Over the past several weeks, I have come across many articles about how the millennial generation has had an unexpectedly profound impact on the business world, and that they are apparently going to remain relevant to the success of a number of companies and brands for the foreseeable future.
First, who is considered to be a “Millennial?” Also referred to as “Generation Y,” the millennial generation is broadly described as being inclusive of Americans born between 1982 and 2000. They are considered to be the first generation to mature into adulthood as we entered the new millennium in 2000, hence the “Millennial” label. Estimates have declared the Millennial population to be 80 million strong. To put that number into perspective, that is one in four U.S. residents. By comparison, the preceding generation, Generation X, has a population a full 20 percent smaller in size than the Millennials.
Huge population aside, what else about Millennials, who currently fall between the ages of about 13 and 30, makes them such a vital consumer to so many companies? Their collective spending power has a lot to do with it. Approximately $1.3 trillion dollars, about one-fifth of direct annual spending, can be attributed to Millennials. Of this, about $430 billion is spent on discretionary, or nonessential, items such as clothing and Starbucks Frappuccinos. These are huge numbers, considering that Millenials have yet to reach their peak earning potential and spending power. Further, these figures do not include Millennial-influenced spending by the older generations — it is important to note that Millennials tend to tap into a source of monetary assistance more than any preceding generation: money given to them by parents and grandparents.
These facts and numbers are definitely not lost on retailers. Over the last 10 years, the number of businesses, particularly those in the fashion industry, specifically targeting teens and twentysomethings (while all but ignoring the older consumer) has grown exponentially. Forever 21, Abercrombie & Fitch, Hot Topic, PacSun, Zumiez…and the list goes on. Some companies, like Victoria’s Secret, whose wares are naturally marketed to more mature shoppers, have found ways to attract younger consumers. Their wildly successful PINK label, while still including lingerie — albeit less “sexy” and more “fun” pieces — also includes items like sweatsuits, pajamas, and workout gear, all designed with bright colors and patterns, more sparkle and “bling,” all of which appeal to a younger demographic.
What is interesting, yet puzzling for retailers, is that a lot of the data gathered on Millennials doesn’t align with their spending habits, making the generation somewhat of an enigma for companies looking to get a piece of the Millennial spending pie. They are considered to be on track to becoming the most educated generation in U.S. history, although the Great Recession has slowed a lot of their career prospects — recent data shows the unemployment rate among workers ages 20-24 is 13%, a lot higher than the 8% rate for older workers. Further, the recession has caused approximately 12% of Millennials ages 22 and older to move back in with their parents. Despite all of this, 90% of Millennials claim to either have enough money now, or are confident that their long-term financial goals were eventually be realized. They are also the largest segment of our population purchasing electronics and fashion apparel – according to data compiled by Bloomberg BusinessWeek, Millennials ages 25 and over spend 8% more on clothing and other fashion items than Gen-Xers ages 35 to 44, despite earning 22% less. Also, for Millennials who are employed, discretionary spending on items such as clothing and entertainment often trumps expenses such as health insurance, something approximately 40% of the millennial generation are currently going without, a figure also attributed to Bloomberg Businessweek.
Companies in creative industries who manufacture things like clothing and accessories have always necessitated fluidity in their product lines to accommodate the fluctuating nature of trends. Forecasting and tracking current trends will always be a priority in fashion, but these companies have also become increasingly aware of Millennials and the affect they are having on the trends and styles that ultimately land on their shelves and sell. “Every brand needs to attract new customers if it is going to have a long life,” stated Al Ries, founder of Ries & Ries, a Georgia-based firm that focuses on marketing strategy consultation. He also stresses that “[i]t is easier to attract younger consumers than older consumers,” because Millennials are a more open-minded set, while “older consumers have already made up their minds about which brands they prefer.” Also important for a brand’s longevity, according to Rony Zeidan, president and creative director of luxury branding agency RO New York, is for the brand “to grow with its existing customer base, while simultaneously attracting the younger audience to have this generation embrace the brand with time.”
An integral part of targeting this younger generation is for fashion marketers to know how best to connect to them. “Millennials’ information-gathering method is very diverse, so if brands want to capture that audience, they need to play along in all those media,” said RO New York’s Mr. Zeidan. Brands have employed a number of strategies to make these connections, such as hiring younger designers, introducing new product lines, and communicating with current and potential customers via social media like Facebook and Twitter. In some cases, traditional retailers have had to completely reinvent their images in order to capture the interest of the Millennial consumer.
A great example of this total reinvention is the Gap, a company that launched in 1969 and became unwittingly tied to Baby Boomers. Robin Lewis, CEO and Editorial Director of The Robin Report, a company whose mission is to offer insight into the retail industry, feels that The Gap’s image underwent something he refers to as “positioning drift” — when a brand “ages” along with its original target consumer. So when the average age of its customers crept up to 39, The Gap’s CMO Seth Farbman found his company in need of a makeover. Realizing a big part of remaining relevant was to start attracting younger buyers and to get Gap consumers to “think” younger, Farbman began focusing on some common themes in the millennial generation: energy, sustainability, and quality. These efforts started with a Fall 2011 ad campaign specifically targeting Millennials — images featured real residents of young, hip cities such as Austin, Texas wearing their 1969 denim line. Further, the company released videos via social media that showcased the denim’s manufacturing process because, according to Farbman, Millennials “demand transparency.” The following Spring, the focus switched to quality, with The Gap investing in upgrading its merchandise and retraining its employees. Time will tell how well these efforts will pay off.
Another big-name company that is making a huge and very overt push for the Millennial consumer is Macy’s. Their approach has been to develop two sub-brands to attract a younger demographic: mstylelab focuses on the 13-to-22 age group, while Impulse focuses on19- to 30-year-olds. Both will feature exclusive lines and products the store feels will be of interest to the sought-after Millennial consumer. They will be coming out with 13 new brands and further developing another 10 existing brands across all of its departments. In addition, Macy’s has begun to use more technology, like QR codes, both in-store and online to create an interactive and convenient shopping experience that will hopefully be attractive to their target customers.
So what is Donna Bella Designs doing to attract Millennials? Along with a recent crowd-sourcing campaign, we have stepped up our presence on several social media platforms, including Facebook, Twitter, and Pinterest, and have been holding monthly interactive contests to give our fans and followers chances to win free products. We are also expanding our product line to include a broader selection of styles and colors that will ideally catch the eyes of the younger generation, while still retaining the interest of our current customer base. It is a very exciting time for us, and we hope by growing our company we can not only become a more recognizable brand, but we can offer more jobs for women in the workforce.