The Shopping Generation GapPosted: December 20, 2012 Filed under: Performance improvement | Tags: baby boomers, Millennials, online shopping, retail trends, smartphones Leave a comment
A recent article by Shelly Banjo in the Wall Street Journal highlighted the vast range of difference in how people now shop. To illustrate the point she profiled the Ultican family from Columbus Ohio. Chris Ultican, a 54-year-old teacher and her husband Kreg, a 56-year-old retired high-school administrator, shop a bit online but “have yet to make a major purchase on their cellphones.” Wandering through the Easton Town Center mall, they come “armed with clipped-out paper coupons.”
Meanwhile their 24-year-old daughter, Danielle, is “accustomed to receiving pitches through social media and email, so much so, she dais, that it takes something special — like a call to her cellphone from a saleswoman – to grab her attention. Despite a lot of looking, Danielle left the mall without spending any money. When she got home, though, she went online and bought herself a red lace dress she had seen earlier in the day at J. Crew Group’s Madewell. That is not surprising; about 70% of people age 18 to 34 plan to ‘self gift’ this year, compared with 44% of people over age 65, the National Retail Federation said.”
Then there is the youngest of the children. Drew, 10-year-old, “uses her rhinestone-encased iPhone to post pictures of potential purchases as she shops, while polling her friends with an Instagram app to get opinions on which clothes to wear to school the next day.”
All of this adds up to a big challenge for any company that deals with retail consumers. On the one hand, the Boomers still spend more than any other demographic group — $3.4 trillion each year in the U.S. But on the other hand the Millennials — the 79 million between the ages of 16 to 34 — spend ony $200 billion but they are the customers of the future and are “likely to rival the boomers’ as early as 2020 and they already exert a disproportionate influence on their parent’s spending decisions.” But on then again, if retailer change their formats too quickly or radically they can risk alienating the boomers.
As Banjo points out, even when a retailer tries to refashion itself, younger shoppers are often not persuaded. “J.C. Penney’s has remodeled stores, altered its merchandise mix, changed its logo and. most of all, is eschewing special discounts in favor of overall lower prices. But so far the plan has largely backfired: Penney’s sales fell 27% in the three months ended Oct. 27 in a fourth consecutive quarterly drop.” The challenge for established retailers is that old images are hard to shake off: Chris says “her daughter Drew refers to Penney as a place ‘for old people.'”
The smartphone is one tangible indicator of this shopping generation gap. According to a National Retail Federation survey conducted this past October, close to 45% of shoppers age 18 to 24 use their smartphones to research products or to compare prices versus just 22% of shoppers aged 55 to 64. Similarly, 25% of 18 to 24 year olds plan to purchase products through their smartphones whereas that percentage drops to 8% in the 55 to 64 year olds.