There’s a new and growing breed of optical retail consumer emerging, poised to give the Baby Boomer sector and retailers a run for their money. The Millennial Generation, aka Generation Y, an 80 million to 90 million group of Americans born between 1982 and 2000, are already bigger than Boomers in size and influence. And the day is fast approaching when their bank accounts will rival and eventually surpass Boomers’.
Understanding these changing demographics and addressing the shifting needs—and expectations—of both generations is vital for ECPs and optical retailers who, like many other retail sectors, are fighting for every consumer dollar.
According to Pew Research, the Millennial generation currently outnumber the aging Baby Boomers and are three times larger than the generation that follows, which translates into huge consumer spending clout. “Since the Millennials’ generation is larger than the Baby Boomers and three times bigger than Generation X, marketers’ understanding of Millennials’ needs, tastes and behaviors will clearly shape current and future business decisions,” said Jeff Fromm, a senior vice president for Barkley, an independent marketing agency.
Tendencies of this younger generation of consumers are becoming more important as retailers struggle to keep up with new spending habits, technology and modes of communicating. A recent survey by Barkley looked at more than 5,000 Millennials to track their digital and social media habits, as well as their attitudes in the areas of cause marketing, grocery shopping, dining preferences and peer relations. The results were eye opening and pointed to some of the striking similarities and differences between the two generations.
Technology plays an increasing role in the generational shopping split. Millennials are more than two times more likely to be early adopters of technology than older generations, serving as a leading indicator for retailers of what is likely to become mainstream, said Christine Barton, a partner at Boston Consulting Group. Millennials are more likely than older shoppers to check out brands on social networks (53 percent versus 37 percent) and use mobile devices to read reviews, research products and compare prices while shopping (50 percent versus 21 percent), according to the Barkley report.
When shopping for eyewear, technology use is the most noticeable difference between the two age groups. Millennials tend to research products on the Internet and question retailers about their findings whereas Boomers are more comfortable taking advice from ODs and opticians.
“They’ve [Millennials] grown up with devices in their hands, so they’re much better at multitasking and using digital media in more flexible and innovative ways,” said Peter Matthews, founder and CEO of Nucleus, a marketing consulting firm in Surrey, England.
The difference is especially apparent with mobile technology, Matthews said. “We study the stats very carefully, and we can see with certain brands, particularly with luxury brands, mobile browsing of the web has grown from 3 percent or 4 percent in 2010 to 10 percent now,” he said. “And some brands are heading toward 20 percent being accessed by mobile.” He believes that trend is led by Millennials’ use of the web on the go.
Compared with other generations, Millennials are more aware of newer, youth-oriented marketing campaigns and they report greater exposure to campaigns through social media (40 percent versus 9 percent for nonmillennials) and online news (28 percent versus 22 percent), while nonmillennials rely on newspapers and direct mail, the Barkley survey showed.
While a majority of all respondents shop alone, Millennials are more likely to shop with others versus nonmillennials. Plus, Millennials reported more shopping than other generations with family units, spouses, children and with adult friends. Not only does this generation seek adventure, but they also think life should be fun. Whether shopping, dining out or immersed in their mobile devices, Millennials prefer the music turned up and a casual atmosphere, the responses indicated.
So studying the behaviors and understanding this new generation of consumers is key to retail success, but what about the Baby Boomers (born between 1946 and 1964) who at nearly 80 million strong still wield substantial spending power? This huge and often wealthy market, characterized by its individuality and diversity, still holds the purse strings to the economy. Having come of age during turbulent times of social change, they are known as a generation of trendsetters.
While the Millennials represent a larger group of potential customers to optical retailers and ECPs, the growing vision needs of the aging Baby Boomers is one factor that will help level the playing field between the two groups.
Today, the Baby Boomer generation has more discretionary income than any other age group and controls most of the net worth of American households accounting for 40 percent of total consumer demand, according to Baby Boomer Magazine. But the Great Recession has not been kind to this generation and they have been hit hard by the downturn’s economic shocks.
Baby Boomers are spending less on frills than the prior generation but more on education, their adult children, and mortgage debt, putting their retirement nest eggs in jeopardy. That’s the conclusion of a study, How Are Baby Boomers Spending Their Money? by Pamela Villarreal at the National Center for Policy Analysis. Relying on data from the Bureau of Labor Statistics’ Consumer Expenditure Survey, she compared the spending habits of 45- to 64-year-olds in 1990 and 2010.
While real income for today’s pre-retirees and those from 20 years ago has not changed much, the portion of disposable income spent on certain things is changing, Villarreal said. Baby Boomers are no longer spending more on discretionary items or products. Food purchases, including eating out, household furnishings and clothing expenditures all fell. Education expenses and housing costs increased the most of any spending categories in the last decade: for 45- to 54-year-olds, education costs skyrocketed by 80 percent and the cost of maintaining a house increased by 25 percent, Villarreal found.
She concluded that Baby Boomers are reaching the ages when they are inclined to spend less on accumulating more “stuff.” They are more attracted to buying experiences and are spending precious income on travel and activities like golf, tennis or classes. Sporting events, concerts and other live performances are other experiences which Baby Boomers are actively pursuing.
In a 2012 Report titled Baby Boomers: Riding the Wave of Diversity issued by SymphonyIRI Group, John McIndoe, SVP of marketing summed it up best saying, “Relying on traditional thinking about any shopper group is a dangerous practice. With Boomers, given their diversity and spending power, it can be very detrimental to a brand or channel’s chances for success. But, by developing marketing strategies that are aligned with shopper needs, retailers and manufacturers create shopping experiences that will win shopper spending and ongoing loyalty.”
As VM kicks off its newest editorial series “Mind the Gap,” we turn to four experts on the front lines of eyecare and optical retailing to find out how these generational splits are affecting the business of selling, fitting and dispensing eyewear as we examine these two very different generations, their attitudes, imaginations and loyalties. Find out what optical retailers are doing in their businesses to “mind the gap” as they develop strategies that will spark a connection with both sectors of the market.
A New VM Series:
Mind the Gap
VM kicks off a new editorial series, “Mind the Gap” with this month’s cover feature—The New Consumer Gap, which explores the different attitudes, values and consumer priorities of today’s 20-something Millennials and 55 and over Baby Boomers—and how ECPs and optical retailers are addressing the needs of this new “age divide.”
Look for upcoming series installments which will tackle bridging other “gaps” that exist in the retail, optical dispensing and eyewear product arenas. Stay tuned as VM helps retailers/ECPs Mind the Gap with key data about trends and practical info about tactics that can help your business on the information, knowledge, technology and culture fronts.