With Taylor Swift’s Eras Tour heading to Europe and stimulating the economy there, the U.S. economy faces a “cruel summer” with forecasts of below-average growth. One key group with growing economic influence? Millennials.
Born between 1981 and 1996, millennials are now entering middle age and reaching their peak earning and spending years. Here’s why brands should pay attention to millennial spending habits right now:
- With over 83 million members in the U.S., millennials are the largest generation in American history.
- They spend $1.9 trillion on retail annually.
- Their annual expenditure averages around $70,000, including housing, just below the median millennial income of $71,566.
- Millennials account for 28% of all U.S. retail spending, a figure projected to rise to 31% by 2030.
- Their annual spending is 5% higher than the average U.S. consumer, surpassing baby boomers and Generation Z, though 21% less than Generation X.
These figures highlight that millennial spending significantly contributes to the U.S. economy. Brands that understand their buying habits can effectively tap into this substantial market segment.
Financial Health Influences Millennial Spending Habits 📈
Millennials are more likely than any other generation to meticulously budget their spending. This tendency stems from economic challenges such as a higher cost of living and wages that have not kept up with inflation in America, making their money stretch less than they would prefer.
Many millennials carry substantial debt, particularly from student loans, as the cost of a college education has skyrocketed compared to when their parents, the baby boomers, attended school. This debt often discourages them from making significant purchases like homes or cars. About 21% of millennials have savings between $1,000 and $5,000, while 31% have less than $1,000 saved.
They are also known for their careful attention to competitive pricing and often spend time researching brands and products before making a purchase.
Millennials Value Experiences Over Material Goods 🌟
Researchers have observed a significant shift in consumer behavior: millennials prioritize experiences over tangible items. This trend distinguishes them from older generations like baby boomers and Gen Xers.
Millennials are more inclined to spend their time and money on travel and dining out. For instance, a study revealed that 79% of millennials would dine at a popular restaurant, compared to 66% of Gen Xers and 56% of boomers. 🍽️✈️
Embracing Convenience in the Digital Age 🚀✨
Firmly within the digital native subset, millennials rely on tech and apps to simplify their lives. They use ride-share apps like Lyft and Uber, and food delivery apps like GrubHub and DoorDash, to save time, even if it costs a bit more.
For instance, if I want takeout from a downtown restaurant, I have two options: call and place my order, drive to the restaurant, park, go in to pay and pick up my food. OR I can use a food delivery app to have it delivered to my door for a small fee (contactless delivery, of course).
Restaurants, especially small businesses, prefer the first option because they earn more, but I’ll keep choosing the one that gives me more time in my day. ⏳🍽️
Millennial Habits: Purposeful Spending 💸🌍
Millennials gravitate towards ESG (Environmental, Social, and Governance) brands that are ethical, authentic, and transparent. 🌱✨
- 75% prioritize sustainability in their purchases 🌿
- 62% favor products that reflect their political and social beliefs 🗳️
To win over millennial buyers, it’s crucial to distinguish between brands that genuinely care and those that merely use purpose-driven marketing as a cash grab (the latter is facing backlash). Simply adding DEI mentions or a recycling symbol isn’t enough. 🚫
ESG brands strive to be good citizens of the Earth by:
- Offsetting their carbon footprint 🌍
- Reducing emissions 🚗💨
- Using recyclable or compostable packaging 📦♻️
- Operating with renewable energy 🌞🔋
When asked what issues brands should address, socially conscious millennials responded with:
- 60% racial justice ✊🏿
- 52% income inequality 💰
- 39% climate change 🌡️
- 37% affordable healthcare 💊
- 36% LGBTQ+ rights 🌈
Shopping Physical Stores vs. Online 🏬🛒
It’s fascinating to see how this tech-savvy generation still leans towards brick-and-mortar stores. 📊 A survey found that nearly 38% of millennials prefer shopping in-store, while just 30% favor online shopping.
Though millennials show a slight preference for in-store shopping, they are also significant supporters of e-commerce. 🛒💻 They search for products online, make purchases on their phones, and shop through social media platforms like TikTok. 📱
As with any generation, it’s essential to remember that generalizations about millennials are just that: generalizations. We can observe patterns and draw conclusions from research and behavior, but they don’t apply to all millennials. Different societal factors and environmental influences are at play, and people change. 🌐🔄
However, there is a significant opportunity to understand and embrace these evolving spending habits. Recognizing and tapping into the immense spending power of millennials is a promising strategy for brands aiming to boost their bottom line. Millennial influence, much like millennial megastar Taylor Swift, is set to shape the economic landscape for years to come. 🌟💸
