Breaking Down Millennial Spending Habits
The millennial generation, those born between 1982 and 1998, is the nation’s largest. Millennials are all 18-34 years old, but age is about the only common denominator for the individuals in this demographic.
Jean-Yves Sabot, vice president of retail business development for Epsilon , breaks down millennials into six different groups, or what he refers to as life stages. Each group within the generation is at a different stage in life, and this affects what they're buying — and not buying.
Here’s how Sabot presented his breakdown of millennials to the audience at NEMOA's directXchange Fall Conference last week:
1. Recent college grads: This segment of millennials is investing heavily in their careers. According to Sabot, they're buying clothes for a more professional wardrobe. They're most likely in debt from college, so they're not as likely to use credit cards. These millennials are also very active on Instagram.
2. Boomerang kids: These are millennials who have moved back home to live with their parents. Similar to recent grads, boomerang kids may be in debt from college and are looking to save money. Sabot explains that this group wants high-speed internet for things like gaming capabilities and social media.
3. Newlyweds: This segment of millennials are obviously spending on wedding expenses, but also on home and “nesting” expenses. Sabot says this group is now spending as a couple rather than a single person.
4. Having children: When millennials start to have children, their purchases are with “we” in mind instead of “me.” New millennial parents are more active on Facebook and influenced by what they see on the social network.
5. Buying a new home: Although a quarter of millennials rent rather than own, many are taking the plunge and purchasing a home. Sabot notes that this group is more active making purchases online.
6. Experiential: This segment of millennials doesn’t want to buy products or things — they want to invest in experiences. They want to travel and, therefore, spend their money on plane tickets, concerts, excursions, etc.
By 2020, millennial spending power will reach $1.14 trillion annually. If you want to get in on this action, you need to treat the millennial generation like the diverse group that it is.
Sabot told the audience that they shouldn’t target millennials as a whole group. Rather, he suggest that brands find out what life stage their millennial customers are in, then market and sell to them based on what they're trying to buy and achieve at this time in their lives.
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