Millennials have surpassed baby boomers as the largest generation in the U.S. So, it's vital for retailers to understand how millennials are spending their money in order to be profitable in 2018.
To provide insight into how the younger generation is shopping and making major purchases, TD Bank surveyed 1,021 Americans of all ages and tracked how millennial (age 18 to 34) habits compare to Gen Xers (age 35 to 54) and boomers (age 55 to 72).
Click through to discover the unexpected ways millennials and other generations are spending money.
What’s Most Important to Millennials When Choosing a Retailer?
When choosing a retailer, millennials value price and the product selection. Sixty-three percent of millennials said price is an important factor, and 82 percent said the selection of products is an important factor.
In fact, millennials value price more than baby boomers (49 percent said price is most important), and they value selection less than Gen Xers (90 percent said selection is most important).
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Millennials Are More Likely to Seek the Best Deal
Millennials are also more likely to seek the best deal when making a major purchase, and rank price as very important when making a major purchase of $500 or more.
Sixty-three percent of millennials ranked price as very important compared to only 59 percent of Gen Xers and 49 percent of baby boomers.
Millennials Spend More Time Researching Before Shopping
Approximately half of millennials (47 percent) spend one to three hours researching their finance options before making a major purchase, which is on par with Gen X respondents.
However, millennials are more likely to spend seven or more hours researching finance options than older buyers. Twenty-three percent of millennials said they spend seven or more hours doing research, while only 10 percent of shoppers age 35 and older said they do.
"It has to do with their online use, their social media activity where they're sometimes crowd-sourcing feedback on a product, retailer or brand, and with their nature to seek out the best deal," said Mike Rittler, head of TD Retail Card Services and interim head of U.S. Partnerships.
"Millennials, on the whole, are not impulse shoppers," he said. "They like to research, they like to feel confident that the retailer and brand align to their values, and they want to make sure they're getting the best price for an item, so they leverage a lot of channels in order to find this information."
Millennials Are More Likely to Make Big Purchases
Millennials are spending more than their parents are right now. Eighty-one percent of millennials said they made a single purchase of $500 or more in the past year, compared to only 61 percent of baby boomers.
Millennials Are the Most ‘Brand Loyal’ Generation
Millennials are more brand loyal than any other age group, with 69 percent choosing the same brand for a major purchase in the last year. For comparison, only 58 percent of Gen Xers and 56 percent of baby boomers did the same.
This could explain why millennials are hesitant to try a new brand when making a major purchase, with only 17 percent saying they would.
Most Millennials Are Not Shopping Online
This might come as a surprise, but less than half of the millennials surveyed — 41 percent — said they shop online "all the time."
However, "you need to factor in-app shopping with the millennial audience," said Rittler. "We're looking beyond retailers' websites to their app shopping. Millennials are the leading demographic when you look at in-app shopping. Combine that with online, and you've got a very e-commerce focused set of consumers."
Even if they are not shopping on retailer sites all the time, they are shopping online more frequently than older shoppers: Only 26 percent of Gen Xers and 17 percent of baby boomers said they shop online all the time.
Most Millennials Want Discounts When Shopping Online
When millennials shop online or with a retail app, 66 percent say the primary perk is the access to promos, coupons and discounts.
In fact, millennials care more about discounts than the other age groups, with 63 percent of Gen Xers and only 46 percent of boomers saying this was the primary perk of online and app shopping.
Millennials Care Less About Seeing Products in Person
When shopping at a retail store, 93 percent of consumers over the age of 35 said the ability to see merchandise in person is important. Meanwhile, only 81 percent of millennials did.
This could be because millennials are more accustomed to shopping online than the older generations.
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Millennials Care More About Window-Shopping
Forty-three percent of millennials said the ability to window-shop is an important aspect of shopping at a retail store.
Interestingly, they care more about window-shopping than boomers: Only 32 percent of baby boomers ranked the ability to window-shop as important.
Shopping In-Store Is More of a Social Activity for Millennials
"Millennials still enjoy the social aspect of shopping," said Rittler. "They're making an event out of it. They shop with friends or family, they browse, they grab a coffee and window-shop. To this group, shopping is an event, not an errand. And in many cases, they enjoy doing it."
In fact, nearly half of millennials are heading to the mall as a social activity. Forty-nine percent of this age group said that the social attributes of shopping are important to them, found the TD Bank survey.
However, Gen Xers prefer the social aspects of shopping the most, with 50 percent ranking the social attributes of shopping highly versus only 32 percent of baby boomers.
Millennials Still Seek Guidance From Sales Associates
When millennials are making a major purchase — defined by this survey as a single purchase of $500 or more — 61 percent said they seek help from a sales associate.
"I was surprised to see how much they value the input and help from sales associates," said Rittler. "If you look at our numbers, 18 percent of respondents felt that the sales associate was influential in their purchase decision, but that number jumps to 29 percent when you look at millennial consumers. They like the option to interact in person, ask questions and engage with a retail employee, which we may not have expected given their prolific use of online and mobile shopping channels."
But, baby boomers are even more likely to seek help from a sales associate, with 77 percent saying that they seek advice before making a major purchase.
How Retailers Can Give Millennials the Optimal Shopping Experience
The retailer landscape is always changing — and so are the customers. To attract and maintain millennial customers, retailers should keep three things in mind: convenience, price and experience, said Rittler.
"We know that millennials are active online and they research regularly," he said. "In fact, they research online while they shop in store," said Rittler.
He predicts "retailers will see the 'buy online, pick up in-store' option become increasingly popular, as well as same-day shipping and delivery. These benefits and services appeal to millennials who want instant gratification when it comes to shopping today."
And "additional conveniences like a coffee shop in-store, a fast-casual restaurant in-store, free gift wrap, car-side delivery, charging stations, etc. — all of these things make for the kind of convenient and catered experience that millennials are expecting more and more," Rittler added.