The Millennial generation is often at the front of controversy among statistics, economic studies and news articles for being drastically different from the generations before them. News outlets often cite Millennials for downturns in economic sectors including chain restaurants and the housing industry, or rises in other industries including live events and coffee.
Although no generation behaves the same as the last, Millennials are attributed to changing much in America due to their sheer size. As the youngest Millennials will turn 18 in 2018, it is growing important to learn about their spending habits and purchasing preferences.
General Millennial Facts
Millennials, also referred to as Generation Y, are currently between the ages of 17 and 36 and one of the first generations to spend their formative years online. At 83 million people, Millennials account for a quarter of the population of the United States, making them the largest living generation. Like every generation, Millennials are characterized by sharing similar worldviews, habits and traits.
Millennial Spending Power
As many Millennials are graduating from college with financial responsibilities, including debt, they have a growing obligation to act more responsible with their money and spending habits. Millennials are expected to accrue more wealth by the year 2020 where they are trended to spend $1.4 trillion. As Millennials pay off loans and get better jobs with higher salaries the spending habits are expected to change.
- 94% of Millennials use coupons and have a preference towards digital formats. [Source: Valassis]
- Millennial shoppers spend $600 billion in the United States each year. [Source: Accenture]
- The Millennial population is projected to spend $1.4 trillion shopping each year by 2020. [Source: Accenture]
- Millennials average yearly expenditures totals around $47,112. [Source: BLS]
- Millennials average yearly income is around $56,099 before taxes. [Source: BLS]
- Millennials spend two thirds the amount spent by Generation Xers and Baby Boomers on entertainment. [Source: BLS]
Online Shopping Habits
As the most connected generation, Millennials are leading the pack in online purchases. With convenience and price at mind, online outlets offer more value to the average Millennial shopper. Unlike older generations, Millennials are not concerned about security when completing transactions online. 40 percent of Millennials refer to reviews and testimonials before purchasing any products, and the number is even higher when they are purchasing products online.
Millennials are also using subscription services to replace regular shopping trips to grocery stores and other bricks and mortars. During a UPS study of Millennial shopping habits, only 11 percent of Millennials reported they will make their next purchase in a physical retail store. They also favor generic store brands over name brands if it means saving money.
- Millennials make 54% of purchases online. [Source: UPS]
- 63% of Millennials complete transactions on their smartphones. [Source: UPS]
- 22% of Millennials have used an app to purchase groceries. [Source: UPS]
- 83% of Millennials are not concerned about security while online shopping. [Source: UPS]
- 41% of Millennial smartphone users have completed an in-store transaction with their mobile device. [Source: UPS]
- 60% of Millennials prefer to purchase generic brands over name brands. [Source: Millennial Marketing]
- 40% of Millennials refer to online reviews and testimonials before purchasing a product. [Source: Millennial Marketing]
How Will Millennials Make their Next Purchase?
- Laptop or desktop computer: 32%
- Smartphone: 25%
- Tablet: 24%
- Shop in a physical retail store: 11%
Millennials prefer brands who offering a unique experience, value for their money and great customer service. Although many brands have credited Millennials for a downturn in business, 60 percent of Millennials stay loyal to brands they purchase. Millennials also cite an importance in giving back to the community and expect the brands they follow will do the same.
As Millennials prefer experiences over things, they heavily weigh a brands customer experience into their perception of a brand. With 74 percent of Millennials reporting that they will switch to a different retailer or brand if they have a negative experience, it is important for companies to focus heavily on making sure their customer is satisfied.
- Millennial parents expect brands to provide value for their money and proper customer service. [Source: Crowdtap]
- 60% of Millennials remain loyal to brands they purchase. [Source: Forbes]
- 42% of Millennials are interested in helping companies develop future products. [Source: Forbes]
- 81% of Millennials expect companies to make a public commitment to charitable causes and citizenship. [Source: Horizon Media]
- 67% of Millennials believe they have a responsibility to share feedback with a brand about their experience. [Source: Edelman]
- 74% of Millennials would switch to a different retailer or brand if they had a negative customer service experience. [Source: ICSC]
- Millennials are more likely to share positive customer service experiences than negative ones. [Source: American Express]
- Millennials are more likely to stay loyal to a brand because of loyalty rewards than any other generation. [Source: Yes Lifestyle Marketing]
Advertisements and Marketing
Millennials overall are responsive to advertising if it is relevant. However, the intrusive nature of some advertisements leads 63 percent to use ad blockers online. Although the majority of Millennials use ad blockers while online, they still are receptive to some marketing ads. Many prefer in-feed advertisements so long as they do not disrupt the overall experience of a website.
As Millennials prefer online entertainment over traditional cable or television, advertising to the demographic has adapted to become more specific. With the power of online advertising and cookie history tracking targeting users by age, gender and other demographics is possible. Although it is easier to reach Millennials online only 6 percent believe that online advertising is credible.
- 3 out of 4 Millennials prefer to buy an experience over something desirable. [Source: Eventbrite]
- 63% of Millennials in the United States use ad blockers while online. [Source: Anatomy Media]
- 3 out of 5 Millennials use a shared password or login to stream content online. [Source: Anatomy Media]
- Millennials are receptive to online advertising that is restrained, targeted and relevant. [Source: Anatomy Media]
- Only 6% of Millennials think online advertising is credible. [Source: SocialChorus]
- 75% of Millennials believe attending an event in person has more impact than taking action online. [Source: Eventbrite]
- 80% of Millennials find in-feed ads that are not intrusive a good user experience. [Source: Sharethrough]
- 83% of Millennials find online content useful in making purchasing decisions. [Source: Sharethrough]
- Millennials spend more time on apps and the internet than they do watching television. [Source: Marketing Charts]
Millennials are heavily burdened with debt from student loans, credit cards and other lending sources. As many borrow large sums of money to pay for education, Millennials carry over $1 trillion in student loans. This large debt has a large impact on Millennials as home ownership is down among the demographic and over 52 percent are concerned about defaulting on their loans over the next 12 months.
- Millennials carry $1 trillion in student loan debt. [Source: US Census Bureau]
- 63% of Millennials have more than $10,000 in student debt. [Source: Padilla]
- 52% of Millennials carry over balances on their credit cards every month. [Source: Filene]
- 52% of Millennials were concerned about defaulting on a loan in the next 12 months. [Source: UBS]
- 41% of Millennials are delaying owning a home because of debt. [Source: Padilla]
- 49% of Millennials do not have a retirement account. [Source: Filene]
- 36% of Millennials are paying off auto loan debt. [Source: Filene]
- 66% of Millennials have one or more sources of outstanding long term debt. [Source: Filene]
- 48% of Millennials report that they are living from paycheck to paycheck. [Source: Wells Fargo]
As Millennials will soon become the largest living generation in America there is a growing need for brands and companies to pivot their sales tactics and marketing approaches to the demographic. The full impact of Millennials purchasing power and brand preferences will come into full effect in 2020 when their purchasing power is projected to reach $1.4 trillion. With Millennials becoming a major part of the US economy it is important for brands to stay educated on the spending habits of this growing power house.