It’s not uncommon to hear Baby Boomers tell their Millennial offspring that they should be saving for a home and car as soon as they start working. However, Millennials don’t seem to be concentrating their focus on either anymore.
For example, tech-savvy young adults especially in urban areas have the luxury of relying on shared economy ventures such as Uber or Lyft instead of purchasing a car. Due to the rising house prices, Millennials also see renting as the most practical option over becoming homeowners.
This sudden change in Millennial spending habits is forcing retailers to shift their marketing strategies.
Blueboard is one of the first firms who have started selling “experiential” packages to traditional retailers. One of Blueboard’s missions is to integrate new services to businesses that target Millennials. Some of their international customers include Astex Pharmaceuticals and GoPro.
“(Millennials) aren’t spending money on cars, TVs and watches,” said Taylor Smith, CEO of Blueboard. “(They’re) renting scooters and touring Vietnam, rocking out at music festivals, or hiking Machu Picchu.”
This change in spending habits is happening all over the world. A study by the Harris Group found that a whopping 72% of Millennials favour spending money on experiences rather than physical purchases.
Why did the shift happen?
Most Millennials grew up in homes that were motivated by saving money. Baby Boomers bought material possessions like cars, jewellery, and property, which was seen as a sign of success. While Millennials enjoy the fruits of their parents’ labour, they also see the limitations due to the debts many families have amassed.
The uncertainty surrounding Brexit isn’t helping Millennials either. If a soft Brexit occurs, FXCM states that the UK will still have trade connections with countries in the EU, meaning the consumer good market will remain the same. Thus, a soft Brexit would be beneficial to Millennials. However, what happens if the UK experiences a hard Brexit? A hard Brexit would mean the UK would sever ties with the EU, which would result in imported items increasing in price.
Crippling debts have certainly left their mark on Millennials, which is why most of them levitate towards renting property as opposed to buying. Buying a house means that they are essentially tied down to that property regardless of their financial circumstances.
How can companies step up to this change?
Step into the shoes of Millennials and think about new experiences that they may participate in or spend money on. Then, create this experience, and communicate with them creatively using social media channels.
Take for example General Motors (GM), who have recently tapped into the ride-sharing market by investing $500 million in Lyft. The company did it to appeal to the growing number of Millennials who enjoy using the app on a regular basis. General Motors’ idea is to create a community of rentable self-driving cars, which they believe will be the next-big thing among young consumers.
Self-driving cars will change the way commuting works, and General Motors is one of the purveyors of this idea. With self-driving cars, people don’t need to get a license to drive through the streets. General Motors aims to provide this futuristic service by developing cars that are integrated with Lyft’s technology.
Lyft is a ride-sharing, transportation network company headquartered in California, with operations in 200 U.S. cities. It develops, operates, and markets the Lyft software application, which allows drivers and customers to meet on the road. Using GM’s investment, Lyft is tweaking its software to make self-driving cars possible in the future.
Businesses need to change with the times to properly cater to the experiential generation. Creating a community, promoting unforgettable experiences, and selling services that can be quickly rented are now necessary to appeal to the newest generation of spenders.