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For the next big generation of shoppers, it's about me!

Millennials aren't kids anymore.
7/17/2012

With the fickle, spoiled-for-choice millennial generation entering its prime shopping years, grocers should take note of the latest research on this demographic.

True, they’re cash-strapped. In sheer numbers, however, the so-called Me Generation–roughly those born between the late 1970s and into the mid 1990s–is a tsunami.

By 2014 the first big wave of this group, now 25 to 34 years old, will outnumber baby boomers, says WD Partners, a retail consulting company. In other words, it’s becoming important to understand what makes this generation tick.

The first thing to know is that millennials love the Internet. No surprise there; they grew up with it, after all. But now, armed with the Net’s most up-to-date weapons–social media, apps and smartphones–they’re poised to revolutionize the shopping experience.

Already 27 per cent say they would use mobile devices as a loyalty card, according to a survey by loyalty firm Aimia. As more such programs hit stores, millennials’ interest in combining technology and shopping will skyrocket, believes Rick Ferguson, Aimia’s vice-president of knowledge development.

Indeed, store-level technology may be the best way to reach millennial grocery shoppers. “They’re a big foodie generation,” says Michelle Fenstermaker, executive director of consumer insights at WD Partners. So picking up recipe ideas next to the avocados makes perfect sense to them.

One grocer already on top of that is Sainsbury in the U.K. A Sainsbury app allows consumers to create meal plans, receive points and get ads for discounts depending on where they are in the store.

The Me Generation is a big group, yet one of its defining traits is individuality. “You can’t just say millennials want X,” says Alex Monk, senior analyst at Ottawa-based research firm Abacus Data.

Millennials expect to be individually catered to. According to Aimia’s survey, 53 per cent of millennials cite relevancy of rewards as a top reason to join a loyalty program, compared to just 32 per cent of older consumers.

“They understand they’re giving up their information so the company can learn more about them,” says Ferguson. “They expect a retailer to understand them.”

Monk believes that retailers need to have a diverse palette of marketing strategies and products to reach Me Generation shoppers.

A good example of the latter, he says, is Loblaw’s Green, Blue Menu and black label product lines. With these, Loblaw is able to separately cater to eco- and health-conscious and luxury-seeking consumers.

Manufacturers, meanwhile, have been launching products that appeal to Gen Me’s quest to personalize. A good example of this: Mio, Kraft’s water enhancer that allows users to add as much or as little flavour as they wish.

Millennials may also incite store-format changes. In its survey, WD Partners found the No. 1 grocery destination for millennials in the U.S. is the supercentre.

“This generation has grown up with the world at their fingertips,” says Monk, and supercentres’ mimic that anywhere, anytime selection. Conventional grocery stores ranked No. 3, after specialty and boutique stores. Baby boomers, on the other hand, prefer conventional grocery stores.

That doesn’t mean conventional grocers can’t attract millennials.

Monk suggests grocers cater to their interest in local, ethical and organic products. According to Abacus data, 18- to 29-year-olds said they were willing to spend about $16 extra on a $100 basket of groceries if the products were locally produced. That’s in comparison to an average of $13 extra among other demographics.

Another way to win over Gen Me? Make sure loyalty programs reward them quickly. “If it takes more than three months, they’re more likely to disengage,” says Ferguson.

Aimia found that 68 per cent of millennials expect to be rewarded within three months, compared to 53 per cent of non-millennials.

Millennials grew up amid affluence but the last four years of recession have hit them especially hard and they’ve learned to be frugal.

They are mimicking the Great Depression’s Silent Generation, says Fenstermaker, and even when the current malaise lifts and millennials start getting jobs and raises, they are likely to keep pinching pennies.

Aimia found that price ranked No. 1 in the buying decisions of 45 per cent of Canadian millennials, compared to 27 per cent of non-millennials. Sixty-three per cent also rated free registration as a key reason to join a loyalty program vs. 37 per cent for other generations.

One thing is for certain: this group of actively engaged consumers shouldn’t be ignored or else grocers risk losing out on this generation’s peak spending years.

Think of it this way: It’s not about you. It’s about Meeeeee!

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