Meet the Millennials
By Lisa Readie Mayer
Millennials are not your future customers; they are your current customers. They are here. Now. Today. Whether you’ve been anticipating this moment with excitement or apprehension, the generation – at 73 million strong – has finally arrived as bona fide adult consumers.
The world’s largest generational cohort thinks, lives, eats, works, and shops differently from the generations that preceded it. But considering they wield $200 billion in spending power, it behooves both manufacturers and retailers to understand this group and what makes it tick.
Defining the Generations
Though age parameters vary slightly depending on the research organization, Pew Research Center defines today’s generational groups this way:
Silent Generation: Born 1928 to 1945, and age 74 to 91 in 2019, the generation came into the world in times of war and economic insecurity, and as a result, has always been a small cohort compared to other generations.
Baby Boomers: Born between 1946 and 1964, and currently 55 to 73 years old, this generation is named for the surge in post-World War II births. Baby Boomers came of age in a time of social and culture change, and have considerable wealth. The generation began retiring about 10 years ago and many are looking to downsize.
Gen X: Born 1965 to 1980, and age 39 to 54 today, this frequently forgotten generation is 65 million strong. Still raising families, and sometimes caring for parents as well, they have disposable income and will be part of the workforce for at least the next 25 years.
Millennials (a.k.a. Gen Y): Born between 1981 and 1996, and ages 23 to 38 currently. (Read on; we’ll do a deep dive into this generation on the following pages.)
Gen Z: Born between 1997 and 2015, and age 4 to 22. These socially conscious, digital natives have never lived in a world without the Internet. The group is on the threshold of becoming the largest generational cohort at 78 million, and studies show it wields significant spending power, as much as $143 billion.
Who Are the Millennials?
Millennials value individuality and despise sweeping generalizations – particularly those made about their own generation. Indeed, with ages ranging between 38 at the leading edge, to 23 at the tail end, the group spans very different life stages, making universal descriptions difficult and unwise. That being said, there are definite trends and distinct patterns that identify the cohort.
What’s Important to Them
Millennials value experiences over things. They are not interested in “acquiring,” they prefer to be “doing.”
When asked to identify their top ambitions and aspirations, “traveling and seeing the world” was identified by 57% of Millennials as their number-one priority, according to the “Deloitte Global Millennial Survey 2019.” Of note: this desire was stronger for women (62%) than men (51%).
Earning a high salary and being wealthy ranked second (52%) among their top ambitions, but when asked if the goal was attainable, Millennials ranked it last. Slightly less than half (49%) in the Deloitte survey said they wanted to own a home, and 46% said “making a positive impact in their communities or society at large” was a top goal, placing higher than having a family (39%).
According to a study by The Wall Street Journal and NBC News, Millennials place a lower priority on values that were hallmarks of their parents’ and grandparents’ generations. Since 1998, the number of Americans who rank patriotism as “very important” dropped nine points, religion dropped 12 points, and having children dropped 16 points. Those 55 and older were nearly twice as likely as 18- to 38-year-olds to rank these things as “very important.”
According to a study by Pew Research Center, “Millennial Life: How Young Adulthood Today Compares with Prior Generations,” Millennials are better educated than previous generations, with 39% having a bachelor’s degree or higher. This compares to just 15% of the Silent Generation, approximately 25% of Baby Boomers, and 29% of Gen Xers who had college degrees at the same age.
The study finds this educational attainment is responsible for a broadening income gap within the Millennial generation. Pew Research calls a college degree, “the dividing line between Millennial Haves and Have Nots.” Despite the student loan debt that often accompanies a degree, the study notes “Millennials with a bachelor’s degree are doing as well as or better than Gen Xers, Baby Boomers, or older Americans (the Silent Generation) at the same age. Millennials without a bachelor’s degree are doing worse.”
Millennials and Gen Zers are more diverse and multicultural than any other generation, and the trend is expected to grow. According to the ARF Cultural Effectiveness Council, multiracial and multiethnic births in the U.S. climbed from 5% in 1980, to 10% in 2000, to 14% in 2015.
The so-called “Genderless Generation” is blurring the lines between genders and traditional views on masculinity and femininity. INC. reports younger Millennials and Generation Z are spearheading the growth in awareness and acceptance of non-binary, transgender, and gender-fluid lifestyles, and are supporting companies such as Sephora and Tiffany & Co. that feature diversity in advertising, and have introduced genderless makeup, fashions, jewelry, and other products.
“Wellness” is a key focus for this generation, and it’s fueling growth in fitness pursuits, self-care regimes, and products made with botanical ingredients. The group is concerned about getting proper sleep, wants to connect with nature, and gets behind products that promote body-positivity.
What’s on Their Minds?
The “Deloitte Global Millennial Survey 2019” finds that Millennials and Gen Zers feel increasingly pessimistic about the world. While 45% reported being “hopeful” in 2017, that figure dropped to 26% this year. They are disillusioned with their lives, jobs, financial situations, and traditional societal institutions, and are mistrustful of the mass media, the government, religious, and business leaders. Deloitte calls the cohort “Generation Disrupted” and says “continuous change and upheaval” in society and their everyday lives have “created a population that is different at its core.” Deloitte reports the group has “a palpable deterioration of optimism and a wide variety of . . . anxieties weighing on their minds.”
Millennials are stressed out. According to the American Psychological Association, Millennials report the highest stress levels of any generation, and 39% say their stress has increased in the last year. By contrast, 36% of Gen X, 33% of Baby Boomers, and 29% of the Silent Generation report increasing stress levels.
Despite – or perhaps, because of – 24/7 connectedness with other people through their mobile phones and social media, 30% of Millennials said they always or often feel lonely, 27% said they had no close friends, and 22% felt they had no friends at all, according to a survey by market research firm YouGov. With numerous medical reports linking chronic anxiety, isolation, and stress to inflammation, a contributing factor in high blood pressure, heart disease, and cancer, this state of being could be a harbinger of long-term health effects for the generation.
It doesn’t appear to be any better for Gen Z. According to Pew Research Center, 36% of 12- to 19-year-old girls say they feel “extremely anxious” every day. Most teen girls indicate their best friend is their mom. They are less likely than previous generations to work, date, or have a driver’s license, and spend most of their free time inside, alone, and on their phones.
The Deloitte Study shows climate change/protecting the environment is the top worry for Millennials, cited by 29% of participants, and far ahead of income inequality/wealth distribution, which comes in second on the list of concerns at 22%.
To help relax and generate feelings of calm and well-being, Millennials are turning to yoga, meditation apps, ASMR videos of repetitive soft sounds and behaviors, and “slow-TV” programming, featuring hours-long, yule-log-like coverage of mundane activities such as ironing, a cargo ship’s voyage through the ocean, or a days-long train ride through the mountains.
Millennial trends-monitor YPulse reports a record number of young people are not having sex. The General Social Survey reveals 23% of 18- to 29-year-olds have not had sex within the past year, nearly double the percentage reported in 2008. While female celibacy rose 8% in that period to a total of 18%, male celibacy nearly tripled to 28% during that time. The trend is blamed on a greater percentage of young men living at home, and “excessive tech use.”
CB Insights reveals Millennials would rather travel than pay off debts or buy a home. YPulse trends newsletter reports that more than half of Gen Zers and Millennials have cut back on daily expenses to afford to travel more. “Generation Wanderlust” is driving airlines to add routes to more exotic and far-flung locales to appeal to the generation’s desire for different and unique travel experiences. YPulse also reveals older Millennials are willing to spend more on travel experiences such as preferred economy class and luxurious camping known as “glamping.”
In fact, Millennials are fueling a surge in camping in general. Kampgrounds of America reports 56% of all new campers last year were Millennials.
The health-conscious generation is into fitness; 76% of Millennials report exercising weekly, versus 70% of Gen X, and 64% of Baby Boomers, according to a CB Insights report.
Millennials have been called “the most nostalgic generation ever.” Despite not having a long past to pull from, the generation longs for the “good old days.” They are into retro brands, ’90s fashions, and TV shows, movies, and other nostalgia from their childhood. The trend is attributed to the fast pace and disruption in the world today.
According to The Wall Street Journal, this generation is obsessed with selfies. It has led to a surge in makeup sales – they want to look good in those close-ups. But selfies are also responsible for a far more serious Millennial trend. CNN reports that more than 250 people worldwide have died taking selfies between 2011 and 2018, most of them were males under the age of 30. The incidents are rising as people strive to capture the ultimate selfie in unique and often dangerous locations in pursuit of “likes.”
A penchant for posting everything from selfies to dinner-plate pics, has led manufacturers to develop products with Millennials in mind. One example: Driscoll’s Berries introduced a limited-time-only line of blush-pink Rosé Strawberries and Rosé Raspberries. The berries match the color of trendy, often-Instagramed, rosé wine.
Foodie Culture: What They’re Eating and Drinking
Millennials love food and entertaining, and are more engaged with food than any other generation. According to a report by consumer trend data company Mintel, 58% of Millennials consider themselves “foodies.” They regard the foods they eat, the beverages they drink, and the way they cook as a form of self-expression, a personal representation, and part of their pursuit of experiences.
Millennials want information about their food, including how it was grown or made, where it came from, and who made or cooked it. They are interested in artisanal ingredients, and authentic dishes and cooking techniques.
The generation is more experimental in what they eat and drink, and, according to The Wall Street Journal, craves new flavors, textures, and taste experiences. The Specialty Food Association reports the exposure to global cuisines while traveling is propelling Millennials’ interest in trying and learning to cook different ethnic cuisines.
Food is one of Millennials’ top monthly expenses, according to YPulse. A study by Rabobank finds Millennials spend more on food than any other generation, a direct correlation with their penchant for organic, grass-fed, free-range, all-natural, artisanal, and other premium-priced foods.
Trend expert Tom Mirabile told attendees of the 2019 International Home & Housewares Show, that young consumers do not consider cooking a women’s task, but rather a “craft or skill.”
According to a survey by food trends newsletter “The Spoon,” 95% of young Millennials say they cook at home weekly, more than any other generation. About half cook between five and seven times a week, comparable to other generations, however, the group is least likely to cook at home every day.
One reason for this could be Mintel’s finding that 57% of Millennials believe meal-planning takes too much time. As a result, the generation eats out often – an average of 90 times per year, according to “Food Navigator.” This is especially true of Millennials with children, according to consumer research firm The NPD Group, which reports a 5% increase in foodservice visits among Millennials in 2018, compared to flat restaurant-industry sales overall. Dinner is the meal Millennials eat out most often, and at fast-casual restaurants with lots of menu choices, including healthy options.
This is a generation of snackers, grazing on mini meals throughout the day. Trend expert Tom Mirabile says many Millennials have replaced one meal of the day with two snacks. He also says Millennials are less likely to eat around the kitchen table, with many eating in their bedrooms or on the couch.
What’s On the Plate?
Millennials are less loyal to food products and brands than their parents. They are more open to trying new and unique brands, particularly those that align with their nutritional preferences or “represent them.”
Sixty percent believe their generation is more health-focused than other generations, and they prefer all-natural, less-processed foods with fewer ingredients. YPulse reports 50% of Millennial and Gen Z shoppers buy organic food, versus 30% of Baby Boomers; 20% buy organic “all the time,” compared to 8% of Gen X and 7% of Baby Boomers.
Millennials are credited with growing sales of plant-based foods, frozen foods (particularly those that are healthy and plant-based), and CBD-oil-enhanced foods and beverages.
According to “Food Navigator,” 57% of Millennials say they follow a special diet, such as plant-based, vegan, keto, Whole 30, or paleo. A significant number also report cutting back on sugar, carbs, meat, or other foods.
This makes it challenging to host dinner parties, but Millennials persevere nonetheless. The generation loves to entertain, and according to “Food Navigator,” hosts an average of 41 dinner parties annually.
Shifting Millennial tastes are accused of killing processed foods such as soda pop, mayonnaise, canned tuna, American cheese, and breakfast cereals, leaving food companies scrambling.
According to the The Wall Street Journal, the cereal industry is trying to turn around sagging sales by repositioning some of its products as snack foods, packaging it in individual bags to appeal to snack-happy Millennials.
The generation likes bold flavors and spicy cuisines, and food companies are revamping offerings with spicier flavor profiles targeted to Millennial preferences. For instance, spice maker McCormick & Company has teamed with the online, step-by-step recipe-video platform Tasty – a Millennial-fave – to develop a line of co-branded seasoning kits. The spice blends, labeled Fiery, Zesty, Jazzy, Hearty, and Savory, are featured in a series of Tasty video recipes, created with the generations’ palate in mind.
Liquids and Libations
There is a “sobriety shift” and “moderation movement” within the generation. According to a Bank of America Merrill Lynch study, more than 30% of Millennials report cutting back on alcohol, up from 22% last year. Bars, restaurants, and beverage companies are responding with introductions of low-to-no-alcohol “mocktails,” non-alcoholic rosé wines, drinking vinegars, and other virgin libations.
When they do drink, many Millennials often opt for hard seltzer as a lighter and lower-alcohol alternative to mixed drinks. Millennials also like wine – they consume 42% of it in the U.S., helping to grow wine sales 33%, according to YPulse. Mintel reports Millennials are fueling the 125% growth in canned wine, and are the targets for new “lower-priced-premium” wine labels.
Millennials prefer craft beers over mass-produced brews, and are, in part, responsible for the 1% decline in sales of big-brand beers in 2018. During the same period, sales of craft beers produced by smaller, independent brewers grew 4%. For Millennials, discovering craft beers is in keeping with their pursuit of experiences.
Millennials are also credited with driving huge growth in sales of coffee, seltzer waters, plant-based milks, and kombucha, a fermented tea drink.
In the Workplace: Financial Statement
Depending on their position on the generational age continuum, Millennials are likely to report different workplace experiences and outcomes. The “Great Recession,” according to “Business Insider,” is responsible for the distinction. Older Millennials, who entered the workforce during the economic downturn, faced a challenging job market, stagnant wages, and greater and longer-lasting financial difficulties. Younger Millennials, who started working during the improved, post-recessionary economy, faced better job prospects and pay, and have been able to save more.
Overall, according to YPulse, Millennials are “well-educated, entrepreneurial, and digitally savvy” in the workplace, and “thrive when working in fast-paced business environments, solving challenges, and creating new business models” that disrupt the status quo.
Millennial employees want workplace policies and perks such as flexible work hours, sabbaticals, and ample paid-time-off. Thanks to technology, they feel untethered to a desk and desire the opportunity to work from home or remotely, at least occasionally. YPulse reports these trends are “becoming the norm as young people prioritize their time and experiences over the hours they clock in at their desks.”
The Next Generation Workplace Study from management firm 15five, reveals young workers expect employers to foster an atmosphere of work-life balance that supports their psychological wellbeing. They also want frequent feedback from managers.
According to Pew Research, 72% of Millennial women are now in the workforce – more than any other generation at the same age. This is driving an expectation of gender equality at work, including equal pay for women, and flexible family leave policies for both sexes.
A study by professional staffing and executive search firm The Addison Group, finds Gen Z (44%) and Millennials (41%) negotiate salary more than Gen X (33%) and Baby Boomers (19%). It also reveals 45% of all employees believe Millennials get the most favoritism in their workplace, as a result of their digital prowess.
Contrary to popular belief that the generation job-hops frequently, Pew Research reports nearly 80% of Millennials have been in their current jobs at least 13 months, and about half have been with their employer for at least five years. According to The Addison Group, salary is the most important determinant of job loyalty for Millennials (62%). For Gen X (63%) and Baby Boomers (67%), it’s satisfaction with the work they do. Gen Zers require good work-life balance (64%) to earn their loyalty.
Millennials are behind the “Slow Work” movement, a counter-response to Baby Boomers’ hectic pace, work-related stress, and burnout. The philosophy, which advocates periodically skipping the commute and working from home, taking midday naps, “timeboxing,” and “monotasking” instead of multitasking, is said to improve quality of life and productivity.
The Wall Street Journal reports Millennials are embracing the “Gig Economy” as a lifestyle choice. It notes the practice of taking freelance jobs or “side hustles,” such as driving for Uber, is a trend that’s here to stay. According to the Deloitte Global Millennial Survey 2019, 80% of the generation finds the gig economy appealing. More than 60% of Millennials indicate they would take a side hustle to supplement existing income. Although only 6% currently take gig jobs instead of full-time work as their main source of income, 50% say they would consider doing so.
What’s in Their Wallets?
Improvements in workplace culture have not included the paycheck for many Millennials. According to “Business Insider,” the average Millennial makes $35,592 in annual salary, 20% less than Baby Boomers made at the same age, when adjusted for inflation.
According to the The Wall Street Journal, Millennials are “in worse financial shape than any preceding generation, and may never recover.”
“Business Insider” estimates the average Millennial’s net worth at about $8,000 – a decline of 34% since 1996, and lower than Gen X’s or Baby Boomers’ net worth at the same age in inflation-adjusted dollars. The report reveals 58% of the generation has less than $5,000 in savings.
Many Millennials are saddled with student load debt. Pew Research Center reports 34% of people ages 18 to 29, and 22% of ages 30 to 44 still owe on student loans. The youngest Millennials, graduating in the class of 2018 last year, left with an average student loan debt of nearly $30,000.
Not surprisingly, many Millennials are not financially independent. Country Financial reports 53% of Millennials get help from parents or other family members to pay for rent, cellphone, groceries, and gas. Bank of America puts the number even higher – its survey shows 79% of parents are financially assisting their young-adult children with the likes of tuition, student loans, rent, and other bills.
Often portrayed as blowing their income on avocado toast, “Business Insider” reports that Millennials are actually financially savvy, disciplined spenders, and working hard to catch up. It says 75% have a budget and stick to it. Most are contributing to their 401(k) and saving for emergencies.
According to YPulse, on average, Millennials say 31 is the age when they finally feel like they’re “adulting.” The majority believe purchasing a home makes them a grown-up; slightly less believe it’s buying a car. For 32%, buying a coffee maker is their adult-milestone moment.
Routinely mocked for living in mom’s basement and parenting puppies rather than children, Millennials have long been accused of “failing to launch.” While that is decidedly not the case, the generation has taken significantly longer than previous generations to hit traditional major milestones. In fact, the The Wall Street Journal describes Millennials as, “Playing catch-up in the game of life.”
But that situation is finally changing, particularly for the older members of the cohort, who are now well into their 30s.
To assess how the generation is doing on meeting milestones, it makes sense to break the group into two segments that more accurately reflect the different life stages within the cohort’s broad age range. Older Millennials – about 31 to 38 years old – are more likely to have started hitting milestones such as getting married, having children, and buying homes. Young Millennials – approximately 23 to 30 years old – are more likely to be single, building a career, and either renting apartments or living with parents.
Love and Marriage
Pew Research Center estimates that 46% of Millennials age 25 to 37 are married. That is down from 83% who were married at the same age in 1968, and reflective of a downward trend in marriage since then.
According to a Nuveen Real Estate study, 51% of 18- to 34-year-olds are currently single without a steady romantic partner; the figure was 33% in 2004 and 45% in 2016.
Millennials are interested in marriage, but they are putting it off. According to Pew Research Center, in 1968, the average age to wed was 21 for women and 23 for men. Today, it’s 28 for women and 30 for men.
But the good news is that the generation is finally beginning to marry and form households. Wells Fargo Securities forecasts that, if current trends continue, there will be 1.54 million new Millennial household formations annually for the next five years. This is significant because getting married and having children are the two biggest predicators of home ownership, and home ownership drives sales of products across a multitude of industries.
The way people find mates is changing. “MarketWatch” reports a study from Stanford University and the University of New Mexico shows nearly 40% of heterosexual couples and 64% of same-sex couples now meet online. Millennials’ and Gen Z’s comfort with the digital space is replacing singles bars, introductions by family and friends, work, and school as the way to meet a romantic partner.
When they do get hitched, Millennials are increasingly likely to ask for a prenup. According to the American Academy of Matrimonial Lawyers, 62% of divorce attorneys have seen a greater number of requests for prenuptial agreements, with over half indicating the trend is being driven by Millennials. The reason, according to the report, is likely due to the cohort waiting longer to marry and wanting to protect their accumulated financial assets.
… and Baby Carriage
Although they have also put off having children, Millennials do want a family. According to Pew Research Center, 52% of the generation says parenthood is one of their most important lifetime goals – well ahead of the goal of marriage, at 30%.
Pew’s data indicates 40% of Millennials are now parents, with more than 1 million Millennial women giving birth annually since 2016.
Even so, the cohort is on track to have fewer kids than previous generations, according to the Institute of Family Studies. It estimates Millennials will have a total of 75 million children throughout their child-bearing years.
Millennial moms are older than previous generations, a trend that started in the 70s and continues today. The average age of a first-time mom has risen two years in the past two decades, according to The New York Times. It reports a correlation among older parenthood, higher education, and socio-economic status. The average age of a first-time mother with a college degree is 30.3 years old; without a college degree, 23.8 years old.
Millennials may be delaying having kids, but in the meantime, they are becoming pet parents. Millennials make up 35% of U.S. pet owners, and 76% of them (versus 50% of Baby Boomers), say they pamper their pets, splurging on the likes of organic, vegan, and grain-free pet foods, spa treatments, and other indulgences.
YPulse reports 25- to 34-year-olds spend the most on wellness supplements for pets, such as CBD chews and fish-oil pills, noting, “Products that were considered luxuries by earlier generations are now considered essentials by Millennial pet owners.”
Millennials also practice parenting on plants. In fact, indoor plant sales are way up, a trend that YPulse theorizes is because plants “offer a sense of caregiving and responsibility.”
Forming Households: The Boomerang Generation
About 20% of Millennials – more than 14 million – live with their parents today, more than double the 6.8 million that lived at home in 2000, according to a study by Zillow.
The number of boomerang Millennials (so called because they have returned home after college) is growing, despite the fact that the unemployment rate for Millennials has fallen from 19.5% in 2010 to 10.3% in 2019. According to “Builder Online,” this suggests that young adults are “struggling to afford independent housing even while holding a job.”
Young Millennials are having difficulty coming up with the funds to move out on their own. With monthly rents steadily escalating – up 2.5% in the last year alone – a Zillow study found today’s renters need 18 months longer than their parent’s generation required 30 years ago to save for a security deposit and other up-front rental costs.
Living at home can be an effective strategy to save for a security deposit on a rental, a downpayment on a home purchase, or other significant expense. In fact, Zillow reports living at home rent-free can get Millennials into homeownership three years sooner than if they were paying rent for an apartment.
The National Association of Realtors indicates younger Millennials are the most likely to move directly from their parents’ home into homeownership. Nine percent of older Millennials bought a multi-generational home with their parents to boost affordability.
Location, Location, Location
Not surprisingly, expensive metro areas such as San Francisco, New York, Miami, and Los Angeles, have a greater share of boomerang Millennials – 31% on average. According to the U.S. Census Bureau, the rate is highest in New Jersey where 47% of 18- to 34-year-olds lived with their parents in 2015, up from 36% in 2005. The situation is better in areas such as Seattle, Austin, Portland, Kansas City, and Denver, where only about 15% of Millennials live at home.
When Millennials move out of the nest, they are likely moving to places such as Dallas; Seattle; Portland, Oregon; Columbia, South Carolina; and Norfolk, Virginia – the top five cities for Millennial migration, according to the U.S. Census Bureau. With the exception of St. Paul and Minneapolis, Minnesota, the top 25 cities where Millennials are moving are all in the South and West; no Northeast cities made the top-25 list. The study finds New York City, Chicago, and Miami are losing the most Millennials.
According to Ernst & Young, overall, the number of Millennials living in the suburbs (38%) compared to cities (37%) is pretty evenly split. However, among Millennial homeowners, it shifts to 41% living in the suburbs and 31% living in cities, with affordability being a key reason. Many Millennials are combining the best of both worlds by buying homes in urban-adjacent suburbs, allowing them to be close to employment opportunities, have a shorter commute, and enjoy access to city lifestyles and entertainment, but at more affordable prices.
Toll Brothers at Blackstone - The Retreat Collection, and Aracena Contemporary Model.
Home Sweet Home
Speedbumps on the Highway to Homeownership
Research shows Millennials have a strong desire to own a home. A survey by online loan marketplace LendEDU indicates 89% of 23- to 38-year-olds “wish to become a homeowner at some point in their lives,” versus 11% who say they never want to own a home. The dream, however, is often thwarted or delayed by the struggle to save for a downpayment.
U.S. Census Bureau and Department of Housing and Urban Development data from August 2019 shows the median purchase price of a newly-constructed home is $328,400. The median purchase price of an existing home is about $267,000, up 3.5% from a year earlier, according to the National Association of Realtors. In some areas of the country – particularly the Northeast and California markets – home prices can skew significantly higher.
According to Nuveen Real Estate, factors such as declining home affordability, student loan debt, lower income levels, and stricter lending requirements, are common impediments that delay or prevent Millennial home purchases.
Student loan debt is the reason 31% of Millennials put off buying a home, according to Forbes. “Builder Online” puts the figure at 61% for younger Millennials. The National Association of Realtors estimates student loan debt delayed a Millennial first-home purchase by a median of two years.
There is a catch-22 regarding student debt and homeownership, however. While education-related loans do, in fact, delay home purchases for many Millennials, according to YPulse, “basically, the only way to get your foot in the housing door is to have a degree, even if it comes with debt.”
The “high cost of living” prevents 45% of 23- to 38-year-olds from becoming homeowners, according to YPulse. Comparatively, 38% of Gen X and 31% of Boomers cite high living costs as an impediment.
Lack of affordable housing – particularly in urban areas – is another factor keeping the generation from buying a home. According to Nuveen Real Estate, over the past three years there has been a 20-point decline in the Home Affordability Index – a measure of how much income is required to qualify for a loan.
But not all Millennials are struggling to afford a home. Some have substantial budgets, thanks in part to being older when they first buy, with higher incomes and greater wealth amassed from saving while living at home, inheriting money, or receiving downpayment assistance from parents. This segment of the cohort sometimes skips the entry-priced starter home entirely and opts for a larger, pricier property.
Toll Brothers, the nation’s largest luxury homebuilder, reports nearly 25% of its buyers are under age 35, with average contract prices over $837,000. TRI Pointe Homes’ Viridian at Esencia in Rancho Mission Viejo, California, a community targeted to the Millennial move-up homebuyer, has 72 single-family homes starting at over $1 million.
It Took a While, But It’s Finally Happening!
The good news is, at long last, Millennials have officially entered the housing market. According to the National Association of Realtors’ “2019 Home Buyers and Sellers Generational Trends Report,” last year Millennials represented 37% of the nation’s total homebuyers, the largest share among all generations. According to Zillow, the cohort accounted for 56% of first-time homebuyers.
A study by Genworth Financial estimates more than two million first-time homebuyers bought a single-family home in 2018.
The Census Bureau’s “Housing Vacancy Survey” shows homeownership has been on a steady growth trend since 2015. Though still down from its peak of 69.2% in 2004, the overall homeownership rate for U.S. households hit 64.8% in 2018. According to the National Association of Home Builders’ “Eye on Housing” report, 36.5% of Millennials owned a home by the end of 2018, up half a percentage point from 2017.
Zillow reports that the number of rental households declined by 754,000 between 2016 and 2018, signaling a transition from renting to owning.
It appears the trend will continue. According to the National Association of Home Builders’ “Housing Trends Report,” 22% of Millennials say they plan to purchase a home within the next 12 months. A study by LendEDU indicates 65% of Millennials who do not currently own a home, expect to become homeowners within the next one to five years.
“MoneyWise” reports that, over the next decade, nearly 45 million Millennials will turn 34 – the median age of first-time homebuyers, according to Zillow – and enter their prime homebuying years. According to “MoneyWise,” that translates to “7.4% more first-timers than during the last decade.”
At a median age of 34, Millennials are older than previous generations when buying their first home. They are also not as likely to be married. The National Association of Realtors’ “2019 Home Buyers and Sellers Generational Trends Report” reveals 63% of recent homebuyers were married and 34% were unmarried.
In the latter category, 8% of homes were bought by unmarried couples, most of whom were under age 29. A combined 26% of homes were bought by single people, with single females (17%) far outpacing the number of single males (9%) buying homes.
Single female homeownership – it’s as likely to involve single Millennial career women as older single women downsizing after divorce, retirement or the death of a spouse – is a growing trend, up 11% since 1981, according to US News & World Report.
Though Millennial homeownership rates are climbing, attaining this American dream is not uniformly realized within the generation. A study by The Urban Institute reveals 40% of white Millennials own homes today, however, the same is true of only 13.4% of African Americans, 27.2% of Asians, and 24.6% of Hispanics. The report also indicates the likelihood of Millennials owning a home is 9% greater if their parents owned a home, a trend that could continue to “perpetuate (homeownership) disparities among white, black, and Hispanic Millennials.”
In a highly competitive market with very limited affordable housing stock, 41% of Millennials made an offer on a home without first seeing it in person. Comparatively, 30% of Gen X and 12% of Baby Boomers have made an offer sight-unseen. The trend has been growing for the past two years, with the help of proliferating online real estate resources.
Interestingly, while Millennials are buying homes, Baby Boomers are increasingly selling them and renting instead. A study by real estate website RentCafe shows the homeownership rate for those 65 years and over is declining, while the number of renters in that age group has grown by 43% over the last decade, faster than any other age group. The trend is especially prevalent in Sunbelt cities such as Austin, Texas, where the number of 60-plus renters grew 113% in the last decade.
TRI Pointe Group - Sundance at Cordes Village, Residence 2, Mountain House, California.
Paying for It
For Millennials, the desire to own a home is often at odds with the ability to afford one. According to “Builder Online,” an analysis of U.S. Census Bureau data shows median home prices have risen more than 120% since the 1960s, yet median household income has only increased 29% in the same period. More recently, home prices jumped 47% between 2012 and 2018 while, comparatively, wages rose just 16%, according to the National Association of Realtors.
The situation is not much better for renters. “Builder Online” reports median gross rents climbed 72% over the last five decades, more than double the growth of adjusted incomes. The predicament makes it more difficult to save for a home and transition from renting to buying.
YPulse says, to make home purchasing more affordable, young buyers are looking for homes in less costly areas and making lower downpayments. Today, the median downpayment amount for first-time homebuyers is 7%, according to the National Association of Realtors. Doing the math, that translates to an $18,700 downpayment on a median-priced existing home, and about $23,000 on median-priced new construction.
Paying a 20% downpayment, which avoids additional mortgage insurance, would require coming up with $53,400 for that median-priced existing home and $65,680 for the median-priced new-construction home. Of course, in many areas, homes cost far more than the median price and would require a considerably larger downpayment.
A study by Apartment List shows nearly half of all Millennials currently renting haven’t saved a penny toward the downpayment on a home purchase, and only 11% have saved $10,000 or more.
According to Bankrate, Millennial homebuyers estimated they would need three years on average – more than any other generation – to save enough for a downpayment.
However, Bankrate says there is frequent confusion over how much downpayment is actually required to purchase a home. Its research shows 51% of Americans did not know the minimum-percentage downpayment requirement. Only 2% of respondents knew about available FHA loans requiring as little as 3.5% down, and conventional loan options requiring between 5 and 20% down. (Regardless of the type of loan, additional mortgage insurance is typically required with downpayments less than 20%.)
A report from Zillow shows half of all first-time homebuyers rely on two or more sources to fund their downpayment, often parents or family members. Bankrate research reinforces that finding; it says 33% of Millennial homebuyers received some or all of their downpayment as a gift from family or friends.
Realtor.com reports that, since January 2017, Millennials have taken the lead in mortgages purchased. In 2018, Millennials took on 47% of all new mortgages, compared to 36% for Gen Xers and 17% for Baby Boomers. The cohort also is responsible for 42% of new mortgage loans by dollar volume, the largest of any generation.
When they do finally buy a home, a Bankrate study shows 63% of Millennial homeowners regret their purchase, compared to 44% of U.S. homeowners overall. Unexpected maintenance expenses, buying the “wrong house,” and buying in the “wrong location” top the list of regrets.
What Millennials Want in a Home
Quality Over Quantity
Millennials have distinct ideas about what they’re looking for in a home. For one thing, size matters. The generation regards the oversized and often cheaply-made “McMansions” that Baby Boomers coveted, as symbols of excess. In fact, the The Wall Street Journal points to a glut of huge, million-dollar homes languishing on the market in many areas, as a result of Baby Boomers downsizing; Millennials don’t want them.
The cohort has no desire to waste money on unused formal living spaces, impractical furnishings, and superfluous “stuff.” Instead, the article says, young homebuyers prefer smaller, modern-style homes in walkable areas.
“Business Insider” reports first-time Millennial homebuyers purchased an 1,800 sq. ft. home, on average.
According to the U.S. Census Bureau, the average size of a home in the U.S. has declined for the last three years. The average new single-family house was 2,549 sq. ft. in 2018, down from 2,624 sq. ft. in 2016. The Home Innovation Research Lab’s “2019 Builder Practices Survey” says the size decline is driven by demographics; more Millennials are buying homes, and smaller homes appeal to their preferences and budgets.
Millennials are also influencing the characteristics of new-construction homes. According to a study by the Home Innovation Research Labs, the number of single-story homes is increasing today, as are homes with crawlspaces or slab foundations. The total number of rooms and closets in the home is down, and the number of homes with gas-fueled appliances and heating is down, as well. These cost-cutting measures not only keep the price of the home down for Millennial buyers, they allow for the inclusion of higher-end features and finishes Millennials desire, such as two-car garages and hardwood or ceramic-tile flooring, all of which are increasing in new construction.
According to the NAHB, new townhome construction is on the rise, up 24% in 2018, as builders target Millennials transitioning from rentals to homeownership. Townhouses accounted for 14% of all new-home starts in 2018. Often tricked out with features such as two-car garages and private balconies, decks, or rooftop outdoor living areas, townhomes offer the size and characteristics of a single-family home, the premium amenities Millennials have come to expect, and the city-like walkability they desire, but at a lower price point. Another benefit: the low-maintenance, “lock-and-leave” townhouse lifestyle allows Millennials the time and ability to pursue travel and other experiences.
Fit, Finish, and Features
Millennials want flexibility in their homes, with open-concept floor plans and multi-purpose furnishings that can maximize limited space and adapt daily to changing needs.
They have high standards regarding the finishes, features, fixtures, appliances, and other appointments for their homes, demanding high functionality, durability, and sustainability, as well as beauty. They prefer a sleek and neutral design aesthetic, accented with pops of bold color, or unique, statement-making features to differentiate their home from their neighbors.’
In the kitchen, the National Association of Home Builders reports 31% of Millennials prefer white cabinets, far greater than the second choice – dark brown – at 18%. Stainless-steel appliances are preferred by 64%, well ahead of black (22%) or white (12%). For counters, 62% of Millennials want granite, compared with 17% who want quartz, 12% laminate, and 7% solid surface.
Millennials demand strong Wi-Fi and fast Internet in their homes, serving their need to be constantly connected. These features are becoming particularly critical as Millennials are allowed to work from home more often.
TRI Pointe Group - Sundance at Cordes Village, Residence 1, Mountain House, California.
Outdoor Living Is Important
Outdoor living spaces are vital to Millennials. According to the National Association of Landscape Professionals, 82% of Millennials say having a lawn is the most important priority when buying a home, even ahead of an updated kitchen.
Research by TRI Pointe Homes supports this, finding a “big backyard” is important to Millennial homebuyers who see it as an extension of the living space. In response, the company created an optional outdoor amenity package designed to appeal to Millennial buyers at its Viridian at Esencia community in Rancho Mission Viejo, California. Add-on options include a fire pit, outdoor kitchen, and choice of a cabana, casita, or an indoor-outdoor “California Room” with sheltered living and entertaining space that can be outfitted with a bar, television, and comfortable furnishings.
Eighty-one percent of Millennials consider a patio a “desirable or essential” home feature, according to a National Association of Home Builders report on home amenities, ranking third on the list of Millennials’ most-wanted home features. The report notes, “It may be a bit surprising that something so non-essential to daily life is the third most wanted (home) feature,” but, it adds, “this is not an outlier.”
Exterior lighting is also on Millennials’ top-10 list of desired home features.
Given Millennials’ penchant for outdoor living, it’s not surprising that one-third of newly-built, single-family homes now have a patio or porch, according to the U.S. Census Bureau. The number of sliding doors connecting the interior spaces to those outdoor patios, is up, too.
The “State of Home Spending Report” from HomeAdvisor found that, when it comes to home improvement spending, Millennials are more likely to put money toward improving their property and outdoor spaces, while Baby Boomers and Gen X put money into changing the home design or interior aesthetics.
Do They Fancy Fireplaces?
An analysis of U.S. Census Bureau data reveals 41% of new single-family homes included fireplaces in 2018. The share of new, single-family homes with fireplaces has been on a steady decline since 2014, when it was at 46%.
The National Association of Home Builder’s “Eye on Housing” blog reports gas- and wood-burning fireplaces rank in the middle of a long list of features desirable to homebuyers, suggesting they might be waning in appeal. Only 16% of buyers rate a fireplace as an essential home feature.
Since a fireplace adds thousands of dollars to the price of a home, analysts believe the trend is a cost-saving measure. Builders are eliminating the nice-to-have-but-non-essential fireplace as a way to make the home more affordable.
When broken down by sale price, only 21% of homes priced $250,000 to $349,000 had a fireplace. This is the median purchase price-range on new and existing homes today, and is the typical target price for Millennial buyers. Comparatively, 65% of homes priced $500,000 to $999,000 had a fireplace.
U.S. Millennials have an estimated $600 billion in annual buying power, according to a study by Accenture. The Nielsen Company estimates Canadian Millennials have $13.2 billion in spending power. As consumers, this group behaves differently from previous generations and its shopping habits are disrupting retail.
Contrary to popular belief, most Millennials are thrifty and spend wisely. Bankrate calls them the “Cautious Generation,” noting nearly three-quarters of Millennials are limiting monthly spending to build savings. A Gallup poll referenced in Forbes, shows cash-strapped younger Millennials spend $20 less per day than previous generations.
A study by the Federal Reserve concludes Millennials spend less money because they have less money. Net worth has been on a steady decline in the country since 1996.
When shopping, Millennials prefer to pay with a debit card, prepaid card, or cash; only one in three has a credit card, according to Bankrate. In light of this, some upscale retailers such as Anthropologie are introducing interest-free layaway plans to help Millennials purchase higher-priced goods in installments.
What Are They Buying?
It’s been widely reported that Millennials value experiences over things. The New York Times says there has been a “significant shift in material culture” within the generation. Investment banking firm Goldman Sachs describes it this way: “Must-haves for previous generations are not as important to Millennials.”
The generation has little interest in fancy china, crystal, family heirlooms, formal living room furniture, and other material goods to keep up with the neighbors and maintain a “properly furnished” home. In fact, Goodwill and Habitat for Humanity thrift stores are overrun with household items donated by downsizing Baby Boomers because their Millennial-aged kids don’t want the stuff.
Instead, the generation favors minimalism over clutter, and prefers spending money on activities, events, and experiences that make memories. They want to buy a lifestyle, not a product.
This notion, along with other changing Millennial preferences, is making and breaking a slew of industries. Millennials are blamed for waning interest in golf, paper napkins, diamonds, and doorbells (young people text to announce they’ve arrived). The 11% drop in sales of men’s shaving products over the last five years is attributed to the many Millennial men who now sport beards, according to “MarketWatch.” “Business Insider” reports the generation doesn’t use liquid fabric softener, causing category sales to plummet – likewise, for bar soap. Despite overall growth in the shower-and-bath products category, sales of bar soap fell more than 2% between 2014 and 2015, attributable to Millennials who believe the bars collect germs.
On the flip side, Millennials are driving growth in sales of camping-related gear, houseplants, skincare products, seltzers, fitness wear, and gyms. They also spend more on holidays than other generations – particularly Halloween, Valentine’s Day, and Christmas. Although they are changing the way recorded music is consumed, according to “MarketWatch,” Millennials are solidly behind live concerts and entertainment. The
report indicates 73% of Millennials are willing to spend on live concerts and events (versus 65% of Gen X and 55% of Baby Boomers).
Resale, Rental, and Sharing
Many Millennials today are not shopping to own, but rather, renting or sharing the products and services they need. Indeed, the so-called “Rental Economy” is booming.
Ride-sharing services, such as Uber and Lyft, that drive you where you need to go at the touch of an app, have reduced the necessity for cars. Fortune reports 56% of travelers have stopped using rental cars, shifting to ride-share services instead.
Fashion-industry disruptors such as Rent the Runway – as well as a growing number of traditional clothing retailers such as Bloomingdales, American Eagle, and Urban Outfitters – now offer clothing subscription and rental services. Luxury retailer Lord & Taylor – the oldest department store in the country – was just acquired by the rental start-up Le Tote. West Elm, Ikea, and other stores are testing rental programs for furniture and home accessories.
Specialty outdoor gear retailer REI recently doubled its rental program, and now offers rentals of camping equipment, snowshoes, skis, snowboards, and other gear at 85 of its 154 total locations, with plans to roll it out to 115 stores in the coming year.
Led by Millennials and Gen Z, the resale and consignment market also is exploding. The movement started in the clothing industry as a result of young consumers’ interest in wardrobe “rotation over accumulation,” and a desire to divert some of the 26 billion pounds of clothing that ends up in landfills each year. Sales of secondhand clothing are expected to double to $51 billion over the next five years, according to the 2019 Resale Report by online thrift store thredUP.
The resale concept is moving beyond clothing to a host of other goods, as well – including patio furniture and grills – through local online sites such as Facebook Marketplace, Craigslist, Buy Swap Sell, and Nextdoor.
Where and How They Shop
According to a report from Goldman Sachs, Millennials shop by this mantra: maximum convenience at the lowest cost.
They are omnichannel shoppers, with about 60% of Millennials saying they use a mix of online and in-store channels to research and purchase products, according to studies in “eMarketer Retail.” The generation is likely to start the process of researching and comparison shopping online, regardless of whether they ultimately buy a product in-store or online. Reviews (43%) and price (41%) are the top factors that influence what and where Millennials buy, according to the e-commerce newsletter “Digital Commerce 360.”
Brick-and-mortar channels are still an important part of the Millennial shopping experience. The Millennial Shopping Report by online coupon platform CouponFollow, indicates Millennials currently make 40% of their purchases in-store. Older Millennials (43%) and Millennial women (42%) are slightly more likely to shop in-store than younger Millennials and Millennial men. A study from consumer analytics firm Buxton shows Millennials spend an average of $57 per in-store transaction, more than any other generation.
However, research indicates Millennials are moving away from brick-and-mortar to online shopping.
“Digital Commerce 360” reports Millennials are making fewer of their purchases in-store; since 2017 the number has dropped from 53% to 40% of purchases. An estimated 60% of the generation’s purchases are now made online, up from 47% in 2017.
YPulse reports the number of Millennials who browse and buy only in-store, fell from 18% to 13% between 2017 and 2019, and those who say they prefer to buy in-store after researching online, decreased from 31% to 22%.
Comparative studies show Millennials’ preference for digital shopping is growing, according to “eMarketer Retail.” A 2019 report shows the greatest share of Millennials – 39% – prefer to browse online and then purchase online, up from 30% in 2017. Showrooming – browsing in-store but purchasing online – also is up, from 6% to 8%, according to the study.
Tech-savvy Millennials are very comfortable shopping online for more and more things. In fact, a study in YPulse shows 40% of Millennial males and 33% of females would prefer to shop only online if they could.
Increasingly, mobile-oriented Millennials are using their phones to shop. Thirty-six percent of digital purchases are made on mobile devices today, up from 16% in 2017, according to CouponFollow’s Millennial Shopping Report. During the same period, the number of digital purchases made on laptops or desktops dropped from 31% to 24%.
A big chunk of those purchases are being made on Amazon. Research in Entrepreneur magazine shows Millennials are the most frequent Amazon customers, with 79% reporting they purchased from the site within the last month.
Free and fast delivery is a key motivator for buying online. To avoid shipping costs and get products in their hands even faster, more young shoppers are opting to “buy online and pick up in-store.” According to “eMarketer Retail,” two-thirds of Millennial and Gen Z consumers have tried “click-and-collect.” The National Retail Federation reports about 60% of shoppers did so to avoid shipping costs; other key reasons were speed (pick up the same day) and convenience.
They Put Their Money Where Their Causes Are
Gen Z and Millennial consumers want to do business with authentic and values-led companies. The Deloitte “2019 Global Millennial Survey” found 42% of Millennials have begun or deepened a relationship with a company because they believe its products or services have a positive impact on society or the environment. Conversely, 38% have stopped or reduced doing business with a company if they believe its products or services negatively impact the environment, and 37% have stopped because of the company’s ethics or business practices.
Cause-conscious young consumers want companies to focus on sustainability. YPulse reports over half of Millennials have taken steps to reduce their own consumption of single-use plastics, and want companies to reduce packaging waste, energy consumption, and greenhouse gas emissions. The generation says it is willing to pay more for sustainably produced products.
Companies are responding with products and initiatives that appeal to eco-conscious Millennial and Gen Z consumers. Vogue reports 150 brands have joined the G7 Fashion Pact, with goals of achieving zero greenhouse gas emissions, restoring biodiversity, and preserving the oceans. High-end retailer Nordstrom’s launched a new Sustainable Style online site, offering sustainably made products from socially- and environmentally-responsible factories and brands that give back, including Reformation, Patagonia, and Toms. Blanket company Sackcloth & Ashes donates a blanket to a homeless shelter for every blanket purchased and has a page on its website titled “Activism.”
Millennials also expect brands to support social-justice causes. According to an article in Forbes, 70% of Millennial consumers consider a company’s values when deciding to purchase a product. According to the ARF Cultural Effectiveness Council, Millennials say they feel pride in wearing or owning products from brands such as Patagonia and Toms that “showcase their values” and “stand for something beyond making a profit.” Remarkably, the study also shows that 45% of Millennials say they are “likely to boycott brands that mishandle social issues.”
Taking a stand on polarizing social issues can be risky, but according to “eMarketer Retail,” companies are increasingly willing to alienate some consumers to gain the support of the Millennial majority. For instance, a Quinnipiac University poll found 67% of Millennials approved of Nike’s decision to feature controversial former NFL quarterback Colin Kaepernick in its ads, and 34% of Millennials indicated they were more likely to purchase Nike products following the brand’s ad campaign.
On the Horizon…
Though young, Gen Z is already putting its own mark on shopping and spending. Bloomberg Businessweek reports one-third of Gen Zers believe shopping should also be entertaining. Despite being digitally savvy, they actually like shopping in brick-and-mortar stores, particularly in a mall. A report from the International Council of Shopping Centers found that 95% of them visited a shopping center in the past three months, compared with 75% of Millennials, and three-quarters of them say going to a brick-and-mortar store is a better experience than shopping online. They expect to find products geared to their generation’s tastes and interests.
Where to Reach Millennials
Millennials are constantly connected, yet connecting with them is tricky business. Capturing and holding the attention of this distracted generation is a challenge. Businesses trying to reach these digital natives need to revamp their marketing playbook and meet them where they are – which is usually online.
The Good, The Bad, and The Ugly of Being Constantly Connected
The Nielsen Company reports that the generation spends 11 hours per day “watching, reading, listening to, or interacting with” digital media, up from 9.5 hours four years ago. According to the Pew Research Center, 48% of younger Millennials and 36% of older Millennials say they are online “almost constantly,” compared with just 19% of 50- to 64-year-olds who report similar behavior.
A report in Forbes indicates 47% of Millennials say they can’t live without the Internet, and a survey from Techsurvey shows 63% of Millennials believe they are “addicted” to their mobile phones. It’s not hyperbole. Studies show 83% of Millennials sleep next to their phones, two-thirds take their phones into the bathroom, and more than half check their phones if they awaken during the night.
The obsession is creating serious consequences for the generation. The fear of being without one’s phone, or being unconnected due to a lack of signal or battery power, actually has a name: Nomophobia. The anxiety disorder is recognized by the National Institutes of Health; it reports as many as 23% of college-age males suffer from the affliction.
“Science Daily” explains cellphone overuse actually changes the brain, resulting in imbalances that decrease attention span, and increase depression, insomnia, anxiety, and impulsivity. This is especially true for Gen Z who have never known life without the Internet, and for whom a smartphone is practically an appendage.
The Atlantic reports the “iGen” cohort is “on the brink of the worst mental health crisis in decades,” with depression and suicide rates having skyrocketed among the group since 2011, blamed in part on overuse of cellphones and social media. A host of rehab facilities nationwide now offer programs to help treat cellphone addiction.
Social Media Engagement
While online, chances are good Millennials are engaging with social media. “Digital Information World” reports 25- to 34-year-olds spend an average of 2:37 hours per day on social media, second only to 16- to 24-year-olds who spend an average of 3:01 hours a day on social media platforms.
YouTube is one of the top sites visited by Millennials and Gen Z. Social media management platform Hootsuite reports 96% of 18- to 24-year-olds and 95% of 25- to 34-year-olds use YouTube. According to “eMarketer Retail,” 59% of Gen Z and 46% of Millennials have increased their use of YouTube in the past year; the platform now reaches more 18- to 34-year-olds than any traditional TV network. About 37% of 18- to 34-year-olds say they binge watch videos on the platform, according to Omnicore, and a study from Pearson/Harris shows 47% spend three hours per day on the site.
Seventy percent of Millennial YouTube users watched a video to learn how to do something, according to Hootsuite. Eighty percent of the generation finds viewing product videos helpful when researching prior to a purchase. And 60% of Millennials say they prefer to watch a company video than read a company newsletter, according to video production company Wipster.
In terms of the number of user accounts, Facebook remains a top platform for the generation, particularly the older segment of the cohort. Although Gen X and Baby Boomers are heavier Facebook users than Millennials, 88% of 18- to 29-year-olds and 84% of 30- to 49-year-olds are on the platform, according to “Business Insider.” Ninety-six percent of Facebook users access the site on their mobile phones, spending an average of about 35 minutes per visit.
However, the number of Millennial Facebook accounts and active usership rates are on the decline. A 2018 study from the Pew Research Center shows 44% of 18- to 29-year-olds and nearly 30% of 30- to 49-year-olds temporarily deleted the Facebook app from their phones within the last year. Smart Insights reports Facebook lost 2.8 million U.S. users under age 25 last year.
Instagram has more than 43 million active Millennial users in the U.S., spending an average of 53 minutes per day on the app, according to “Business Insider.” More than 70% of Instagram users are under age 35.
Pinterest, the fourth largest social media platform, is used by 34% of 18- to 49-year-olds, according to Pew Research Center. Eighty percent of Millennial Pinterest users say the platform helps them decide what to buy.
Snapchat reaches 75% of 13- to 34-year-olds, according to Hubspot. According to Pew Research, 51% of Gen Z says Snapchat is the platform they use most, followed by Instagram at 46%. Only 10% of Gen Zers use Facebook most often.
Reddit engagement is up 50% year-over-year among Gen Z & Millennials.
According to Wipster, Millennials connect with businesses through social media. About 84% of Millennial Facebook users follow companies on the platform; 76% on YouTube, 50% on Twitter, and 40% on Instagram.
But following companies on social media doesn’t guarantee customer loyalty. According to digital technology consulting firm Accenture, Millennials tend to view their social media relationships with companies as “transactional,” or a way to score deals. In fact, a study from Hanover Research indicates 56% of Millennials are willing to share their location and personal information to receive coupons or special offers.
Millennials are cord-cutters. Traditional paid television viewership is on a steady decline among 18- to 34-year-olds, dropping 12% in 2018, on the heels of a 13% decline in 2017, according to “Hootsuite.” It is being replaced with digital streaming services such as Netflix, Amazon Prime Video, Hulu, Sling, and Apple TV.
Of course, this trend is happening across all generations, but it is particularly pronounced among Millennials. According to Fortune, 88% of Millennials subscribe to Internet streaming services and 51% subscribe to traditional cable or satellite TV. Comparatively, 69% of overall adults subscribe to streaming services and 65% pay for cable.
Whether they’re watching traditional TV or streaming video, Millennials are likely to be multitasking. According to YPulse, 70% of Millennials say they are simultaneously on a second screen – either a computer or phone – and 75% are using social media, while watching a show.
As compared to older generations, Millennials are more likely to access news online from apps, podcasts, or even social media. Twitter is the social media platform most used for news. Reading a traditional print newspaper as a primary news source has declined steadily among the generation.
Bloggers, YouTubers, Instagramers, podcasters, and social media celebrities wield a lot of influence over the generation. According to “eMarketer Retail,” 40% of Millennials heed the recommendations of social media influencers, while only 9% of Baby Boomers do. Millennials regard influencers as authentic and objective third parties; Baby Boomers put more credence into recommendations from true industry experts.
YPulse calls Gen Z kids “household influencers.” The National Retail Federation reports 87% of parents say their Gen Z children influence family purchase decisions. After seeing a product promoted on social media by a celebrity, YouTuber, or Instagramer, 50% of six- to 16-year-olds have asked their parents to buy it, according to YPulse.
More Millennial Insights
As Millennials become your customers, it’s important to understand how they like to communicate and interact with businesses.
As anyone who’s ever called a Millennial can likely attest, the generation has largely replaced landlines with mobile phones, rarely answers phone calls (although, given the increasing inundation of spam calls, the same might be said of all generations), dislikes talking on the phone, and almost never uses voice mail.
The generation likes email, according to Forbes; more than 50% of young Millennials and 43% of older Millennials check email before even getting out of bed in the morning. So, perhaps it’s not surprising that 63% of Millennials prefer email for communicating with retailers, according to Entrepreneur. (Text messaging with retailers was preferred by 14%.)
One cautionary note: According to Forbes, 34% of Millennials say they are annoyed by brand emails that are “irrelevant” to them and have landed in their inbox as a result of data tracking and analytics. CNBC reports that fewer than half of the emails Millennials receive are actually opened.
When shopping in brick-and-mortar stores, Millennials are happy to avoid salespeople. Believing salespeople have ulterior motives, Millennials are likely to do their own product research online prior to walking into the store. According to “eMarketer Retail,” nearly 70% always or often consult online reviews before making a product purchase; they also solicit friends’ opinions, and use social media to ask for recommendations, collecting what they perceive as trustworthy and unbiased advice before buying.
Another interesting fact: A “Bizrate Insights” survey shows over 50% of Millennials use self-service checkouts. Given their apprehension about salespeople, a low-pressure approach on the sales floor would probably work best.
Opinions About Advertising
Possibly for the same reasons they don’t appreciate working with salespeople, Forbes reports 84% of Millennials don’t like or trust traditional paid advertising. They usually don’t pay much attention to it either – Nielsen reports the cohort has the lowest ad memorability score of any generation.
However, 57% of Millennials will view brand-sponsored content as long as it’s “authentic, entertaining, and useful,” according to Nielsen. They prefer “brand storytelling” over traditional hard-sell ads.
About 85% of Millennials find remarketing ads – ads that follow someone around online after searching a product or topic – to be “creepy” and “annoying,” according to a survey by Clever Real Estate.
But that hasn’t stopped them from making a purchase through ads on social media sites – 35% have reported doing so, according to “eMarketer Retail.”
Nearly half of Gen Z and Millennials say they would like to be able to buy items they see on-screen during television shows, according to YPulse, and 26% have actively tried to do so. Now some shows and videos are becoming “shoppable,” with embedded scannable codes that allow viewers to click on and purchase products directly from the screen. For example, the online video tour of Real Simple magazine’s 2019 Idea House is embedded with smart-code technology that gives consumers the ability to purchase more than 300 items featured in the home.
TRI Pointe Group - Sundance at Cordes Village, Residence 1, Mountain House, California.
Courting the Millennial Customer
While Millennials’ love of online shopping is widely reported, 56% of them actually shop in stores weekly (not including convenience or grocery stores) – that’s more than Gen X at 44%, and Baby Boomers at 27%, according to “Grow Wire.” The two main reasons Millennials choose physical stores over online sites: They don’t have to wait for product to be delivered (63%), and they get to see, hold, and/or try on product before buying (59%).
According to YPulse, “Retailers tend to think of stores as places to buy, but for Millennials, they’re really places to try.”
Creating an experience-driven retail environment is essential to building a Millennial customer base. According to Yes Lifecycle Marketing, 19% of Millennials consider the in-store shopping experience a top factor in determining customer loyalty. An inviting and compelling in-store experience could help drive foot traffic and trigger in-store purchases, particularly among the 21% of Millennials who almost always “showroom” (check out a product in-store, before purchasing online), according to YPulse.
Let the five senses guide and inspire fun, inviting, and memorable in-store shopping that experience-seeking Millennials can’t get online or at Big Box stores. How? Draw customers in visually with creative merchandising and displays. Create enticing aromas by always burning wood, charcoal, and/or pellets, and tempt taste buds with delicious samples. Engage Millennials with classes and workshops; let them touch, test, and interact with products.
If space permits, create a cozy living-room lounge with comfy furniture surrounding a fireplace or stove so customers can sit, feel the warmth, and imagine it in their own living room. Play music in the store daily; consider hiring a local musician or band that has a Millennial following to play during your store’s biggest annual event.
Displays, product selection, and events should be continually tweaked to keep experiences fresh and encourage repeat visits.
Tell Your Social and Environmental Story
Use social media, your website, and in-store signage to toot your horn about efforts you make that are important to cause- and sustainability-conscious Millennials. Let them know how many pounds of metal you recycle from the old grills and hearth products you haul away. If you sell poly-resin furniture made from recycled materials, tell them how much plastic each chair kept out of the ocean. Point out that the teak dining tables you sell are Forest Stewardship Council-certified.
Likewise, share information about the good deeds you do in the community; the charitable causes you support; the end-of-the-season pizza party you threw for the Little League team you sponsor – with pizza cooked in the pizza oven and served to players and their Millennial-age parents in your Outdoor Room display, of course. Tell about your support of hearth industry stove-change-out initiatives that have improved air quality in different communities.
Opportunities for Hearth, Barbecue, and Patio Retailers
Food-tech newsletter “The Spoon” reports 25% of young Millennials and 35% of older Millennials currently use a grill to cook meals. But considering the generation is finally getting into the housing market, and a grill purchase typically coincides with a home purchase, grill sales could grow significantly over the next decade.
More good news comes from a 2016 Rabobank study that finds U.S. Millennials spend an average of $11.91 per person on food for a barbecue, while cookout hosts of other generations spend an average of $6.90 per person on food. The reason: Millennials are interested in eating well and authentically.
For example, if burgers are on the cookout menu, Millennials are much more likely to source organic, grass-fed beef from their local butcher, grind it themselves, cook it over a live fire of all-natural, sustainably-sourced lump charcoal, and serve it on a bakery-fresh bun with melted artisanal cheese, a strip of uncured, heritage-pork bacon, and a slice of heirloom tomato they bought at the farmer’s market. Whereas their parents might have bought a sleeve of frozen hamburger patties, cooked them on the gas grill, topped them with American cheese and a squirt of ketchup, and served them on squishy white-bread buns.
Another way Millennials cook outdoors differently: According to a report in The Wall Street Journal, they are “over-indexing on charcoal grilling.” The experience of lighting the charcoal and grilling over fire could be behind the generational trend, or it might be because charcoal grills are typically cheaper than gas grills.
Millennials’ growing interest in camping, opens the door to sales of portable grills, fire pits, and tailgating gear. Grills with color finishes and tech features such as Wi-Fi-enabled controls and apps that monitor temperatures and provide recipes, should appeal to Millennials. Their desire for experiences makes them strong candidates for value-priced modular outdoor kitchens, cart-based or tabletop outdoor pizza ovens, and live-fire grills. These products have fast turnaround times (Millennials don’t like to wait) and provide the outdoor lifestyle Millennials want, at a price they can afford.
A Better Homes & Gardens survey shows Millennial homeowners love and want to improve their backyards. More than 50% say they want to decorate their outdoor space as they would an indoor dining or living room, and nearly a quarter want comfortable outdoor seating, dining sets, and accessories on the patio. Furniture with clean lines and compact footprints appeals to Millennial’s design preferences and small patios.
The generation loves fire pits. It is one of Millennials’ most-desired backyard features. A fire pit offers the promise of romantic evenings for two, wholesome family fun, and hip outdoor entertaining. It is also a relatively inexpensive and attainable entry point to introduce Millennials to the experience of gathering around a hearth, and to the beauty, warmth, and ambiance fire adds to a home. For Millennials, a fire pit could be a gateway to a hearth product inside the home.
As Millennials purchase homes and enter their prime spending years, this important and powerful generation is shopping now. Understanding what makes them tick and making the necessary adjustments to your store, product offerings, and marketing mix will help attract and retain this incoming wave of hearth, patio, and barbecue customers. Because Millennials aren’t the future, they’re here right now.