How Millennials Spend Their Money

Anna Ngo Blog, eCommerce articles, Fashion & Apparel, Food & Beverage, Retail Articles, Uncategorized Leave a Comment

The so-called “Me Me Me Generation” has been labeled everything from entitled to ethically conscious, but whatever you may think of these special snowflakes, 2019 is their year. This year, they will overtake the Baby Boomers to become the largest living generation in the United States. Already 76 million strong in 2017, depending on whose definition you use, they number 1.8 billion globally, or about one in four of the world’s population.

Suffice it to say that the things they’re into—and by extension the things they’re not into—are going to play a huge part in shaping, well, everything, both now and in the future, at home and around the world. With the continued spread of globalization, millennials are now the most urbanized generation to date, sharing many common traits in both developing and developed countries.

Whether your business is B2C or B2B, millennials and their habits are having, and will continue to have, a profound impact on the global economy that few can afford to ignore.

Still Reeling from the Big Crash

Much has been made of the fact that millennials are highly educated yet underemployed, with many working side gigs and about a third opting to live at home with their parents. While some pundits would blame pricey brunches and barista-made coffees as the cause of low home ownership among this cohort, the reality is far more complex.

Coming of age during the financial crisis of 2008, millennials have suffered the brunt of the economic fallout, with higher student debt due to rising tuition costs, fewer living wage jobs for those with limited experience, fewer starter homes for sale and wages that have failed to keep pace with inflation. They are tracking to become the first generation to be financially worse off than their parents.

But it’s definitely not because they’re working less. Several reports even show millennials to be workaholics, answering e-mails around the clock and being fearful of taking vacations. It makes sense, then, that they want to enjoy what time and money they do have. Millennials will pay a premium for fresh, natural foods and extras like Uber rides or the latest tech gadget, but they are overall fairly price-sensitive and debt-averse.

Millennial Values Influence Spending Habits

They’ve been blamed for killing industries including napkins, cereal, canned tuna, fabric softener, high heels, diamonds and honeymoons, things they deem nonessential or at odds with their values. They value experiences over things, comfort, individuality and meaning, in both the work they do and the companies they support.

They’re getting married later—if at all—starting families and buying homes later, and are less interested in buying cars or having credit cards. Just one in three millennials has a credit card, and those who do carry plastic generally prefer prepaid or debit cards for budgeting purchases over time. But they’re also significantly more likely to have a financial plan and a financial advisor than previous generations.

Where Their Money Goes—and Doesn’t

Areas where millennials outspend Gen Xers and Boomers include housing, transportation, dining out, alcoholic beverages and education, particularly at the graduate level. Categories where they underspent their elders were more intangible: personal insurance, health care, entertainment, cash contributions and gifts, and reading. They were, however, on par with other generations when it came to spending on food eaten at home, apparel, personal care products and services, and, oddly, tobacco and smoking supplies.

What does this mean for retailers? Well, that depends on what you’re selling. Millennials seem to prize everyday pleasures and still engage in plenty of impulse and discretionary spending—69 percent admit to buying clothes they don’t need. And as you can see from above, they aren’t skimping on health and beauty products. But they are more reluctant to buy big-ticket items or shop in bulk and favor a “shared economy” proliferated by models like Airbnb and Lime electric scooters.

Services like Apple Pay and Afterpay, which allows shoppers to divide purchases into four equal payments, have successfully tapped into the way millennials prefer to spend, allowing eCommerce retailers to thrive while promoting responsible spending over a greater number of purchases.

Cin7 is now Afterpay accredited in Australia and New Zealand for point of sale purchases. This means that retailers in these countries can start accepting payments from Afterpay customers in as little as three weeks while enjoying the full omnichannel functionality of Cin7’s built-in POS. Gain full stock visibility across all your stores and warehouses, easily route orders and manage eCommerce sales, and manage loyalty programs and gift cards online and in store.

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