It may be grim, but one reason millennials have become a key target for marketers is because the baby boomer generation is shifting to a period of adult-only households with many living on fixed incomes, and … well … others are dying. There really is no gentle way to put it and as the baby boomer demographic continues to shrink it will be more important than ever for marketers to understand and deliver products, services and messages that resonate with millennials.
“We are about to have a fundamental shift in spending power,” said Paul P. Lainis, senior vice-president of consumer and shopper marketing for IRI, Chicago.
Mr. Lainis noted that the shift in spending power from baby boomers to millennials will have a particular impact on food and beverage companies.
“As you get older your ability to identify flavors and tastes becomes less,” he said. “They (baby boomers) will consume much less than they have in the past. That’s not to say there will not be opportunities, but they will be different. There will be categories where there will be growth, but companies have to be cognizant that there will be a shift in volume from baby boomers to millennials.”
One significant shift he identified is in flavor adoption, which he said millennials are driving.
“Look at what has happened with sriracha and harissa,” he said. “Now you see it happening with hummus. The speed of change is accelerating and you can’t guess. You have to have the tools to understand and reach these consumers.”
Developing an understanding of the millennial demographic was a key focus of this year’s IRI Summit, held April 21-22 in Austin, Texas. Speaker after speaker who addressed the more than 2,000 consumer packaged goods marketers that attended the meeting, noted that influencing the millennial demographic will be a challenge as mobile technology becomes more prevalent.
“We are in the midst of a consumer buying revolution, where media and thousands of other influences affect the market,” said Andrew Appel, president and chief executive officer of IRI. “By 2020, 90% of digital access will be mobile and the average person who saw 500 ads per day years ago will see 5,000 ads.”
The millennial demographic ranges between 18 to 34 years in age and is the most highly educated of any generation in the United States. It is also the most diverse.
“There are three big topics driving shopper marketing: millennials, Hispanics and baby boomers,” Mr. Lainis said. “But from an age perspective, we have to realize Hispanics are rolled up into millennials.”
The future, according to Wal-Mart
Wal-Mart Stores, Inc., Bentonville, Ark., has been studying the drivers of retail choice for more than a decade and they have not changed, said Cindy Davis, executive vice-president of global customer insights and analytics for Wal-Mart. They are convenience, price, assortment and experience. What have changed are expectations, particularly from millennial consumers.
“Today, convenience is defined as fast and easy access,” Ms. Davis said. “We are working to understand and deliver on that fast and easy access.”
But she added that price, assortment and experience are not one dimensional attributes.
“Our customers are not holding back,” Ms. Davis said. “They are telling us what they want from a physical and digital experience. Specifically, they want it to be simple, empowering and personalized.”
Contrary to popular belief, Ms. Davis said consumers, most notably millennials, want companies to show them that they know them.
“They get that we have information about them,” she said. “This is no surprise. What they are asking us to do is use it. They want us to use it to recognize them as individuals, improve their experience and make sure our communication with them is relevant to them.”
To achieve this level of personalization Wal-Mart has built what Ms. Davis called an on-line “personalization engine” to help the retailer’s customers find what they are looking for.
“If you go to the web site you will get a different home page based on where you are, the weather, purchasing history, etc.,” she said. “We’ve been able to do it by bringing together in-store and on-line purchasing behavior.”
Finally, Ms. Davis emphasized the importance of simplifying the customer’s experience.
“Time is our customers’ most precious resource,” she said. “They are looking for solutions that are simple; they want us to remove a step or do it for them.”
With that in mind, Wal-Mart has leveraged its learnings from its ASDA business unit in the United Kingdom to develop an on-line grocery program in the United States. The effort currently is being tested in five markets and offers customers the option of free delivery or pickup at a Wal-Mart store.
“We tend to assume people want things delivered,” Ms. Davis said. “But that is not necessarily true. Think how much moms drive. I’ve seen some estimates it is as much as 15 hours per week. Sometimes it is more convenient for people to pick up their groceries after they drop their kids off at school.”
The pilot program is going well, Ms. Davis said, with 80% of orders coming from repeat customers.
“The success we are seeing so far shows we can leverage innovation from ASDA and bring it to the U.S.,” she said. “It also shows the power of the concept and that is really a global opportunity.”