Small is the new big: Millennials & the future of retail

Do you shop online? If you answered “Yes”, then you probably fall into the demographic who has contributed to the massive closure of brick-and-mortar stores. In the past decade, physical stores have been facing increased competition from online retailers catering to Millennials. This has pushed brands to rethink marketing strategies as they learn how to ride the Web 2.0 wave.

Sorting out the admin of the clothing boutiqueHowever, research by Accenture shows that physical stores will not be going extinct as soon as we think. In fact, many young people still prefer visiting physical stores to shopping online. NPD Group reports that Millennials spent 81 percent of their shopping dollars in brick and mortar stores, and only 19 percent online. If you think about it, shopping is not merely about practicality, but it is also a social and leisure experience involving all five senses.

Today’s top brands are watching Millennials’ buying habits closely to guide strategic sales and marketing decisions. This emerging adult population, often referred to as the Gen Y, are the largest group to have grown up in an age of consumerism. They are known to have a sense of entitlement and big expectations. They demand instant gratification, and most importantly – they play a vital role in sustaining the market, as their buying decisions will have major economic impact in the near future.

“By 2020…[Millenial shoppers’] spending in the United States will grow to $1.4 trillion annually and represent 30 percent of total retail sales” (source).

The question is, how do you keep these hyper-connected, tech-dependant customers happy? By using data to optimize operations – giving you the ability to leverage on useful insights as your business grows bigger. Here are five smart ways retailers can engage Millennials on a personal level:

1. Create a seamless shopping experience

The easiest way to lose trust is to display inconsistent information across different platforms, such as product pricing and current deals. Details like these should appear consistently, both in-store as well as on your website and across social media channels. Many stores now allow customers to view in-store inventory online, and in-store pickup of online purchases. Integration with existing social media logins promote a sense of convenience and reliability.

2. Use targeted promotions

Millennials are the ones checking in at locations where they work, dine, and play, advancing the growth of crowd-sourcing apps. They do not mind sharing bits of personal information in exchange for social gratification, or rewards points that can be converted to cash value. Adding a customized recommendation for every purchase could boost sales, given the right insights into the preferences of various customer personas. Another common trend is limited-time promotions sent via push notifications to customers’ mobiles when they arrive within your store’s vicinity. With this generation, marketing has to move fast and hit hard.

3. Support causes

This generation buys into the prospect of giving back. TOMS has a business model revolving around “One for One”, where the company will match every pair of shoes purchased with a pair of new shoes for a child in need. Puravida allows young fashionable people to support multiple causes by purchasing unique handmade bracelets, while promising to provide full-time jobs for local artisans in Costa Rica. Millennials love being part of a larger picture, and brands that give back appear to be more genuine.

4. Keep things simple

Millennials are big fans of convenience. They don’t bother cutting out coupons and bringing them to the store. They do not want yet another membership card to clutter their wallets. Keep promotions simple and integrated with their online logins.

5. Use innovative technology

Tesco created a virtual grocery shopping experience at the Gatwick Airport. Adidas designed a virtual footwear wall for customers to browse up to 8,000 shoe designs in its futuristic boutique store. For Millennials, it is second nature to interact with screens and to use their mobile devices in making purchasing decisions. Constantly update sales initiatives with smarter technology that solves real life human problems. After all, businesses exist to solve problems.

Brand loyalty has to be earned. Millennials know they have the power to make or break your brand, so you want them to be on your side – to go beyond just engaging with them, but also to convert them into your brand evangelists.

With customer data readily available, it helps in demand forecasting of the market. He who has the data, wins. Think big, start small. Big calculations leads the way.

What are your thoughts on leveraging data analytics for higher profits? Let us know in your comment below or drop us a tweet @Quintiq.

Read also: How customer priorities impact your supply chain

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Planet Planning

AUTHOR

Anna Teoh.

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Anna Teoh

About Anna Teoh

As a psychology graduate, I can't help but be constantly fascinated by human behavior! Being an optimization analyst gives me an avenue to analyse user actions. With web analytics tools, I attempt to measure visitor intent, translate numbers into actionable insights, and help convert visitors into customers. In my free time, I enjoy the company of cats and books.