Over the last several years, retailers have devoted huge amounts of resources to attracting the Millennial audience – after all, this demographic makes up 25 percent of the U.S. population with $200 billion in annual buying power. But, Millennials pose a real challenge to marketers. Millennials grew up with technology and are about three times more likely than other generations to reference social media networks when making purchasing decisions. They’re also wary of traditional advertising, with a McCarthy Group survey finding that 84 percent do not like or trust all forms of advertising. Having grown through the recession, Millennials are also cost-conscious.
Experts are now suggesting that retailers might be wasting their time by marketing to Millennials. In the highly-cited report, “The Future of Shopping,” Forrester Analyst Sucharita Mulpuru suggested that retailers should instead focus on older shoppers who have healthier bank accounts and aren’t burdened by student loans.
However, some savvy retailers have been able to target the Millennial market successfully by providing the personalized experiences they seek. Here are a few examples of retailers that are leading the way:
The automaker launched its youth brand, Scion, in 2002 as a way to reach a younger market without alienating its base of older customers, and the company recently announced the roll out of two new models aimed specifically at Millennials’ needs and aesthetic. Toyota understands that marketing to Millennials isn’t easy, with USA Today citing a Toyota executive saying, “Millennial buyers represent a huge challenge for the auto industry. They’re 80 million strong, and will come to dominate the car business as they age… But they don’t buy cars in traditional ways, leaning much more heavily on online research before setting foot into dealerships.”
Millennials are not only looking for convenience when grocery shopping, but also more often look for locally-grown and organic foods than their parents’ generation. Target plans to differentiate itself from big box stores by providing Millennials with trendier clothing and healthier food options in its stores (with expanded options for Millennial staples like beer, granola and coffee). The company is also opening a chain of smaller stores in urban communities, called TargetExpress, aimed specifically at this demographic.
With increased competition from high-end grocers, delivery services like AmazonFresh, and the addition of organic options at discount chains like Walmart, Whole Foods has had to rethink its strategy to differentiate itself and offer customers a more personalized experience. In September, Whole Foods announced a partnership with Instacart to deliver products to customers in just one hour.
Whole Foods is now looking to offer a more personalized experience targeted at Millennials, with a line of lower-cost stores. The Washington Post reported that this move signals that Millennials “aren’t exactly who many of us—or even Whole Foods—thought they were.”
These three retailers are taking different approaches to reaching the elusive Millennial cash cow, but they all share one strategy in common – creating personalized, 1:1 experiences directly targeted at the unique needs of this generation.