Millennial spending habits influence the global economy and have a macro impact on the way businesses operate. As the first generation to grow up with technology at their fingertips, and influenced by the rising cost of a college education, millennials face a unique set of challenges that have changed the way they save, spend, and invest. Instead of beginning marriage conversations and starting families, these technologically savvy individuals have focused their efforts on saving money and paying off their loans.
So how have millennial consumers’ shopping patterns changed during a global disruption? The lasting impacts are still uncertain but will likely have a permanent effect on the future of brand consumption.
Millennial Spending Habits Overview:
Millennials spend an average of $47,256 per person, annually.
During COVID-19, millennial men working from home spent more on online shopping than millennial women.
65 percent of millennials improved their personal finances during the lockdown.
83 percent of millennials want the brands they purchase from to align with their beliefs and values.
Millennials, also called gen Y, were born between 1981 and 1997 and are typically driven by value, quality, or image when making purchases. The average millennial income is between $64,000 to $75,000, and the size of the millennial generation is larger than any other age group, with more than 75 million individuals.
It seems that millennials get a bad wrap for spending all their discretionary money on tiny apartments in crowded cities and food that could have been made at home, but the reality is that even though many will still splurge on their pets, the demographic has been frugal and saved what they could throughout their lifetime.
Gen Y grew up with tech, so it’s no surprise millennial spending habits tend to be with online transactions. The difference is, in past years, millennial consumers would go into a retail store and try the product out before finding and purchasing it at a cheaper price online. In the wake of COVID-19, this practice of “showrooming” is no more.
An estimated 86 percent of millennials are considered digital buyers. (eMarketer)
Online Shopping Before COVID-19
Pre-Coronavirus, online shopping was already booming for millennials. With the availability of Amazon one-day deliveries and groceries delivered to your doorstep, millennials have gotten used to a world where anything is available with a push of a button.
In 2019, millennials made 60 percent of purchases online. (CouponFollow)
About 65 percent of millennials consider the opinions of their family and friends when making purchases. (Millennial Marketing)
Online Shopping After COVID-19
Millennial spending habits online have only been exacerbated by COVID-19 straining supply chains and inundating postal workers with packages. While the overall majority of millennial consumers reduced their spending on non-essential items, most of those purchases happened online during the pandemic.
52 percent of millennials say they now prefer shopping for groceries online than in-store. (Consumer Trends 2021)
Millennial men working from home have spent more on online shopping than millennial women. (Money Under 30)
39 percent of millennials reduced spending on non-essential items during COVID-19. (Global Web Index)
While mass layoffs and unpaid temporary leave were common across the world, millennials found themselves avoiding overdraft fees by saving money and picking up hobbies like cooking while stay-at-home orders were in place.
While millennials report spending 60 percent less overall during the first two months of the COVID-19 pandemic, they’ve spent more money on grocery, alcohol, restaurant, and health and beauty purchases than pre-pandemic levels. (Clutch)
38 percent of millennials in the U.S. and U.K. have increased their gaming usage since the start of the outbreak. (Global Web Index)
Half of millennials state they order take out one to two times per week. (Clutch)
The majority of millennials are more financially literate than other generations and have made strides to improve their personal financial situation by reducing their spending and focusing on debt payments as the lockdown began. The problems of high student loan debt and unaffordable housing still persist, though, and many still feel unconfident about the future of their financial stability and feel an overwhelming distrust of banks.
Nearly three-fourths of millennials wonder how their friends afford the experiences they post on social media. (2019 Modern Wealth Survey)
57 percent of millennials don’t trust financial advisors and think their primary goal is to make money for the company and themselves. (Accenture Millennials & Money)
Millennial consumer behavior has been driven primarily by the societal changes they’ve faced in their lives.
Products millennials love are often ones that offer the most value, quality, and image enhancement. In 2020, gen Y felt the closest brand intimacy with the following companies:
60 percent of millennials state that they’re willing to purchase from large businesses that took care of their workforce and had a positive societal impact during the pandemic. (The Deloitte Global Millennial Survey 2020)
Millennials are the most likely demographic to pay for access rather than ownership of a product or service. (Global Web Index)
Millennials were the first generation to popularize purchases that make positive societal impacts, and they’ll often shell out more cash for purchases that fill that requirement. Social media plays a big role in how millennials will gauge the corporate social responsibility of a brand, and it’s clear that doing proper research and influencing their own network of peers plays a big role in their purchases.
Millennials want value, quality, and a positive perceived image in the products and services they purchase. Make the following considerations when advertising to your millennial audience:
Highlight Environmental Impact: Highlight the positive societal aspects of your product or service in your marketing efforts. From fair wages to eco-friendly production, millennials want to share the same beliefs as the brands they purchase.
Create an Easy Return Policy: Be clear and concise when writing your return policy and make it easy to access on your website.
Vary Your Marketing Formats: Create varied marketing formats through video or blog posts with top- and middle-funnel content instead of bottom-funnel transactional content around your product or industry.
Use a Subscription-Based Business Model: Millennials want to pay for experiences without the responsibility of ownership. By leveraging millennial spending habits in the sharing economy through a subscription-based model, you can capture a wider net of millennial consumers.
Offer Free Delivery: Estimate the cost of local shipping for a product and feature the savings of free shipping for the consumer on the product page. Be clear about delivery and processing times within your policy.
As millennials pay off their loans and focus on saving, they’ve put a pause on using their cash to start families and their purchase behavior has therefore adapted to fit their lifestyle. Millennial spending habits are a driving force behind the economy, and in order to keep up, brands must satisfy these technologically savvy, eco-conscious, and price-sensitive consumers differently than generations past.
Chang is an avid writer, among other things. He grew up loving reading and writing, creating his own poems and even a book he's now hidden in an old closet, unpublished. His financial experience at a large bank along with his passion for technology to help underserved communities inspired him to write for Possible.