Eat or Be Eaten. How Millennials Spend Their Money

The largest generation in US history is about to enter its prime spending years…

How and what they choose to buy will decide which companies will eat or be eaten in the decades to come.

Let’s see who they are and how exactly are they spending their money…

Millennials — those born between 1980 to 2000 (between ages 17 and 37) — were born during a time of rapid change and globalization.

They are the first digital natives and for them these days instant gratification is just a tap on a screen — their relationship with technology affects how they shop.

And that means a few things...

1. They are early adopters.

Millennials — who grew up around quickly reiterated technology — aren’t afraid to try out new technology they haven’t used before.

If a better solution arises to an old problem eventually it will win out no matter how entrenched the old solution was in mainstream culture.

That’s why Millennials choose Netflix over cable.

That’s why they don’t own land phones anymore.

For the same reason they subscribe to Spotify instead of purchase albums… or read on tablets instead of on paper… or play games on phones more than on consoles.

The point is they will always pay for the more convenient and immediate choice no matter how different it was from the old mainstream solution.

What that means for corporations is that they must be able to change and change quickly… they must adapt to the times.

2. They don’t own what they can borrow.

As millennials have less expendable income than previous generations they they have come to choose value over convenience.

They would rather spend time comparing and finding the cheapest price than buy what’s most easily available to them at their local store.

They would rather purchase priceless experiences — like vacations and travel — over assets —like cars and homes.

Instead of own assets, they pay to borrow assets owned by their peers.

This is called the “sharing economy.”

The idea is that you buy access but not ownership to things others have and therefore do not have to pay in full for something you only need in a limited capacity.

This is exactly the idea behind Airbnb and Zipcar or Uber.

You can buy access to someone’s spare living room on Airbnb or to someone’s car on Uber.

What’s important about this is the expanding role it will have in the future.

“25 YEARS FROM NOW, CAR SHARING WILL BE THE NORM, AND CAR OWNERSHIP AN ANOMALY.” Jeremy Rifkin, Author and Economist

It won’t be long before people sell their wifi for an hour or rent out their parking spaces in downtown.

When that happens millennials won’t have to turn to big companies to get what they want because they will have local suppliers in every one of their neighbors.

3. They buy from who they can trust.

Millennials are also the most social buyers of all time and it’s no secret that the best marketing is through word of mouth.

The rise of the internet and social media has taken this effect to a new level.

With product information, reviews and price comparisons instantly available, millennials are the most informed buyers in history.

Therefore, they are careful about what they buy and choose the product that beats out the competition.

Youtube stars, Instagrammers, bloggers all have the power of suggestion and they use it to great effect.

Whatever you want to buy someone else has already bought it and shared their opinion on it.

Millennials know this and they use this information wisely.

Reputation and brand identity is becoming more important and therefore more powerful.

Companies that have done this right — Apple, In-n-out, etc — have reaped massive benefits because of this.

4. They buy what they can make their own.

The deeper truth is that people buy feelings not things.

That’s been true for millennials as it’s been true since trade existed.

The difference is that businesses are getting better at catering to this need and millennials have noticed.

For example Chipotle and Subway do extremely well with millennials because they offer choice to their customers which gives them a more personal experience.

However they do this without overwhelming their customers with choice — instead they curate.

They give them enough options to make the experience personal but not so much that it becomes confusing.

For the same reason millennials purchase from shops on Etsy where they can have a direct connection to a business and specify their tastes.

These businesses make the customer feel like a partner rather than a purchaser which is something that millennials want.

What this means is that customization will be a key feature in the evolution of technology and business.

Sooner or later people will be able to buy clothes tailored to their specifications on the norm.

Shoes will be able to mold to the exact shape of your feet.

Phones will come in colors you decide.

And this personalization of your things will ironically all be mainstream.

The Bottom Line

Millennials will shape the future of what and how businesses operate.

Their relationship with technology means that if there’s a better solution out there even if its wildly different from what they know they will embrace it.

It means that if there’s something they don’t need to own they’ll just borrow it.

It means they won’t buy a product they don’t trust even if it’s cheap.

And if you can’t give them a personal experience someone else will.

Millennials have more leverage as customers than any other generation in history.

The businesses that survive are the ones that cater to their needs the best.

As companies compete for millennial dollars, this is survival of the fittest..