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Generational Perspective: How our past defines our future buying behaviors


Everyone’s trying to figure out what drives consumers to purchase. But to understand how they shop, you need to know what makes them tick.

Alliance Data’s Analytics and Insights Institute conducted a study with more than 2,400 respondents to better understand consumer buying habits and expectations. These insights, cross-referenced with results from our "Understanding Customer Loyalty" study, confirmed that consumer buying habits track closely with life stage and each generation’s cultural identity.

The study showed that buying behaviors were clearly influenced by what consumers were exposed to in their habit-forming years. Among the key takeaways from Alliance Data’s The Generational Perspective Study:

Current shopping behaviors are driven by generational experiences. For example, Gen Xers and Millennials grew up during the information revolution and want options and instant gratification.

All consumers share baseline expectations of brands, regardless of their generation — non-negotiables include payment security, easy brand interactions, and transparent promotions.

Each generation connects with brands differently — consider that Millennials define loyalty differently than the Silent Generation, and are willing to go out of their way for a brand they love.

Generations connect with brands differently based on lifestyle and lifestage

Retailers may miss the boat when it comes to connecting with consumers in a very authentic way if they ignore generational influences because consumer buying behaviors mirror values formed at an early age — behaviors indicative of life experiences by generation. In other words, retailers may not meet emotional needs that help to build relationships with customers. Millennials, for example, may not like being labeled as the “me” generation, though it makes sense when you think about the influences that shaped their formative years.

Brands must think generationally about the customer experience and take a targeted approach when it comes to engaging customers.

Millennials (ages 18-35) came of age during the social media boom and rely on technology for everything. From price comparisons to product reviews, this connected generation uses their smartphones to research options before purchase. They need to feel emotionally connected to brands, and the overall brand experience matters a great deal to them. To win with millennials, brands should allow connection to their social networks and enable self-service options such as chatbots to deliver in-the-moment service.

Generation X (ages 36-51) is the first group to be raised with email, the Internet, and the rise of e-commerce, and the convenience that came with it. Now they work and drive the car pool, so they gravitate toward shopping experiences that are efficient, getting them what they need when they need it. Retailers should focus on solutions that save time for these shoppers, like the options to order online and pick up curbside.

Baby Boomers’ (ages 52-70) coming of age ushered in an era of consumerism. But they didn’t grow up with 24/7 connectivity, so they don’t rank technology as a top priority. They care more about product quality and value, and now they may be empty nesters, which means they have more discretionary income. Retailers must tell them why a product is worth the price. Brands also should offer white-glove, personalized treatment to retain Boomers’ loyalty.

Raised by Depression-era parents, the Silent Generation (ages 71+) chose traditional careers and stuck with them. They put trust in institutions, managed risks, and were prudent with their retirement accounts — and they have the financial stability to show for it. They shop with brands they know and trust, but value for the money they spend is most important to them.

They also have a “waste not, want not” philosophy about what they buy, so retailers must appeal to their sensible nature and focus on value first. In-store associates are a retailer’s best brand ambassadors for this generation, who want the salesperson to know them by name.

Consumer confidence dictates spend

When consumers are more confident, they spend more. They’re choosier about where to spend, they’re able to invest in larger purchases (like home improvement and auto), and they’re looking for value and quality in their everyday purchases (like clothing and accessories).

Retailers will therefore benefit from digging into their customer data and getting to know the different generational segments on a deeper level. Understanding why those customers shop the brand and what need the brand fulfills for them will help them attract and retain loyal customers.

Even the youngest millennials are growing up, getting married, and starting families, so it’s no surprise that they’re driving the trend toward home purchases and new cars as they trade little splurges for major investments. And when the economy is strong enough, it puts these purchases within reach, especially with the built-up post-recession demand and use of credit as a tool to help them meet their long-term wants and needs.

The present influence of future shoppers

Despite all the headlines, brick-and-mortar stores are still king. But in the future, a digitally connected shopping experience will dominate — from browsing at home to checking product reviews in-store — providing customers with the options, ease, and convenience they want.

Putting the customer’s needs first has led to “brick-and-mobile” becoming the new standard in customer experience—one that transcends individual channels and provides a unified brand experience. Successful brands recognize that the customer experience must be seamless across all channels, and they must keep their eyes on the next generation so they can accommodate their emerging shopping preferences, especially as Generation Z gains spending power.

Generation Z (ages 6-20) will shop brands, not channels. Raised in the era of smartphones and 24/7 connectivity, Gen Z consists of true digital natives, so they’ll expect near-instant gratification from brands. They’re more pragmatic, conscientious, and culturally diverse than Millennials. Challenged with today’s social, environmental, and political issues, this generation will likely play it safe financially and aim to make a positive difference in the world. Sustainability matters to this group. Brands that champion smaller environmental impact will resonate with them. Gen Z will want to know how your brand makes the world a better place.

Each generation connects with brands differently based on their life experiences, and brands must know the differences to deliver relevant solutions that match their shopping and buying behaviors. Brands that embrace what drives each generation will increase sales and win customer loyalty long term.

Shannon Andrick is VP of marketing advancement at Alliance Data’s card services business, and focuses on emerging trends in the retail landscape. With more than 20 years of retail merchandising experience, Shannon’s areas of expertise include CRM, patterning and competitive analysis, deepening customer loyalty through innovative products and services, and growing credit sales penetration.

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