Throughout history, technology has led to numerous transformations in the buying and selling process. Prior to the Industrial Revolution, manufacturing was typically a cottage industry; rural families would produce goods in their homes or a small shop with hand tools or simple machines. Advances in technology and a shifting consumer base led to the factory system. During the early 20th century, another technological advance — the automobile — again transformed the retail industry. Stores no longer had to be clustered along trolley lines or located in residential neighborhoods. Instead, retailers could place their stores in shopping centers or malls where they could sell their goods to customers from all neighborhoods. The internet brought yet another transformation, opening the door to the world of online sales. However, the retail industry is now undergoing a transformation that is more sweeping than any since the Industrial Revolution — and it is being driven by Millennials and their attachment to the digital world.
The Effect of Millennials on the Retail Industry
The exact age of Millennials is somewhat vague; some demographers define the generation as those born since 1978, others choose to define it as those born since 1982 and still others simply state that it is the generation reaching adulthood during the first decade of the 21st century. Regardless of how you define the generation, Millennials are very different from their parents and grandparents. The retailers that experienced explosive growth from the 1950s through the 1980s owe much of their prosperity to the loyalty of the Baby Boomers. These are the same retailers that are now teetering on the brink of extinction, including some major brands such as Sears and JC Penney. Shopping malls across the country stand empty or have had to find new uses for their vacant spaces.
Millennials represent the first generation to have grown up with digital technology. Things that would have been difficult for baby boomers to imagine when they were young adults — including home computers, the internet, mobile phones, video games, wearable tech and ATMs — have been commonplace in the lives of most millennials since early childhood. Thus, millennials have a level of comfort with the digital world that exceeds that of previous generations when each generation is considered as a demographic group.
Millennials also differ in what they expect from the brands with which they do business and the methods that they use to interact with companies. As stated in an article published by Entrepreneur, Millennials rely primarily on the social networks for information about special deals, products and company news. Approximately 89 percent use smartphones to connect to the internet, 75 percent use laptops and only 37 percent use desktops. However, because they are tech-savvy, Millennials employ a variety of devices and channels to conduct research prior to a purchase and expect a seamless experience across every channel.
Furthermore, as a group, Millennials lead busy lives. While they are definitely focused on establishing a career, they also tend to commit their spare time to charitable causes and normally have active social lives. They value their time, and fail to find sufficient justification to spend their time driving to a mall and spending hours to locate a product they want to purchase when they can find the same item online at the same price. They would rather complete the purchase in just a few minutes from wherever they might be on whatever device they choose to use and have the item delivered to their front door.
Why Retailers Should Care About Millennials
According to Forbes.com, Millennials represent approximately 25 percent of the American population and have an annual buying power of $200 billion. By 2025, Millennials are expected to comprise 75 percent of the workforce. Given the amount of purchasing power that this generation has — which will only increase as they climb the career ladder — it seems prudent to give Millennials what they want and embrace a digital transformation that will enable the delivery of engaging content and quality merchandise that encourages their loyalty and their business.