- Baby Non-Food Products
- Baking/Cooking Staples
- Household Products
- Kitchen Products
- Paper Products
- Personal Care
- Pet Products
- RESEARCH & AWARDS
The world’s scientific community didn’t really embrace the concept of plate tectonics until the late 1950s. Plate tectonics is the theory that describes the movement of the earth’s crust, and explains why places such as California have earthquakes from time to time.
Another idea that came into common usage in the mid-20th century was that of generational cohorts. Originally a concept used by social scientists, the use of specific terms and behaviors for generations came into broad use in the ‘60s and ‘70s as the Baby Boomers were coming of age. The term “generation gap” was broadly adopted as a way to explain the seemingly odd behavior exhibited by these post-war children.
Not since the late 1960s has the world seen a transfer of power on the scale of the coming shift from the Boomers to the Millennials. Also known as Gen Y, or Echo Boomers, members of the Millennial generation were born from about 1980 through the turn of the new millennium (hence the name), and in many cases are the children of Boomers themselves.
Much has been written already about the impact this new cohort will have on the world of retail. Dire predictions of the decline and fall of retail are already being made. Jefferies and Alix Partners collaborated on a study called “Trouble in Aisle 5” that forecasts a gloomy future for traditional retailers. The coming onslaught of Millennials will change the game in a number of ways, and retailers will need to be observant, responsive and fleet-of-foot to keep up.
The predicted changes can be grouped into five broad areas:
- Fresh and healthy/natural and organic – more choices
- Convenience – make it easy to access
- Value – more than just low price
- Mobile/digital – focus on customization
- Private brands – growing acceptance as “real” brands
Here’s the interesting part: all five of these areas appeal to the Boomers as well. In fact, the deeper we dig into the changing landscape from Boomers to Millennials, the more similarities we find. It appears that, although retailers do need to change some of their thinking and overall approach, those changes will appeal to more than just the Millennial group.
That’s a good thing, because writing off the Boomer generation is not only premature, it’s bad business. Within five years, Nielsen predicts that half of the U.S. population will be 50 or older. That group will continue to control some 70 percent of the country’s disposable income, and they are far more willing to spend it than earlier generations were. In other words, the Boomers are still doing what they’ve always done, making their own rules.
Fewer Boomers are retiring than expected; this is partly because of the economy, and partly because of an unwillingness to go quietly into the sunset. More people are working into their 60s and 70s or later, and this behavior is likely to continue, even as the economy improves. The net effect here is that there will be two major generations vying for jobs, for goods and services, and for marketing attention. Once upon a time, it was standard practice to drop a target market once it reached 50. Today that would be suicidal.
The good news for retailers is that the changes required to increase appeal to Millennials don’t have to alienate the Boomers. That’s not to say there won’t be challenges; a “one-size-fits-all” marketing strategy isn’t remotely viable. Marketing will need to become much more targeted and flexible in its messages.
Let’s clear up another point: the idea of the “nuclear family” is long gone. Family units come in all shapes, sizes, ethnicities and generations, and understanding that change along with the impact it has on shopping behavior and meal planning is critical to retail success. While latter-day “Ozzie and Harriet” scenarios still exist, it’s very likely that they live across the street from a “Modern Family.”
It also appears that at long last we are heading into a new era for private brands. The old “cheap stuff cheap” stigma is just about gone, with more consumers of all generations seeing store brands as “real” brands instead of value alternatives to a national brand. According to FMI, 70 percent of consumers believe store brands offer great value, and nearly half believe they offer the same quality as national brand products. This view cuts across generational lines, not to mention income levels.
There’s a common perception that Millennials are the only ones using digital media for shopping, but that’s not quite accurate. Although it’s true that the younger shoppers are somewhat more likely to use smartphones for shopping, the behavior is becoming commonplace in all age groups. Mobile is another medium, and as the novelty wears off it’s becoming a critical element in any effective campaign no matter who the target market is.
There’s little debate that retail faces numerous challenges going forward: ecommerce, price transparency, differentiation, and labor costs are just a few. But the power transfer from Boomers to Millennials, much like geologic activity, will happen over time rather than in one earthshaking event.