millennials in 2015: retail deep dive

1 MILLENNIALS IN 2015: RETAIL DEEP DIVE

MILLENNIALS IN 2015:

RETAIL DEEP DIVE

2 MILLENNIALS IN 2015: RETAIL DEEP DIVE2

MILLENNIALS IN 2015: RETAIL DEEP DIVE

Diversity, self-expression and optimism define the Millennial

generation. As a group, this young generation is more

racially and ethnically diverse than any before it. Millennials

are fueling an urban revolution, looking for the vibrant,

creative energy that cities have to offer with a mix of housing,

shopping and offices right outside their doorstep. They value

self-expression and artistic pursuits.

Millennials are deal shoppers who won’t compromise

on quality. They place a premium on authenticity–from

the products they buy to their interactions with brands.

In particular, Millennials value goods that are handmade

and locally produced. They want to know the story, history

and heritage behind the items they purchase. And they

demand a connected, multi-channel shopping experience.

Millennials have been hard hit by economic turmoil with

high unemployment rates and high student loan debt.

However, upscale Millennials, who are more established

with significantly more cash to spend, represent a pocket of

opportunity for retailers.

MILLENNIALS—STRIVING, OPTIMISTIC & AUTHENTICToday, there are more Millennials (those born between 1977 and 1995)

in the U.S. than Baby Boomers. They are 77 million strong and make up

24% of the U.S. population. Just two years ago, Millennials and Boomers

were on equal footing, each representing 24%.

U.S. GENERATION DISTRIBUTION

27%

24%16%

23%

10%

GEN Z GEN XMILLENNIALS BOOMERS SILENT

NIELSEN GENERATION DEFINITIONS:• GREATEST/SILENT GENERATION (PRE-1945) AGE 70+• BABY BOOMERS (1946-1964) AGE 51-69• GENERATION X (1965-1976) AGE 39-50• MILLENNIALS (1977-1995) AGE 21-38• GENERATION Z (1996-PRESENT) UNDER AGE 21

Source: Nielsen Pop-Facts 2015

3Copyright © 2015 The Nielsen Company

MILLENNIALS IN 2015: RETAIL DEEP DIVE4

Millennials have been hard hit by the recent turbulence in the economy.

They’ve experienced high unemployment along with high student

loan debt, and they have witnessed their parents and grandparents

struggle with investment losses during the Great Recession. However,

Millennials’ high education levels and optimism foreshadow their

future success.

According to the second-quarter 2015 Nielsen Consumer Confidence

report, roughly 70% of Millennials indicate their personal finances will

be either good or excellent in the next year, yet 55% still feel like the U.S.

is in an economic recession. This makes Millennials cautious spenders

and savers. About half of Millennials (51%) have cut down on take-away

meals in order to save on household expenses, and 48% are spending

less on new clothes. However, as a generation defined by their use of

technology, the majority of Millennials aren’t willing to delay upgrading

their PCs or mobile devices to save money.

Source: Nielsen Consumer Confidence Study, Q2 2015

Compared to Last Year, Which of the Following Actions Have You Taken to Save on HH Expenses?

MILLENNIALS ARE CHANGING THEIR SPENDING HABITS TO SAVE MONEY

18%

17%

22%

23%

25%

25%27%28%

32%37%

45%45%

48%

51%Cut down on take-away meals

Spend less on new clothes

Try to save on gas and electricity

Cut down on out-of-home entertainment

Switch to cheaper grocery brands

Cut down on at-home entertainment

Cut down on holidays/short breaks

Use my car less often

Delay the replacement of major household items

Delay upgrading technology, eg. PC, Mobile, etc.

Cut down on telephone expenses

Cut out annual vacation

Look for better deals on home loans, insurance, credit cards, etc.

Cut down on or buy cheaper brands of alcohol

Cut down on smoking 13%

0% 10% 20% 30% 40% 50% 60%

0% 10% 20% 30% 40% 50% 60%

42%Putting into Savings

26%Paying Off Debt/Credit Cards/Loans

35%New Clothes

24%Holidays/Vacations

23%I have No Spare Cash

23%New Technology Products

21%Out-of-Home Entertainment

16%Home Improvement/Decorating

11%Retirement Fund

Investings in Shares of Stock/Mutual Funds 11%

Source: Nielsen Consumer Confidence Study, Q2 2015

Once you have covered your essential living expenses, which of the following statements best describes what you do with your spare cash?

MILLENNIALS ARE SAVING THEIR EXTRA CASH

In addition to changing their spending

habits, Millennials are saving more of their

discretionary income. After covering their

living expenses, putting money into savings

is the top action taken by Millennials.

While Millennials are spending less on

clothes to save money, 35% still make

apparel purchases with their extra cash.

Experiences are a priority for Millennials

with 24% spending their extra money on

vacations. And despite recent improvements

in economic conditions, almost one-quarter

(23%) say they don’t have any extra money

after payday.SPEND EXTRA CASH

ON VACATIONS

24%

SPEND EXTRA CASH ON APPAREL

35%



Source: Nielsen Pop-Facts 2015

UNDER $25,000 $25,000-$50,000 $50,000-$75,000

$75,000-$100,000 $100,000+

MILLENNIALS BY INCOME TOTAL U.S. BY INCOME

27.8%15.4%

26.6%18.7%

11.4%

23.5%22.8%

23.9%17.8%

12.0%

Economic struggles are a reality for many Millennials, but one subset is thriving. Roughly 27% of this generation earn

more than $75,000 per year, 15% of this group earn more than $100,000. In addition to their high income, these upscale

Millennials (HH income $75k+) have amassed significantly more wealth than their generation as a whole. The median

liquid wealth value (income producing assets; IPA) for upscale Millennials is $157,500, more than 11 times the median IPA

of their generation as a whole. Appealing to the distinct wants and needs of upscale Millennials is vital in capturing this

lucrative segment.

Upscale Millennials lead a more established lifestyle than their generation as whole. These upscale consumers are more

likely to be married, well-educated homeowners. On the other hand, life for this generation as a whole tends to be in flux,

as 29% plan to look for a new job and 18% plan to move in the next year.

MILLENNIALS BY THE NUMBERS

MEDIAN INCOME PRODUCING ASSETS (IPA)

TOTAL MILLENNIALS UPSCALE MILLENNIALS (HH INCOME $75K+)

Median Household Income $48,797 $109,818

Presence of Kids 57% with kids 57% with Kids

Race/Ethnicity74% Caucasian, 21% Hispanic,

14% African-American, 4% Asian-American

78% Caucasian, 15% Hispanic, 9% African-American, 6% Asian-American

Homeownership 47% Homeowners 68% Homeowners

Home Type57% Single-Family Home,

23% Apartment, 9% Townhome, 3% Condo

72% Single-Family Home, 12% Apartment, 8% Townhome,

4% Condo

Education30% College Graduates,

11% Post-Grad Work51% College Graduates,

21% Post-Grad work

Source: Nielsen Scarborough 2015

Source: Nielsen Financial Track 2015

UPSCALE MILLENNIALS $157,500

$13,875TOTAL MILLENNIALS

$25,600GENERAL POPULATION


MILLENNIALS —DEAL SHOPPERS WHO DESIRE AUTHENTICITYAccording to the Intelligence Group, Millennials spend about $200

billion per year in the U.S. This figure is likely to grow as they age and

become more established. In order to capture their shopping dollars,

retailers must pay attention to the unique shopping habits of this young

generation. Millennials are deal hunters. They value authenticity and

locally made products, and they expect a connected, multi-channel

shopping experience.

Millennials, like the population as a whole, tend to frequent Wal-Mart.

Upscale Millennials, however, are less likely than their generation as

a whole to frequent Wal-Mart and are more likely to frequent Target.

Target has focused on capturing the upscale Millennial market through

its partnerships with fashion designers and the affordable, yet chic

Threshold home accessory line. This generation as a whole is likely to

shop at dollar stores, while upscale Millennials are likely to frequent

Best Buy, Costco and Old Navy.

TOP 10 RETAILERS SHOPPED IN LAST 3 MONTHS

Source: Nielsen Scarborough 2015

TOTAL MILLENNIALS

1. Wal-Mart 75.5%

2. Target 55.6%

3. Amazon 46.8%

4. Dollar Tree 38.6%

5. Kohl’s 30.9%

6. Dollar General 30.2%

7. JCPenney 26.4%

8. Family Dollar 25.6%

9. Best Buy 25.5%

10. Macy’s 22.9%

UPSCALE MILLENNIALS

1. Wal-Mart 67.8%

2. Target 65.2%

3. Amazon 59.7%

4. Kohl’s 39.1%

5. Best Buy 31.8%

6. Macy’s 30.3%

7. Dollar Tree 29.6%

8. Costco 29.6%

9. JCPenney 29.3%

10. Old Navy 24.4%



SHARE BRAND HERITAGE AND HISTORY WITH MILLENNIALS

Millennials are leading the “buy local” movement—a movement that

has become a $29 billion industry and doubled in size in the last 10

years, according to AdWeek. But Millennials aren’t just buying local;

they’re also contributing by making and selling their own goods.

Millennials make up more than half of those making and selling their

own goods. They value the personal, custom shopping experience that

buying local, handmade products affords. Roughly half (51%) say they’re

more likely to purchase an item if they have the ability to customize it.

Despite their love of a deal, Millennials are willing to spend more

to shop local. According to Edelman Digital, 40% prefer to shop

local, even if it costs more. When they’re not buying from their local

communities, they prefer to buy American-made products. Roughly

76% of upscale Millennials and 73% of the total generation say buying

American products is important to them. National retailers can

capitalize on this trend by sharing the story of their brand with them.

Make them feel like they’re a part of the process of producing the goods

they purchase by telling them how and where products were made.

SAVVY SHOPPERS & AVID RESEARCHERS

With limited money to spend, Millennials are savvy shoppers by

necessity. Avid researchers, 42% of them check at least four sources

when trying to decide on a purchase, according to Edelman Digital.

About a third make purchases only when they have a coupon or

promotional code. And roughly 40% buy previously used items online to

save money. Despite having more money to spend, upscale Millennials

are deal-lovers as well. Roughly 43% use coupons at least once a

month. Retailers can entice Millennials to buy with deals and coupons,

especially promotions that feel exclusive and customized to them.

Purchases have both short- and long-term value to Millennials. More

than half of this generation consider the resale value of an item before

buying it, according to research from the Intelligence Group. And in this

way, retailers looking to engage this generation should highlight the

long-term resale value of products by demonstrating quality, durability

and classic styling.

DELIVER A CONNECTED SHOPPING EXPERIENCE

Millennials are always connected. About 92% own a smartphone,

compared with 76% of Baby Boomers. Because technology is an

integral part of their lives, it’s an integral component of their shopping

experience. Millennials expect a seamless multi-channel shopping

experience. They’re driven by digital and want to control and customize

every phase of their shopping experience. The connected store concept

is on the cutting-edge of the multi-channel shopping experience.

Rebecca Minkoff, the women’s fashion brand, is blazing a trail with its

connected store concept, which focuses on the needs of this generation

and allows customers to select their own level of service—from trying

on an outfit in the store to purchasing it later on their mobile device.

Roughly 19% of Millennials and 31% of upscale Millennials spent over

$1,000 online in the past year. The majority (66%), use the Internet to

purchase hard-to-find items. Roughly 70% of upscale Millennials scour

the Internet for hard-to-find items.

Millennials use the Internet to engage with their favorite brands.

Roughly 36% of the total generation and 34% of upscale Millennials

share their opinions of products by posting reviews and ratings

online. And 27% of all Millennials and 24% of upscale Millennials like

to connect with brands via social media. Social media and mobile

technology can be used to deepen the relationship and loyalty among

this group.



WHAT DOES IS ALL MEAN?Millennials have reached critical mass and are too large to ignore.

These young consumers spend $200 billion per year, and this stands

to grow as they become more established. They are deal shoppers.

They value authenticity and locally made products. And Millennials

expect a connected, multi-channel shopping experience. Focusing on

these key elements will help retailers capture opportunity within the

shopping landscape:

• Focus on Upscale Millennials: Upscale Millennials represent a key area of opportunity for retailers. Their shopping preferences are not dramatically different from their generation as a whole. However, they have money to spend, and their early life stage indicates they’re only at the beginning of building their spending power. Focusing efforts on upscale Millennials will deepen engagement and build loyalty with this lucrative segment.

• Offer Personalized Deals and Don’t Compromise Quality: Millennials are deal hunters and savvy researchers. These young consumers place a premium on getting a good deal, but not at the expense of quality. Retailers can encourage them to buy with personalized deals and promotions in the channels they prefer.

• Be Authentic: Millennials are leading the “buy local” movement. They care about the authenticity and the story behind the items they buy. Give them a connection to the brand by sharing the history and heritage, as well as the process for making goods.

• Engage with Technology: Because technology is an integral part of Millennials’ lives, it’s an integral component of their shopping experience. Millennials expect a seamless multi-channel shopping experience. They are driven by digital, and want to control and customize every phase of their shopping experience. Deepen the relationship and loyalty through social media and mobile technology.

ABOUT NIELSEN

Nielsen Holdings plc (NYSE: NLSN) is a global performance management

company that provides a comprehensive understanding of what consumers

watch and buy. Nielsen’s Watch segment provides media and advertising

clients with Total Audience measurement services for all devices on which

content — video, audio and text — is consumed. The Buy segment offers

consumer packaged goods manufacturers and retailers the industry’s only

global view of retail performance measurement. By integrating information

from its Watch and Buy segments and other data sources, Nielsen also

provides its clients with analytics that help improve performance. Nielsen,

an S&P 500 company, has operations in over 100 countries, covering more

than 90% of the world’s population.

For more information, visit www.nielsen.com.

Copyright © 2015 The Nielsen Company. All rights reserved. Nielsen and

the Nielsen logo are trademarks or registered trademarks of CZT/ACN

Trademarks, L.L.C. Other product and service names are trademarks or

registered trademarks of their respective companies.15/9231

millennials in 2015: retail deep dive

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