How Millennials will impact high-end home brands.
What if I told you that a group that makes up 20% of the affluent consumer base in the US is yet to fully participate in the economic recovery – but that when they return, their behavior will look nothing like the behavior of everyone else?
I’m talking about Millennials, the 80 or so million Americans aged 18 to 32. There has been much debate about when (or if) they will come off of the sidelines – and the impact they will have on high-end home brands.
I understand the skepticism. There are a lot of grim statistics about how this group has fared during the recession. For instance, the Pew Research Center recently found that only 34% of Millennials headed up their own household. But let’s face it: if you are 30 years old and have lived in your parents’ basement for the past few years, at some point you’re going to want to get out. Fannie Mae recently published a survey that found that 90% of renters under 40 indicated that they want to buy a home eventually.
Two big questions: when do they start moving up and out – and what does that mean for marketers?
As for when, Bloomberg recently suggested “in the next two to five years, these Americans will gain greater access to housing, lifted by higher levels of education and a stronger labor market.” If you believe that the economy will continue to improve, thereby driving the low end of this estimate, you might anticipate some increased activity as soon as 2016.
As for what that means, I think that the shopping and buying behavior of Millennials will be dramatically different than the behavior of Boomers and Gen-X’ers, driven more by online and mobile than retailers have previously predicted.
Millennials “are abandoning stores faster than executives predicted, pushing the industry to a precipice,” suggests Matt Townsend of Bloomberg. “Traditional retailers, for the first time ever in 2014, will generate half their sales growth on the Web.” Townsend says that this digital shopping and buying behavior will only accelerate as Millennials begin doing things that they’ve put off – namely, buying homes and starting families. He quotes Anne Zybowski of Kantar, who laments the fact that few, if any, retailers have successfully created a seamless shopping experience online and in-store. “There isn’t any best-in-class because nobody is there yet,” says Zybowski.
My message to marketers of high-end home brands: you have 24 months to get ahead of your competition (and perhaps your category) by integrating and improving your online shopping experience, not only for your older consumers, but for those 20- and 30-somethings who are about to be back in force.
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