As of 2023, millennials are the largest generation in the US, with massive spending power that is only poised to grow as they get further into their careers. While millennials were the brunt of many jokes for years, they are now a force to be reckoned with—and retailers need to adjust their strategy to appeal to millennial consumer behaviors.
Continue reading as we look at what is important to millennial consumers today and how you can adapt to turn them into buyers.
Who are Millennials?
Millennials are largely defined by the mass proliferation of technology that became prevalent during their lifetime.
Millennials are the third to youngest generation, born between 1981 and 1996, with ages ranging from 26 to 42. They are defined by their reliance on and intuitive use of technology (especially smartphones), career-driven sensibilities, passion for learning and information, desire for recognition, and questioning of hierarchical thinking.
In recent years, this generation has also been marked as spenders rather than savers as a result of the high cost of living and housing crisis that has plagued their adult lives.
Millennial Consumer Behaviors
Millennials present massive opportunities for retailers, but you will need to understand exactly what millennial consumer habits are in order to take advantage of the opportunities they present. Here is a rundown of what you can expect from the millennial consumer.
Loyalty Programs Are Increasingly Popular
In efforts to get the best deals, 67% of 2023 millennials are more likely to join and participate in brand loyalty programs compared to 2022. Not only that, 53% are more likely to rely on loyalty program benefits when making purchasing decisions.
They Are Financially Stretched …
Due to increased housing prices, a lifetime of economic tumult, inflation, and the current exorbitant cost of living, millennials have 86% less purchasing power than consumers from generations past. While you might think that this would make them frugal (as we see with Gen Z consumers), it has mainly impacted their attitude toward owning major assets, creating a more impulse-driven consumer when it comes to small, everyday purchases (see our next two points for more on this).
… But Their Spending Isn’t Slowing Down
In spite of the current economic downturn, millennials are not slowing down their spending habits. In fact, a study from BusinessWire found that 73% of millennial consumers plan to spend the same or more online in 2023 compared to years past, making them the biggest ecommerce spenders of the year.
They Dominate the Luxury Market
Another sign that millennials are not deterred by the current economy is their plans for luxury spending. When asked about their luxury spending for 2023, 27% of millennials said they intend to spend more on luxury purchases compared to years past versus 20% of Gen Z, 22% of Gen X, and 21% of Baby Boomers.
Ecommerce Is Home
As you may have expected from a generation that has been defined by the internet and with constant online access, millennials shop primarily online more than any other generation. Their preference for ecommerce over in-store shopping is only increasing over time. Take a look at the ecommerce millennial shopping habit stats below for proof:
- 27% of millennial shoppers say they intend to spend significantly more online and less in-store in 2023 across shopping categories, including health, beauty, luxury, apparel, footwear, and electronics.
- Of all the generations, millennials are the most likely to favor online shopping over in-store, with 48% citing ecommerce as their preference.
- 78% of millennial shoppers consider a brand’s mobile shopping app or website to be an important or critically important piece for maintaining loyalty.
Social Platforms Are Key Shopping Channels
While Gen Z are the biggest social commerce shoppers (23%), millennials are close behind (21%). This is compared to 13% of Gen X and 3% of Boomers, according to Statista.
Not only that, 75% of millennials use social media to interact with brands and 63% admit they have made a purchase from a social media advertisem*nt in the last 12 months.
They Love Amazon
While you might have assumed that Gen Z would be the most prolific users of online marketplaces, like Amazon, it is actually millennials. A Statista study of 2022’s leading shopping channels among consumers in the US by generation found that 55% of millennials used online marketplaces to make purchases, compared to 50% of Gen Z.
Leading channels to purchase products among consumers in the United States in 2022, by generation
Consumer behaviors, especially when it comes to shopping channels, vary widely between generations. (Source: Statista)
Convenience Is King
Consumer expectations are shifting, and especially among millennials, convenience is a huge factor in the brands they choose and whether or not they go through with purchases. In fact, a recent study from Numerator found that 87% of millennials cite convenience as a top factor when shopping.
Overall, 1 in 5 consumers cite store location as the most important factor for convenience, with an additional 50% saying it plays a role.
They Will Exchange Information for Personalization
A major piece of the modern ecommerce and marketing experience is retail personalization, which refers to the gathering of user information in order to provide personalized site experiences and marketing, most commonly through the use of AI.
While retail personalization was once a feature that was only offered by major retail companies, it has become a shopper expectation, especially among millennials. And where Gen Z is more skeptical about sharing their personal information for a more personalized shopping experience, 84% of millennials say they are willing to share their hobbies/ interests in exchange for more personalized retail services.
Millennial consumers don’t mind sharing the following details in exchange for better service:
- Gender (85%)
- Email address(78%)
- Date of birth (77%)
- Full name (75%)
- Phone number (67%)
- Income (66%)
- Home address (63%)
- Family makeup (63%)
- Real-time location (62%)
- Photograph (60%)
How to Appeal to Millennial Spending Habits
Now that you understand how millennial consumer behaviors work, the logical question that follows is what can you do to appeal to their sensibilities? Here are a few tips on how you can manage your store to appeal to the spending habits of millennials so you can turn them into buyers.
Focus on Online
Millenials prefer shopping online compared to in-store for most categories. You should focus on boosting your online presence with an intuitive site that follows ecommerce design principles and is up-to-date with your latest inventory.
Some additional ways that you can improve your online store to appeal to millennials include offering a seamless checkout experience, creating a personalized shopping experience, using AI technology, incorporating an ecommerce chatbot for expedited customer service, and improving your overall site design for ease of use and navigation.
Here are some additional resources to get you started:
- Ecommerce Statistics to Know
- How to Start an Online Store: A Beginner’s Guide
- Best Ecommerce Platforms for Small Businesses
- Ecommerce Website Design Principles + Free Checklist
Boost Your Social Media Presence
As we saw in the breakdown of millennial consumer behavior above, social commerce is a major force for making purchases, discovering new brands, and researching products. You should create brand pages on all the major social media platforms, including TikTok, Instagram, and Facebook with the first two being the most important. This will ensure you are able to capture millennials where they are shopping and can maximize their buying potential.
Here are some resources to get you started:
- Social Media Marketing for Small Business: Guide + Template
- How to Sell on TikTok
- How to Sell on Instagram: Steps + Tips
List on Amazon
Amazon is extremely popular among millennials with most of them using the marketplace on a routine basis. To capture this millennial traffic, consider listing your products on Amazon and creating a shop page. It’s free and pretty simple, plus you will be meeting millennials (and millions of other shoppers) where they are already shopping.
Amazon isn’t the right avenue for every type of retailer, but more and more, the marketplace is catering to small, artisan sellers.
Here are some resources to get you started creating a successful Amazon storefront:
- What to Sell on Amazon [+ How to Find the Best Products]
- How to Get Reviews on Amazon
- Amazon Seller Fees: Cost of Selling on Amazon
- Amazon Statistics Sellers Need to Know
Offer Convenience: Fulfillment, CX & Customer Financing
Convenience is a huge factor in millennial shopping habits and can make or break whether they choose your brand over someone else. Three of the biggest ways that you can create a more convenient shopping experience are by offering fast and simple fulfillment options, improving your customer service experience, and incorporating BNPL services both in-store and online.
In terms of order fulfillment, free or affordable shipping is huge and millennials expect to get their goods quickly. Not only that, they want an easy returns process and for their goods to come well-packaged.
For customer service, you should focus on creating customer-facing policies and delivering your customer services quickly and accurately.
Here are some resources to help you improve your fulfillment services:
- How to Offer Free Shipping (Without Losing Money)
- Best Order Fulfillment Companies for Small Businesses
- Packaging Supplies: How to Choose Packaging for a Product
Check out these articles to help you improve your customer service experience:
- Retail Customer Experience Trends
- Best Free Customer Service Software
- Artificial Intelligence in Customer Service: The Ultimate Guide
And, here are some articles on BNPL and customer financing options:
- What Is BNPL? Small Business Guide to Buy Now, Pay Later
- 6 Best Buy Now, Pay Later Apps for Small Businesses in 2023
- How to Offer Customer Financing in 4 Steps
Work Your Locale
Along with fulfillment and customer experience, one of the biggest things that will contribute to convenience is your location. Millennials don’t want to travel far to access a product or service, so you should make sure that you market your offerings to people in your immediate area so they know they can get products from you conveniently.
Use these tools to get started marketing locally and creating local awareness:
- Local Online Marketing Strategies for Small Businesses
- How to Create a Local Marketing Strategy (+ Plan Template)
- Local Advertising Ideas to Grow Your Small Business
Appeal to Their Impulses
Where other generations are less susceptible to impulse buying, millennials are not. Work this angle and appeal to their impulsive sensibilities by mastering the art of impulse purchasing marketing. This means adding small, add-on products to your cash wrap, creating sample stations, advertising add-on purchases online, and training your staff to entice shoppers with inexpensive goodies.
Impulse buying: An unplanned purchase; occurs when a customer buys items they were not planning on buying, or when something is bought “on a whim.”
Learn more about impulse buying and how you can appeal to the millennial impulse buyer with these resources:
- Effective POS Marketing Ideas for Driving Sales
- Impulse Buying Statistics Retailers Should Know
Keep Inventory Levels High
While the economy indicates that people will be more frugal, millennials have expressed little intention to slow their spending through 2023 and beyond. This means you should keep your inventory levels high (or at least consistent with previous years), especially among goods that millennials shop the most.
Use your POS data to identify what items millennials tend to buy most and keep those items in-stock at a level consistent with years past or even increase those product volumes slightly.
Here are some resources to help you manage your inventory for success and avoid stockouts in this ever-changing economy:
- Best Inventory Management Software for Small Businesses
- Best POS Inventory Systems
Frequently Asked Questions (FAQs)
Click through the questions below to get answers to some of you most frequently asked millennial consumer behavior questions.
Millennials tend to be less skeptical and do less research before making purchases than Gen Z. They also are less hesitant to share personal information. However, millennials are more loyal to brands than Gen Z, but are less pragmatic and price-focused than their younger counterparts.
Millennial consumers are defined by their strong preference for ecommerce shopping, their less-than-frugal spending habits, their use of social commerce, and their preference toward convenience shopping solutions.
Millennial consumers value convenience, a strong ecommerce and social media brand presence, a desire for personalization, and convenience fulfillment and CX experiences.
Millennials are the largest generation in the world as of 2023 and their spending power is only going to increase as they get further into their careers. They are also big spenders and are set to become the generation with the greatest buying power in a short time.
Bottom Line
Millennials were not taken seriously for years, but they are an incredibly important part of the retail market that retailers should head, especially as their spending power and size continue to grow. Understanding millennial consumer behaviors is key to any retailer’s success so that they can adapt, appeal to, and take advantage of every millennial shopper.
