“Online and mobile technologies have changed the retail landscape a lot in recent years and amplified differences in consumers’ shopping behavior.”
– Denise Dahlhoff, Research Director, Jay H. Baker Retailing CenterBack to all
Digital Savvy millennials are the top buyers of gift cards.
Digitally savvy millennials are the top buyers of gift cards. Gen X shoppers lean toward gift cards from traditional department and grocery stores. And boomers value one-stop shopping.
That’s what a joint study by the Wharton School at the University of Pennsylvania and the global information firm NPD Group Inc. recently revealed.
The findings give retailers and brand manufacturers useful intelligence on how to better connect with their existing customers and attract new ones, said Denise Dahlhoff, research director of the Jay H. Baker Retailing Center at Wharton, who worked with the NPD Group on the study.
“Online and mobile technologies have changed the retail landscape a lot in recent years and amplified differences in consumers’ shopping behavior,” Dahlhoff said last week. “Different age groups have adopted and utilize electronic shopping channels differently, which reflects in the distinct patterns in terms of how, what, and where different generations shop.
“Millennials, for example, are digital natives, while Gen Xers and boomers adopted digital technologies later in life, resulting in different usage patterns,” she said.
Dahlhoff said that although the different age groups frequent some of the same retailers, “understanding them and thinking about how their needs and behavior might evolve can provide valuable input for retailers’ and consumer brands’ marketing strategies.”
The study relied on NPD Group’s Checkout Tracking system, which culled receipts of both online and bricks-and-mortar retail purchases from the same individuals over time. More than 30 million items were tracked monthly from January to June 2015 from more than 50,000 consumers.
Among the study’s findings:
Compared with other age groups, millennials spend a higher share of their expenses on e-commerce, including at top online retailer Amazon.com. They are also the biggest users of app-based and online-only sites, such as the food-delivery services GrubHub and Seamless, as well as Starbucks and the flash sale sites Gilt Groupe and HauteLook.
The share of millennials’ spending on gift cards at mass merchants, convenience stores, and warehouse clubs was higher than that of Gen Xers and boomers.
Meanwhile, Gen X shoppers – those born between 1964 and 1980 – spend a greater share of their department-store expenses on gift cards.
Younger millennials, defined as 18- to 24-year-olds, tend to focus more on technology, video games, and accessories.
Milos Djordjevic, 23, who graduated from the University of the Sciences in University City two years ago, said he shops online when he “knows specifically what I’m looking for,” such as parts and accessories for his bike. He regularly shops on Amazon.com.
“You really have to make money work for you and be conscious of what you spend – no matter if you’re making $10,000 a year vs. $100,000,” Djordjevic said while grabbing lunch in West Philadelphia recently. “Sometimes, things are cheaper online.”
When shopping online, older millennials, those between the ages of 25 and 34, spend relatively more on sites such as Seamless.com, a food-service delivery app.
Meanwhile, the online shopping habits of boomers, defined generally as consumers between ages 50 and 70, seem to be influenced by their bricks-and-mortar preferences. They make relatively more of their online purchases at department stores, such as Neiman Marcus and Macy’s.
Mass merchants, such as the value department chains Target and Walmart, are particularly popular with younger shoppers, according to the report. Target has started to focus more on younger segments, in part by investing in its online and mobile channels. Three smaller Target Express stores will open in Center City later this year that cater to millennials.
The study also noted that millennials and Gen X shoppers embrace convenience stores and buy groceries and prepared food items from them more than older shoppers do.
“Given an increasing preference for healthy food, especially by younger consumers, offering more healthy, convenient options would serve this need,” Dahlhoff said.
Michael McGrane, 29, of West Philadelphia, is trying to eat healthier. He prefers going to stores for groceries rather than shopping for them online. He recently left the Fresh Grocer at the University of Pennsylvania campus with a $6.09 package of boneless chicken.
“Food online doesn’t seem like a convenience,” said McGrane, who works as a lab research technician. But that doesn’t mean he doesn’t do his fair share online. McGrane bought a Brita water filter on Amazon.com this month. He regularly buys music and guitar accessories on eBay and Sweetwater.com.
James Cook, Americas director of research and retail at Jones Lang LaSalle, said there are ample reasons why retailers are focusing on millennials. “Until very recently, there were about as many millennials in the U.S. as there were boomers,” he said. “But now, the number of millennials is greater.
“Today, baby boomers make up 50 percent of the workforce and most are at the apex of their economic strength,” he said. “By 2020, millennials will make up 50 percent of the workforce.”
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