How many times have you heard a fellow marketer say “We need to target millennials” in a meeting?
Generational marketing isn’t a new concept—it’s been around for years—but this focus has a tendency to create an over-reliance on vague insights and highly generalized segments. Retail Dive recently discussed how this generational emphasis can blind retail marketers from looking deeper into each group for trends and channels that match their behavior. What starts as good intentions toward personalization and knowing customers becomes a crutch for retailers to hold up their already prescribed marketing efforts.
Today’s retail marketers are facing a unique challenge: there are more generations with access to disposable income—and they’re spending more than ever before. When it comes to spending power, some generations of the highest spending generations are just getting started. Millennials already surpassed baby boomers when it comes to spending power, and Gen Zers are not far behind with estimated spending yielding of $143 billion.
From the silent generation to Gen Z, marketers need to contextualize and personalize messages—across channels and devices—for very different behaviors, buying preferences and shopping habits all at once. But understanding these preferences across generations is the first step.
In a recent report from Epsilon-Conversant, “A Guide to Cross-Generational Marketing,” we analyzed our proprietary market data to look at spending habits across generations. Here, we highlight four primary findings for retailers from the research to help improve every interaction a consumer has with your brand.
1. Shifts in spending power
Baby boomers are the spending heavyweights due to their large population size, and, unsurprisingly, they also spend the most per transaction across all retail categories, proving value to marketers.
Following baby boomers, Gen X spends the next highest per transaction, especially in retail categories such as warehouse clubs and sporting goods. Gen Xers are also purchasing more frequently, yet they’re largely ignored by retail marketers because of their young age. Although they’re not a huge group, they do spend a lot per transaction. Gen Xers are key trend-makers and influence how others spend, including their parents, which make them a key target for savvier brands.
Millennials, too, are starting to earn more in their careers. They’re also spending more online than other generations at places like Amazon, Gilt and Zappos. These online retailers sell a variety of products, so, as a retail marketer, it’s important to talk to your customers and offer them a wide product set.
As a group, Gen X, millennials and baby boomers comprise a large swath of consumers with spending power. By knowing how and where they spend, retail marketers can have relevant conversations with their customers and create meaningful interactions with them at every opportunity.
2. In-store shopping is not dead
Although many retailers have both physical and online stores, it’s important to know where your consumers are most likely to purchase. In fact, the research found that 80% of consumers in every generation have recently shopped in a store, and there is a large preference for visiting stores for almost every generation.
For the average person, it comes down to ease and accessibility, which generations view differently. Older generations have a preference for shopping in store, enjoying the ease of experiencing products before they buy and returning products in person because it is less time-consuming than searching for products online or having to go to the post office to return items. Younger generations, like Gen Z, surprisingly also prefer in-store shopping, which is contrary to many notions about younger people. They like in-store for the instant gratification and the social aspect of visiting stores with friends.
It’s important to note that the ease of online shopping is a key factor for millennials, baby boomers and the silent generation, who prefer the convenience of shopping from the comfort of their home, shipping and easy return policies.
Between in store and online consumers, retailers need to be aware of buying preferences so they can market their brand accordingly. For example, if Loft knows certain customers almost always purchase in-store, Loft can send them specific messages for in-store discounts and events at their nearest location. But for other customers that primarily purchase online, Loft should send online-centric discounts and offers for free shipping. This allows retail brands to optimize each customer interaction and understand individual buying preferences to drive optimal results.
3. Understand online shopping attitudes
Not all generations prioritize purchasing online versus in-store, but almost all do some sort of shopping or browsing online with specific device preferences.
Millennials dominate smartphone shopping, with around 75% of them using their phones to shop online. Additionally, 63% of Gen Z prefers to use laptops to shop online, the highest percentage of any generation. Voice assistants, such as Google Home or Amazon Alexa, are growing, but only 3% of consumers (typically in the Gen Z, millennials and Gen X generations) use them to order online.
Online shopping is growing, but, as a retail marketer, it’s important to make sure you’re able to have conversations with your customers across all their devices. Think about how often a consumer searches for something on their phone but then later makes the purchase on a laptop at home. You need that full view of a person across their devices to ensure that your message aligns with their preferences so that even after that customer closes out of their browser on their phone, you later reach them on their laptop with an offer or discount because you know they’re now on their preferred conversion channel.
4. Watch for the spending influence of Gen Z
The youngest generation of the bunch, Gen Z, may have fewer people spending as a generation, but the active buyers amongst the group spend more each year. As many in this generation are likely living with their parents or in college, they have limited financial responsibilities and can shop and spend what they have, particularly at retail stores. And because of their young age, it’s important to know how to reach this generation now since they present a long future lifetime of spending.
They also have a large impact on their parents, the baby boomers. Baby boomers with kids are more likely to shop online (42%) in comparison to baby boomers without kids (33%). They’re also more likely to use a tablet to make purchases, and millennials and Gen Xers who have kids are more likely to use a smartphone to make purchases.
With these households taking advantage of increased online shopping opportunities, it’s important to keep these habits top of mind. Ensuring you’re able to have an ongoing conversation with your customers in the digital space will allow you to say top of mind with your best customers the way they want to be reached—across generations.
Interested in reading the full research? Download the full report.
Joline Hegi is the retail marketing manager for Epsilon-Conversant.