The recession and global economic events that have transpired over the last two years have had a significant impact on consumers and retailers alike. Undoubtedly, the situation has affected everyone differently. The circumstances all carry the same underlying characteristics, yet there are clear distinctions amongst different segments within the population.
Although I won’t be diving into each of these segments, I will be looking directly in the direction I always do. And that’s towards those young consumers of Generation Y. Whether you believe that they’re a product of the environment or that they’re a catalyst in creating it, the Gen-Y consumer is reshaping our notions of consumerism and the retail world.
Breaking Down the Gen-Y Consumer
There’s no denying the recession has had a few underlying effects to current consumer behaviours. Decreased spending would be the most obvious and immediate one to come up in any conversation. But there’s more behind the current Millennial behaviour.
One of the most imperative and often overlooked factors is the issue of unemployment. Even with great parents that “spoil” us, an unemployment rate of 19.5% for those under 30 is quite profound, considering it’s more than double the rate 9.5% of the entire US workforce. Directly and indirectly, it has caused Millennials to be a little more price conscious. One third of Gen-Y now shop at low-priced retailers, such as Walmart, compared to just under a quarter of all adults.
These price conscious Millennials have also become seasoned bargain hunters. Not because they’re cheap but rather, they’ve become highly accustomed to the pattern behaviour of the retailers. A pattern where Gen-Y simply waits to “[I’ll] get it on sale.” A pattern in which 54% of 18-24 year-olds are delaying making a purchase in anticipation of deals and price reductions. Something of which only one third of older adults are doing. Even with my crude math skills, I know that a difference of 21% is significant. But do retailers truly understand the disparity that’s occurring?
A Shifting Retail Environment
An increasingly competitive environment has pushed retailers to leverage the smallest of opportunities. Years of marking-down prices has created a “I’ll wait until it goes on sale” consumer mentality. A mentality that is heading into direct conflict with rising back-end costs that retailers are facing. There is every indication that as material, labour and transportation costs continue to soar, we will most certainly see a decrease in discounting and an actual price increase in products as early as next year.
As retailers face this eventuality, we’ll begin to see the creation of new acquisition, retention and loyalty strategies. E-commerce and m-commerce will grow extensively in the coming years. And they will be anything but typical approaches.
We’re seeing the creation of unique online sites that are providing limited time and quantity deals on products from companies that are socially-responsible while giving to non-profits. And it doesn’t stop there.
We’re in the midst of an app boom. This is the result of advanced mobile technologies, the growth of Gen-Y’s love affair with smart phones and the absolute want, especially from Gen-Y, for greater mobile ability. Enter Shopkick.
Shopkick is a location based mobile app that check’s in the user once they’ve entered a location. They then receive “kickbucks” for walking into the locaton, scanning items, etc, which can be traded in for different credits. I can only imagine the different types of apps that will most certainly come to being. However, will they truly be any different from similar programs we already have? And who will truly be satisfied by apps such as these, the consumer or the retailer?
Where Gen-Y Consumerism Is Heading
It seems that the whole retail environment is becoming less about retail and more about everything else. The Gen-Y consumer has grown to love patterns of price reductions and is increasingly leaning towards a price-conscious state of mind. For Gen-Y, there almost has to be something extra. It’s not simply about buying the product. It’s about the “extra” benefits we’ll get out of it.
Retailers, on the other hand, are playing their own acquisition tune. Inevitably, retailers will move away from slashing-prices as consumer confidence also inevitably increases. This transition will establish a significant m-commerce presence. And one that will have to make-up – or at least appear to make-up – for the decrease in wanting to “get it on sale” and the eventual increase of prices.
The defining characteristic in all of this will be based on the result retailers take in establishing “that” relationship with Gen-Y consumers. When it all comes down to it, we will always consume. But where we consume from will rest on the shoulders of the retailers. As these retailers continually gather and asses greater amounts of consumer information, they should remember not to overlook the simple facts. It’s not about what we buy, it’s about the sale, the deal, the “extra” benefits we get from it. And the most amusing aspect in all this is the retailers only have themselves to blame.