Wake-Up Call for Retailers
By Marianne Wilson
Through special arrangement, what follows is an excerpt of a current article from Chain Store Age magazine, presented here for discussion.
Tracy
D. spends her weekends surfing online, hanging out with friends, text messaging
on her cell, watching TV and movies, and shopping – many of these activities
simultaneously. A high-school senior, she has little free time. Not that she
minds. She’s been programmed since birth, from play-dates to soccer practice
to sleepovers and after-school SAT prep courses.
Tracy hasn’t been spoiled
as much as indulged by her baby-boomer parents eager to expose her to the best
of everything. She’s had input into her family’s buying decisions for as long
as she can remember. Allowing her a generous amount of freedoms, her parents
are never out of touch. Tracy calls her mother several times a day – just to
say hi and see what’s up – and text-messages her father equally often. As she
looks to college, she is amazingly confident about who she is and her relationships. “I plan to stay connected to my friends and family back home,” she said.
Technologically adept, unfailingly optimistic and immersed online, she is a rough composite of the Gen Y generation poised to overtake Baby Boomers in size and marketing clout. With most demographers placing their birth dates between 1982 to 2000, the elders of this generation are just starting to enter the workforce and flex their spending power.
For retailers that have long cast their fortunes with Boomers, Gen Y, also known as Millennial, is a wake-up call to a new type of consumer, one that expects information to be tailored to its individual needs and delivered digitally. Media- and brand-savvy, they can quickly see through the hype.
“For Millennials, being fake is worse than being uncool,” said Nita Rollins, director of thought leadership, Resource Interactive, a Columbus, OH-based interactive agency focusing on the digital experience.
But Gen Y is probably best defined as the first generation born in the age of the Internet. As opposed to traditional advertising, grassroots marketing, local events, whacky promotions, online interactive campaigns and pop-up stores catch their eye.
A critical point to understand is Gen Y’s connectivity in cyberspace. From texting to podcasting to posting on MySpace, members are perpetually connected to each other, constantly sharing opinions and influencing one another.
“Retailers have to learn how to market to a community and tap into Millennials’ social networks,” said Ms. Rollins.
Other insights found by Resource Interactive include that Gen Y thinks of themselves as highly expressive, seeking out creativity and products that show some individuality. As a generation accustomed to getting what it wants when it wants, Gen Y values immediacy. They won’t stand for long lines and or even long waits for online buys. They want broad access to information, particularly online reviews of products from their peers. Finally, Gen Y members constantly filter through messages and media it finds irrelevant and have zero tolerance for intrusive ads, but humor can be a big draw.
“If you don’t want to get filtered out, make sure your messages are fun and entertaining,” Ms.
Rollins said.
Discussion question: What should retailers and vendors be doing
to prepare themselves as the Gen Y generation increasingly gains spending
power? What will retailers have to do to connect with a generation that some
call the most narcissistic ever?
Any retailer who is just waking up to the individualized needs of Gen Y is way behind the curve. Organizations that stay on top of their customers have been preparing for these shoppers for years. The real innovators are already trying to crack “Gen Z” – today’s preteens and tweens who, when they get older, will make Gen Y look like a quaint relic from a simpler, less hectic time.
Transparency and authenticity will be big. By providing real value and also by being realistic about what their products and services can and can’t do, retailers and vendors can position themselves to be part of milleniums’ world. Embrace online reviews and price comparisons now, get used to blogs and integrated consumer ideas and feedback into your offering. This generation expects to be part of the dialog and they will simply dismiss those who don’t include them.
Yes, Gen Y is the first generation raised with the Internet as an integral part of their lives, which means they are quite comfortable with the transformation in how consumers research and purchase products. The most crucial element influencing purchasing decisions is still word of mouth and friends’ recommendations, but what was once conducted face-to-face is now conducted online and peer-to-peer, in chat rooms, on social web sites, or through email and instant messaging.
Retailers will have to reach, communicate with, merchandise and market to Gen Y–and all their customers–through all channels and platforms. Social media and customer communities should now be part of every retailer’s long-term marketing plan. They can be used to cull information, test ideas, do surveys, observe the interaction among community members, and communicate targeted messages.
Trying to communicate to Gen-Y? If your advertising is full of baloney, sandwiched into a lot of similar clutter, and broadcast with no wit, aimed only at the naive, you’re wasting a lot of time and money. Not just to the Gen-Y audience. To every audience. Gen-Y wants the same thing everyone wants: something special, genuine, communicated with wit. Let’s describe most advertising for what it really represents to everyone of all ages: repetitive drill of the boring sameness within similar clutter, insulting the intelligence of almost everyone. Predictable messages, presented predictably, are unlikely to bring special results.
The Gen Y effect reminds us of the importance of consistent information through out all selling channels. The tech-savvy Gen-Yers are, as the article mentions, frequent multi-channel shoppers. A typical night at the mall is often followed up by the typical night on the net. Different prices are immediately noticed, and the crowd comes and goes depending on consistency.
Too many retailers struggle to manage multi-channel consistency. Those who do will use it as a strategic competitive differentiation, and reap the rewards from tech-savvy Gen Yers.
Traditional marketing and brand delivery is not effective for this demographic. This group wants to get and give feedback their way–they are more than willing to provide feedback, but they want to do it in a way that works for them. Text messaging, picture messaging, and community networking are the primary connectivity of this generation. Traditionally, retailers and CPG brands have not entered this arena. If retailers are not looking at ways to use SMS messaging and community sites to make it easier to speak to and get feedback from this demographic they will fall behind and miss this segment.
Understanding this generation and developing effective marketing is a major channel. We can’t just adapt current marketing strategies to them. They don’t use the internet the way we do and it’s not just that they spend more time on the internet. They think of the internet first whenever they have questions; they think of the internet first whenever they want to contact someone; they think of the internet first when they want information about products; they ignore advertising as much as possible; many have a strong interest in sustainability. So, how do you use the internet or any other form of communication to reach this group who ignores advertising and wants non-puffery communication and wants answers to questions? Identifying touch-points and developing appropriate communication are a challenge.
“For Millennials, being fake is worse than being uncool.” This is an extremely important dimension when trying to establish commerce with this important group. As noted, Millennials are technologically adept, unfailingly optimistic and immersed online, but they are also quite savvy. They are sensitive to insincere pandering and will tune these messages and brands out very quickly if their messages are perceived as such. They are taking control of who and how brands communicate with them. They will respond to trusted filtration. This group gets most of its political science information via The Daily Show with Jon Stewart or The Colbert Report. The information is delivered tongue-in-cheek with humor. It spoofs ‘legitmate’ news because the trust has been lost. Apparently known irreverence and sarcasm is cool? Perhaps brand advertisers should take note when trying to establish a meaningful dialog with this audience.
Gen Y presents opportunities and risks to marketers and retailers. Although there are different ranges quoted by different sources, this demographic group can broadly be defined as people born between 1978 to 1998 (arguably) and has an approximate size of 70 million, as big as if not bigger than the baby boom population. This puts the average age of this group at 19, with the oldest just under 30. This is the generation that is very comfy with information and did not have to get used to the internet, because it was already around by the time they were old enough to sit up. Typical ways of marketing may not necessarily work with this group; innovative retailing and marketing means need to be adopted. Online is an obvious candidate, since they spend a majority of their waking hours on the net. But even within that there are ones that a Gen Xer may respond to but a Gen Yer may not respond to; for example pop-up and banner advertising may work well with a Gen X. On the other hand blog advertising and advertising on already high-volume websites like MySpace and Facebook may be a better option. Ultimately retailers may have to completely toss out some of the boomer generation tenets of retail marketing that have become well-entrenched. Case in hand Wal-Mart’s failed TheHub.
Underestimating this generation will do retailers and marketers no good. At well over $ Billions a year in spending, they are sizable enough to make or break brands. At the same time, some of the learnings of consumption patterns from the baby-boomers should indicate that in the coming years, the bulk of this group will have finished college and started working, so they will probably grow out of college clothing to more work-style clothing. This is just a quick deduction, but this is the type of logic that may still be applicable.
Marketing to the Gen Y generation will be all together different. Lisa is right; get used to blogs and displaying the authentic facts. The Gen Y group is into individualization. So, the first thing I would do is put together a focus group of Gen Y diverse culture individuals who could help guide your path. Gen Yers will be into a high tech, “want it now” philosophy. Therefore, today’s marketing teams, consultants and analysts must get into their heads and follow their guidance signals. Beam me up Scottie!
This is one of those $64,000 questions that retailers need to answer. One set of very constructive answers can be found in the learnings of the NACS/Coca-Cola Leadership Council Study on Convenience Teens, i.e., 14-20 year-olds, that was completed about about 18 months ago. (Study is available at www.ccrrc.org under the North America tab.)
Whether they are really the most narcissistic ever or not, this generation is more traditional than many of us would ever guess, i.e., they really appreciate quality and personal service. They also have a completely different set of needs as a result of their very different lifestyles:
>They tend to eat by occasion or on the basis of need versus at meal time.
>Their use of technology, e.g., text messaging and the internet, replaces more personalized one-to-one conversations.
This study is based on a large sample survey of teens that do shop in convenience stores, but it looks broadly at their behavior,i.e., well beyond the convenience stores. It’s worth careful study for anyone who wants to prepare to serve this new market segment.
I’d also suggest that anyone who has a real interest in this area send me an email since we will be producing some very specific action reports describing what retailers can do to “win the hearts and minds” of younger shoppers in the areas of technology, use of foodservice, gasoline, branding, and even the provision of restrooms for this nomadic shopper segment.
Regarding S4WD’s comment: “Somebody explain this quote from the article to me: ‘Allowing her a generous amount of freedoms, her parents are never out of touch.’”
I was the editor on the piece. We might have taken a shortcut here to save space, but the point the author was attempting to make was that this generation has a lot more freedom to do and explore things than past generations. That comes partly from their over-indulgent Baby Boomer parents. At the same time, she stays in touch with her parents. That might point to her confidence and family loyalty, but it also underscores the connectivity the so-called Gen Y generation embraces in so many ways. The connectivity issue was a major point in the article.
I don’t know if it was intentional but there is a real tie-in between two of today’s RetailWire discussions: Gen Y marketing and C-Stores/prepared foods. While the majority of commenters here have rightly focused on the clothing and electronics shopping habits of Gen Y’ers, there is also a seismic shift in how the Millennials eat, cook, and shop for food and the amount of their available funds they are willing to pay for such convenience.
A majority of the teens and young adults that I observe not only have no desire or patience to take the time to bake and cook favorite family recipes, but would have no idea how to do it even if they wanted to. This is a change from Boomers and Gen X’s who some nights may pick up pizza, fast food and takeout on the way home from work but are likely to balance that by more traditional cooking on the other nights and for entertaining on weekends. In the future, I see an increased demand for small batches of prepared lasagna, pre-made ethnic specialties and salads, pre-mashed potatoes, already cooked veggies, meats and fish, all of which can be microwaved. For dessert: pre-cut fruit and already baked cookies and cakes. It is an expensive way to live but seems to be reality for many in Gen Y as they start out on their own. With the huge size and influence of this emerging generation, it will be interesting to see how food merchants respond and meet Gen Y’s demand for variety, speed, and convenient locations.
Somebody explain this quote from the article to me:
“Allowing her a generous amount of freedoms, her parents are never out of touch.”
I would argue that there is no GEN Y/Millennial generation at all. The very technology that is so often cited as an icon of this group has in fact driven far more rapid generational change than that traditionally bounded by languorous 20-year biological increments. I’d say there are at least three distinct value set changes laced through 1982-2000 births. Check out a book called The Consistent Consumer for more.
The immediacy and digital requirements of the Gen Y are not that much different than that of the previous generation. Instant gratification was the buzzword to describe Gen X and this immediacy requirement is the same. However we outline the digital age, it is very similar to the digital age of yesteryear, only the hardware is different. Before we saw ads on TV, now we are seeing ads on our cellphone handsets. The requirement for immediate communication has always been desired in the workplace, and this is no different today than 20 years ago…just more prevalent and less expensive (as well as smaller). The rules of communication haven’t changed for delivering the advertising message to this new generation, only the methods and media through which the communication is delivered. Our promotional messages and requirements are adapting so fast that trying to identify a sudden or even a dramatic change is not a clear task, in a paradigm which adapts to suit change every day.
There’s a feedback loop to Gen Yers too–their baby boomer parents, being as active as ever, are not taking their kids’ techno-savvy lying down. A lot of them are getting roped into social computing because they’re trying to keep pace with their kids. So, as a retailer, if you think you can stay comfortably in your baby boomer market and not pay attention to MySpace, think again….
At this year’s NRF Big Show, there was a company that was showing off their new dressing room technology. A camera in the dressing room takes the shopper’s picture in each outfit the shopper tries on. The shopper can then get instant feed back from friends or family by sending those pictures to any cell phone or computer that the shopper wishes.
Gen Y is the online generation. They want instant communication and connectivity. They don’t know life without internet, just as Gen X doesn’t know life without television.
Retailers/vendors need to market to Gen Y through channels that they use: text messaging, email, podcasts, as well as YouTube and MySpace postings. Talk to the generation on their playing field. Some of these off beat marketing/advertising channels will become mainstream for all consumers in the very near future.