Study: Millennials don't act — or shop — alike

Retailers need to update their approach to targeting millennials.



That's according to a new report by management consulting firm L.E.K., which provides insight into Millennials and their predecessors Gen X and the Baby-Boom generation.



"Savvy retailers who want to court millennials should think more about sub-segments than the whole population, and remember that at the end of the day it's individual consumer behavior that counts," said Rob Haslehurst, managing director in L.E.K.'s consumer products and retail practice, and co-author of the report, "Retailers Play the Generation Game: Lessons from Adapting to Millennials." "Millennials are sometimes treated as a monolithic group, although they're not, and it's often assumed that they behave the way young consumers have always behaved, which is a half-truth at best."



Millennials number 75 million — approximately 30% of the U.S. population — and account for approximately 90% of first-time mothers today, according to L.E.K. They spend about $1.2 trillion a year — one-fifth of the nation's total consumer expenditure. But preferences and behaviors differ notably from one millennial subgroup to another.



"By far the most important distinction among millennials is whether they have children, and their level of education," said L.E.K. Retail Practice consultant Shang Saavedra. Millennials with children and at least a college education spent sharply more than the next-highest spending group in several categories, she added, most notably home (68%), footwear (56%), electronics (52%), and apparel and personal care (49%).



To win over millennial consumers, L.E.K. suggests retailers do the following:



• Target sub-segments. Find the ones relevant to the brand and figure out how to meet their specific needs. Some millennial subgroups prefer to buy beauty and personal care products online. Online-only sellers can take advantage – and beat out grocery and pharmacy stores.



• Target the behavior, not the age. Some behaviors transcend generations. Electronics consumers are tech-savvy and shop in the same channels no matter what generation they're in.



• Personalize. Personalization pairs well with technologies that millennials like. Retailers can use artificial intelligence to drive personalization down to the individual level.



"Retailers have always had to adapt to new generations of consumers," said Haslehurst. "In the case of millennials – because they're a large, high-spending group – the need to adapt is particularly important. But the lesson is timeless – only those that adapt will survive."



The L.E.K. survey, comprised of 3,800 U.S. consumers, maps millennial preferences and behaviors, compares different millennial subgroups, and explores how Gen X and Baby Boom consumers behaved when they were the same age. To download the full report, click here.