By Stuart Eisenberg, Assurance Partner at BDO New York
Millennials — those born roughly between 1980 and 2000 — are changing the face of retail.
They have a combined purchasing power of $2.45 trillion worldwide — $600 billion in the US — and they account for almost a third of all retail sales.
Their influence is only going to grow — by 2025, they will comprise 75 percent of the workforce.
Millennials are now major consumers, but they differ from previous generations in the following ways:
– Thrifty: Having come of age during the Great Recession, many are either underemployed or unemployed, and many have crippling student debts. They are keen bargain hunters and big users of discounts and coupons.
– “NOwners”: Prizing experience over ownership, they love shopping, but see it as a form of entertainment and are often inclined to browse, but not buy. Smart retailers are turning this to their advantage and offering shoppers a fun experience. For example, H&M’s store in midtown Manhattan has a runway shoppers can walk down wearing their new clothes — they are filmed and the best videos are displayed on storefront screens.
– Tech-savvy: Millennials are glued to their mobile devices and have a strong preference for brands that offer seamless integration between online and offline sales. Technology also enables retailers to engage shoppers with discounts and special offers.
– Impatient: With all the world’s stores at their fingertips, Millennials do not like to stand in line or wait for purchases to be delivered. This desire for instant gratification was behind an uptick in so-called click-and-collect purchases during the UK’s holiday shopping period — customers make purchases online and receive a discount when they pick up their purchase at a designated store. Some see retail stores eventually becoming more like distribution hubs, with qualified experts on hand to offer advice.
– Multichannel shoppers: Millennials do more shopping online than other generations, but they also still like going to the mall. According to OpinionLab, 37 percent of Millennials prefer mall shopping while only 27 percent would rather shop online. They use their phones to browse and compare prices online, but online purchases can take too long to deliver and they do still enjoy the instant gratification of purchasing in-store.
The OpinionLab survey is good news for bricks-and-mortar retailers, provided they have a strong and easy-to-use website, and attractive store interiors.
In order to attract them as customers and tenants, retail building owners should consider the following options:
– Interiors: Renovate and retrofit interiors to make them bright, attractive, aesthetically pleasing places to be. Install power points / charging stations in common areas, with comfortable seating and WiFi, so mall shoppers can recharge their mobile devices on the go. Rotate signage frequently to keep the center looking fresh, and include self-service kiosks to reduce line waiting times.
– Tenant mix: Have a wide variety of tenants including fitness and entertainment providers so that shoppers can also work out, relax and socialize. Include value-oriented retailers such as dollar stores, thrift stores, and drug stores. Pet stores are also a draw for Millennials, who have tended to put off marriage and children, but do have a fondness for pets and pet accessories.
– Co-locate: Millennials like to live in dense, mixed use, walkable urban neighborhoods close to offices, shops and entertainment. Malls in downtown neighborhoods that offer a range of shopping and entertainment options will be a sure draw for the millennial customer.
– PopUps. Once an oddity, PopUp stores are becoming more common. Short-term leases — often lasting just a couple of weeks — are a way to increase mall occupancy, provide new and online stores with a temporary storefront to increase their brand awareness, and provide shoppers with a new and different experience each time they visit.