Attracting a $1 Trillion Demo: How Retailers Can Acquire More Millennial Consumers in 2020
Millennials are poised to reign supreme in 2020, commanding 30 percent of the retail market share with purchasing power projected to reach $1.4 trillion. The flipside? Millennials own fewer possessions than ever before and have less incentive to buy things that require commitment, such as insurance protection or long-term contracts.
The trend signals a movement to modernize parts of the online buying journey by offering more personalized and convenient a la carte products. Given that a whopping 74 percent of millennials prioritize experiences over things, how can e-commerce retailers engage with this less-is-more, digital-first generation? Acquiring more millennials requires the retail ecosystem to offer tailored experiences that will build lifetime customer loyalty.
So, what trends will we begin to see this year? There are a few key areas that digital retailers can explore when aiming to attract this trillion-dollar demographic.
Adopt the Short-Term Subscription Model
The smartest companies leading the pack have begun embracing new technologies that millennials are adopting and tailoring their business to match. One emerging trend is the short-term subscription model. You may have seen Dollar Shave Club’s regular razor drops or Goby electric toothbrushes’ monthly brush head replacements. As the razor renegade’s site clearly states, “No sneaky contracts, no tricky fine print, and no B.S.” Both subscription models provide buyers more flexibility, free shipping, and the option to cancel at any time. Not to mention, short-term subscriptions offer products at a fraction of the price of traditional models.
It turns out that retailers have been slow to adopt short-term subscriptions even though the millennial audience is more open to this type of retail solution. Why the resistance? There’s a certain level of hesitancy given that retailers haven’t offered the short-term subscription solution to their customers in the past. There isn’t a whole lot of familiarity; which isn’t to say there’s not a wealth of opportunity.
For the skeptics, I’d recommend taking a look at consumers’ purchasing habits for smartphones. Users are familiar with subscription-based models when it comes to insuring their iPhones, tacking on an extra $3 a month for supplemental Apple Care or Verizon’s accidental coverage. Hence, most millennial shoppers have been utilizing a protection plan on an ongoing subscription basis. Shoppers will only shift further into the subscription space as we move into 2020 and beyond.
Become a Destination Beyond Physical Products
As an online retailer, you may be asking yourself, “How can I modernize my offerings to better align with millennial consumers and their shopping habits?" The truth is, people aren’t buying as many physical products anymore. Ultimately, they want to own less. I’d advise becoming a destination for your customers beyond the physical products you sell. What are the solutions you can offer to your customers? Services are a big part of the puzzle as they have the potential to build basket size and drive frequency to your site.
Think of Amazon.com, for example. Customers continually return to manage their Audible subscription or Kindle books, digital music playlist, Amazon Prime membership, and Subscribe and Save, which are all services offered beyond the digital storefront. Shoppers are buying into an entire ecosystem that’s more than physical products. It’s time e-commerce retailers begin to think of services as a whole.
Consider what problems your customers need solved. Providing a holistic experience with multiple services helps build customer loyalty and encourages shoppers to protect the few items they do hold sacred. Insurance is one such service that you can provide your customers. Explore what possessions and passions are important to them. This demographic might not own homes or have the need for homeowners insurance, but their laptop could be the most expensive thing they own. Undoubtedly, they’ll want to insure it. Introduce customers to no-hassle, easy-to-understand insurance offerings, delivered by brands that they already trust and engage with daily.
Treat E-Commerce as an Endless Aisle
For years, retailers have been using the omnichannel approach. In the coming years, we’re going to see this tactic slowly fade away. The dated model is not how customers embrace retail brands today. Millennials don’t differentiate between shopping at a Walmart store and shopping at Walmart.com. As we move forward, any customer-facing entry point into a brand will be perceived as a single channel by consumers.
As such, physical stores are going to need to ensure they create an “endless aisle” online — i.e., a model that gives consumers the ability to buy merchandise online if it isn’t offered in-store. We all know that there’s limited space in retail stores. If a consumer can’t find what they’re looking for, they must be able to easily open your store’s app and locate it on your website. The last thing you want is a dissatisfied shopper ordering an out-of-stock product off Amazon.com while standing in your store aisle.
As 2020 begins, I would urge online retailers to tap into the millennial mind-set and discover precisely what drives this less-is-more, digital-first generation. Actively seek out what dictates purchasing behavior and examine how your brand can offer compelling, short-term subscriptions; a slew of services beyond physical merchandise; and finally, ensure that when millennials are shopping for tangible items, they’re met with endless options. Any efforts to modernize the buying journey and conveniently offer personalized products will put you in the lead, building lifetime customer loyalty along the way.
Peter Paine is head of retail partnerships, Americas, at Cover Genius, one of the fastest growing insurtechs globally.
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Peter Paine is Head of Strategic Retail Partnerships, Americas at Cover Genius, one of the fastest growing insurtechs globally. In his role, Peter is responsible for leading and executing partnerships for some of the biggest retail brands in Americas while delivering best-in-class user experience. Cover Genius has received dozens of awards within insurance and tech circles for its patent-pending platform and global capability that ensures user-centricity throughout the entire customer journey, an approach that has led to global partnerships with Booking.com (NASDAQ:BKNG), among others. Before Cover Genius, Peter was leading the product warranty and financial services team at eBay U.S. Prior to that, Peter spent 5-years at Walmart.com as the Head of Product Care Plan business. Peter has an MBA from Penn State and BA from Indiana University.