April 22nd, 2014 | Simcha Weinstein | Comments Off on Millennials: It’s Time to Pass the Baton
For the past several decades the Baby Boomer generation has dominated as the target marketing audience for retailers – having an enormous impact on consumer trends. In the organic and natural foods industry Baby Boomers are credited not only with creating and establishing the industry, but with propelling it to the level of success it now enjoys.
A “Millennial” – also known as generation Y – is someone who was born between 1982 and 2001. According to a couple of studies (The Reciprocity Principle: How Millennials Are Changing the Face of Marketing Forever & Trouble in Aisle 5), generation Y’s influence may just transform the food landscape for all of us.
According to these reports, the demographic model is shifting. Right now, there are about 80 million Millennials and 76 million Boomers in America. Half of all Millennials are already in the workforce, and millions enter in every year. Approximately 10,000 Millennials turn 21 every day in America, and by the year 2025, three out of every four workers globally will be in the Millennial generation.
They are reshaping today’s consumer and media markets. U.S. Millennials already account for an estimated $1.3 trillion in direct annual spending, of which at least $430 billion is estimated to be discretionary, nonessential spending. These estimates do not include substantial Millennial-influenced spending, such as by parents and grandparents. And this sum will grow dramatically as more Millennials reach peak earning and buying power. By 2030, the projected 78 million Millennials in the U.S. will outnumber the projected 56 million baby boomers (ages 50 to 69).
While the Millennials are increasing their spending power, by 2016 the Baby Boomers will have moved out of their peak-earning years into retirement and on fixed incomes, and their focus will undoubtedly turn further toward lifestyle preservation. The studies suggest that at-home food spending by Boomers could fall by as much as $15 billion per year through 2020. Millennials, on the other hand, (those over the age of 25 – the age at which income and household formation typically start to really accelerate) – will make up roughly 19% of the U.S. population by 2020, up from just over 5% in 2010. These 64 million Millennials will have a significant spending-power increase in the coming years as the median income for those households is expected to jump to more than $45,000 from just over $28,000. The study finds food-at-home spending by Millennials is set to jump by $50 billion annually through 2020.
Clearly, over the next decade, the baton will be passed from the Baby Boomers to the Millennials as they enter the next phase of their lives and spending patterns. As a result, established food brands and traditional grocery stores will see a different model of shopping in the marketplace. Those best able to foresee this change and adapt to it will become the new retail leaders in the organic and natural foods marketplace.
The question is, how to appeal to the Millennial generation? Here are a few key insights from the aforementioned studies and reports:
• Millennials are less loyal to specific brands, and they shop for food in ways that are different from Baby Boomers: They buy online and shop at multiple venues rather than purchasing everything at traditional “one-stop-shop” supermarkets. Millennials have been completely inundated with advertisements and brands their entire lives. It has become easier and easier for them to disregard brand names when making a purchase. This is especially true when it comes to purchasing groceries. Millennials are reading labels and making purchases based on the health benefits and quality of the product. They are also seeking out specialty foods, including ethnic, organic, and natural products, and are willing to pay more for the foods they value.
• Millennials are especially interested in the story behind their food and are looking to learn more about what’s in it and how it’s made. They want to know more about how their food is produced, and they think brands don’t disclose enough about their food products.
• Millennials consume healthier, more expensive, more natural/organic, less processed and better tasting foods and brands than their parents. They also are more likely than previous generations to be gender neutral when it comes to the role of cooking (61% of females and 60% of males enjoy cooking). They consider food an adventure and seek out different, ethnic, and artisan foods; 40% like to try new kinds of ethnic cuisines and “anything new and different,” compared to 32% of Boomers.
• Millennials are more likely than other generations to share their opinions with friends. More than half of U.S. Millennials said that they are willing to share their brand preferences on social media, compared with 31 percent of Baby Boomers. More than half also said that people seek them out for their knowledge and opinions of brands, compared with only 35 percent of Boomers.
• Having more “International” options at restaurants and markets is extremely appealing for Millennials. The world is getting smaller and growing minorities are more ethnically diverse than other age groups.
The Millennial generation will, no doubt, change the face of retail marketing. Retailers will need to embrace them and brands will need to tell the story of their authenticity and of the soul of their products to attract their attention and loyalty. This generation will indeed push our industry to become more communicative and informative about what we sell, to be more creative with our products, and will help make our food system better for everyone!