Demystifying Millennials | Special Report | Mar 2016

As they grow older, millennials are more like previous  generations, with life stage, not age, dictating their choices
March 2, 2016Allison Zisko

By Allison Zisko

The massive millennial generation is starting to look a little less mythical and a lot more predictable, especially when it comes to home furnishings.

For years, manufacturers and marketers analyzed, discussed and fretted over how to reach the all-important millennial generation, which is now officially the largest population group in the United States, according to the U.S. Census Bureau. This group, born roughly between 1980 and 2000, was, for some, a jumble of contradictions: technologically savvy and wedded to their smartphones, yet in constant pursuit of life-changing experiences; ecologically and environmentally sensitive, yet less likely to hang on to their stuff; brand loyal yet not brand loyal.

Everton Marsha“Some people think of millennials as aliens we don’t understand. The truth is, they’re humans with human behavior.” Marsha Everton, The AIMsights Group
The truth, analysts say, is millennials are all of these things, but more importantly—at least from a manufacturing and marketing perspective—as millennials grow older, they are becoming more like the generations before them, with very common wants and needs. Life stage—not age—dictates many of their choices, and that, in turn, is influenced by income and education levels.

“Some people think of millennials as aliens we don’t understand,” said Marsha Everton, principal of The AIMsights Group, a market research firm. “The truth is, they’re humans with human behavior.”

According to Laura Kennedy, director, retail insights for Kantar Retail, for several years “there was this scary myth that this was a generation that was never going to own a home, never going to get married, never going to have children ... Retailers and suppliers should be less focused on age and more focused on life stage. This is the year that generation Y, or the millennials, are not such a novelty. They’re starting to act more like their parents. The older ones are getting married, moving to the suburbs, buying property. Once generation Y has kids, they act like everybody else.”

In other words, they need couches and chairs, multiple beds, storage products, mixers and blenders and coffeemakers. Millennials’ share of spending on furniture and bedding more than doubled from 2012 to 2014, according to the think tank Fung Business Intelligence Centre Global Retail & Technology, and millennials forming their own households will help home furnishings maintain a compound annual sales growth rate of 2.9 percent through 2019.

KennedyLaura “There was this scary myth that this was a generation that was never going to own a home, get married [or] have children.” Laura Kennedy, Kantar Retail
Millennials made up 37 percent of all households buying furniture and bedding in 2014 and spent $27 billion, according to Furniture|Today’s 2015 Consumer Buying Trends Survey (Furniture|Today is a sister publication of HFN). Millennials comprised the greatest percentage of households buying youth bedroom furniture at 55 percent, entertainment furniture at 51 percent and formal dining furniture at 49 percent, according to the survey. HFN’s exclusive Housewares Consumer Speaks study, published last month, found that the most popular small appliance among millennials is the slow cooker. Forty two percent of younger consumers cook with it each week and 41 percent use it monthly.

Older millennials, who account for about one-third of the total millennial population and who are about 30 to 34 years old, tend to be the ones who buy the bulk of, and the more expensive, home furnishings. But the segment just behind them, who are about 24 to 29 years old, are also making purchases for the home. This group tends to be just starting out on their own and are either living with friends or a significant other, if not still at home with their parents.

“They are entertainers,” said Everton. “Barware is hot, hot, hot right now.” Bowls are also very big with this group: “All that food that tastes great in a bowl ... rice or noodles with stuff on it. It’s an easy way to cook,” Everton added. They also need cookware and they like the aforementioned slow cooker as well as pressure cookers. The Instant Pot 7-1 Multi-Cooker, which retails for $115, was among the most popular items sold on Amazon during the 2015 holiday season and is a favorite among bloggers such as Skinnytaste.

MorsovilloLora“Millennials respond to consumer reviews, blogs, recommendations and cause marketing.” Lora Morsovillo, The NPD Group
“As it relates to the home industry, millennials tend to eat out less and cook more,” said Lora Morsovillo, president, Home, The NPD Group. “Meals—both prep and the occasion—have higher involvement from millennials. Fresh food and controlling ingredients [also] play a big role.” Among the home categories that are hot with millennials are cookware, blender/mixer/chopper systems and craft coffee, Morsovillo said. “It’s all about creating a unique experience in the home, trending toward health and wellness.”

Millennials also gravitate to storage and organization products, according to Everton. “They are cleaning fanatics,” she said. HFN’s Housewares Consumer Speaks study bears that out: 56 percent of millennials obtained an upright vacuum between one and four years ago and 24 percent of them vacuum every day.

Millennials, many of whom live in small apartments or homes, evaluate their possessions carefully and purchase products that “earn their space,” Everton said. Those are products that can basically justify their existence and are the ones millennials would be willing to take with them when they move.

Local & Eco-Friendly Products

Not surprisingly, millennials do much of their product research online, as opposed to reading Consumer Reports or other publications, or going to a store, Kantar’s Kennedy said. Among the most popular online research tools is Amazon.com. Millennials also depend on a lot of personal advice from friends and parents, Everton said. AIMsights found that the Internet is the primary source of information for decision making for millennials (as well as baby boomers), followed by television and then social media. “Millennials respond to consumer reviews, blogs, recommendations and cause marketing,” said Morsovillo.

Millennials gravitate toward products with embedded technology, they care about locally-sourced products and items produced by local artists, and they appreciate customized goods—products they feel are unique or expressly made for them, said Cristina Fernandez, senior research analyst with Telsey Advisory Group. They are not hung up on brands, Fernandez said, but they are interested in high quality and value. “They’ll pay up if they think it’s eco-friendly or has other attributes.”

West Elm is an example of a retailer that appeals to millennials, with its global aesthetic, its local artists and its perceived value, Fernandez said. Joe Feldman, senior managing director of Telsey Advisory Group, added that while millennials grew up with digital commerce and are very comfortable with it, they still crave a good in-store experience and see shopping as entertainment. “They want to go and have a good time while they’re shopping,” he said. And, “they want coffee. They want to be able to walk around a store with a cup of coffee in their hand.” And while doing store checks, Feldman said he often sees women Face Timing with their friends while they are in a store.

“Millennials appreciate a distinctive store experience,” agreed Kennedy. She pointed to hunting and fishing stores Gander Mountain and Cabela’s as an example. While they are geared to a specific audience, the merchandising of those stores is targeted specifically to that audience. She pointed to Anthropologie, with its curated, distinctive point of view, to Whole Foods, with its unique products and its tastings, to supermarkets that have wine and cheese bars and coffee bars within them, to the supermarket Wegmans: “People are religious about it.”

Personalization Wins

What, then, is the best way for home furnishings manufacturers and retailers to market to millennials?

“As a general trend, it’s a generation that prefers personalization,” Kennedy said. It’s important to be specific about a shopper’s needs, she said. Take wedding registries. After getting married and receiving gifts, a newly married couple walking into the store where they registered might appreciate a text message that new barware that complements what they recently received is now in the store, or on sale. “Being personalized and relevant is important to this group,” Kennedy said.

“It’s really important to talk with them, not at them or to them,” Everton said. Integrated, omnichannel marketing programs that invite opinions, listen, respond and respect millennials are the most effective. “You have to show them you value them as a customer and value their brand loyalty.”

The social media platforms most enticing to millennials are Instagram and Pinterest, Everton said. Facebook provides an opportunity to check in with family and friends about once a week, she said. Corporate Facebook pages should be more interactive, but a lot of companies talk to people, not with them, Everton said. They also have ways to reward loyal visitors—by communicating with them individually, for instance—but many companies are not doing that. “There are a lot of ways to take Facebook to a new level but I rarely see that,” Everton said. Instagram is an opportunity, but shouldn’t be treated like Facebook. “It’s an in-the-moment kind of thing,” Everton said. Pinterest lays a role—a lot of recipes get pinned, so it’s a great way to find out how millennials like to prepare food, she said. But the blogging community is one of the biggest influencers. Skinnytaste posts an Instant Pot recipe about once a week. “This is something that grew through social media.”A coordinated omnichannel effort is critical, according to Kennedy. Consumers see retail as seamless across all platforms and they expect to shop without a hiccup across them. “Millennials have that expectation of flexibility and convenience,” she said. “If you are not ready for that it’s going to be hard for you as a retailer or a supplier.”

 

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