Recently, in New York City, “the largest gathering of prestige marketers in North America” met at a forum to discuss the “characteristics, influence and brand affinities of tomorrow’s affluent consumers”.
Present were 22 thought-leaders from diverse fields, including The Economist’s Mathew Bishop, Teen Vogue publisher Laura McEwen, and Microsoft’s chief digital marketer Terri Walter, all investigating how members of Generation Y – consumers born between 1978 and 1995 – form their purchasing decisions.
Welcome to retail’s newest challenge.
Gen-Y buyers purchase $US200 billion of goods or services in the US every year – five times more than their parents did at the same age. There are also now more Gen-Y members than Baby Boomers, making it a demographic so large that it will represent 50 per cent of the total US work force by 2015.
What does this all mean? Within the next five years, the biggest revenue source for any industry in the US will be Gen-Y consumers. The consensus at the forum was clear: the ticket to attracting Gen-Y lies in technology.
Gen-Y consumers are technologically sophisticated, with many using computers since before their first day of school. In fact, Gen-Ys today spend more time online than watching TV – if ever there was an “internet generation”, Gen-Y is it. From this, the notion has formed that Gen-Y consumers will make most of their purchasing decisions using hi-tech tools.
Here’s a few of the forum’s other findings:
Blogs, blogs and more blogs
The new – and hopefully permanent – internet-based marketing vehicle is the blog, which is inexpensive to set up, low cost to enter and abundant. Almost in unison, the Forum thought-leaders expressed the conviction that blogs were the marketing tool of tomorrow, if not today. To be a successful internet “player”, a store or site should be listed on 25 blogs today and 250 in the future.
The rise of the social network
Thanks to blogs, the social networking scene is rapidly morphing from strictly a social medium to a retail one as well. Actually, it won’t be too long before Twitter, Facebook, Manta and MyFace – along with hundreds of others sites – become the world’s leading retail outlets.
The speed of decision making
“It will be business as usual, but faster” was a popular slogan at the Forum – they click, they browse, they buy. It will be the retailers’ challenge to keep showcases up-to-date and stay familiar with the velocity of the transformational retail technology.
Design trends
Product design can no longer be developed by committees, meetings or research teams. Those take too long and styles change too quickly. Companies need to create a network of blogs, tweets (via micro-blogging service Twitter) and other internet tools to develop styling through testing. Other than being inexpensive, it allows for speed and dexterity.
An investment
The Gen-Y consumer sees luxury products as an investment, not as an indulgence. They do not have an appreciation for “trendy” styling, but look for more “classic” designs. When they purchase an item they generally use it and expect exceptional quality.
Parents as reference
Gen-Y consumers consider themselves “equal opportunity buyers,” as if to say, “We buy the same as our parents, except we want more.” Heritage plays no part in design, styling or reference decision and while their parents considered luxury something special, Gen-Ys sees luxury as deserving and understood.
On the subject of parents, one important characteristic of Gen-Y consumers is the relationship they hold with their parents. Studies have shown that, as youths, the Gen-Ys were coddled and pampered. Consequently, on the sales floor, Gen-Ys expect special treatment. How to transfer this “relationship atmosphere” to online retail sites is a notable dilemma.
Flinging the bling
Ostentatiousness is out and subtleness is in. Gen-Y jewellery consumers seek simple designs that are cool and “in the know.” Some visual expression is important but not key.
Purchase Rationale
Gen-Y consumers have a need to add an emotional rationale to their buying decision. For example, when purchasing a silver pendant, they require an additional use for the piece. Jewellery must have more than one use.
Reference group
Positive feedback from their reference group is arguably the Gen-Y’s most important purchase decision criteria. Whatever their peer group is – work colleagues, friends, family, their club, Facebook, Twitter, etc – feedback from that group will make or break the sale.
Sale vs. deal
When an item is on “Sale,” Gen-Y considers that word the radioactive kiss of death. They strongly prefer the word “deal” as a way to communicate bargains or price reductions.
In conclusion, most retailers aren’t Gen-Y consumers, so it’s possible that their knowledge of technology may be strained. Retailers who ignore Gen-Y and the technical revolution do so at their own peril, and could end up as out of date as the desktop calculator or the counter-top “what’s-on-sale” flyer ?
Jan Brassem, director of Brassem Global Consulting, is a recognised marketing thought-leader through his columns found in journals around the world. He is a frequent lecturer at US universities and industry conferences.