The image of the poor artist living in a garrett was probably never as romantic in reality as it sounded. Unfortunately, many of today’s young adults, especially those without resources (like parents) to fall back on, are making that discovery. Mariam Shahab, a Boston University Senior and blogger, bemoaned in Twitter just today “Are we going to be forever known as ‘Generation Recession’“?
The definition of a ‘market’ is a ‘group of people or organizations with a need and the means to satisfy it’. Unfortunately, the “Millennial Market” may not be living up to its true potential, at least right now, due to lack of means.
I am confident Millennials would be lining up to purchase iPads immediately if it weren’t for the high price tag. Fifty-seven percent of 18-34 year olds say price is the number one reason they aren’t buying an iPad, double the average for all ages.
Tru-Research reports that 50% of teens in 2010 say “Not enough money” is their ‘biggest complaint’. This figure compares to just 30% ten years ago. Twenty-three year old Christine Carter wrote an article in Retail Customer Experience this week to explain “Why Gen Y isn’t Buying Your Products“. She writes:
“Our education expenses, our social desire for luxury goods and our inability to save money make us very cash-poor. Because our generation responds and adapts rather quickly to social changes, we have emerged from the recession as “Recessionistas,” informed shoppers who stick to tight budgets while still managing to stay trendy and cultured. We’re looking for inexpensive versions of the items we desire and durable versions of the items we need.”
I hear the same lament almost daily from my marketing students — they consider themselves cash-strapped. Last week, every student expressed a preference to watch ads to access TV shows online rather than pay to avoid them. When I see articles about Gen Y and shopping, they generally refer to teens. Young adults do not seem to get the same pleasure from shopping as those who are still spending their parents’ money. They see it as stressful and are extremely careful shoppers, researching larger purchases and avoiding impulse buys. Of all age groups, Nielsen points out, they make the fewest shopping trips.
Just how poor are Millennials? Let’s look at the data.
First, the Recession was just the latest in a long downward trend in young adult wealth. I have reported before on Gen Y being one of the poorest generations of young adults. According to a 2008 report by DEMO’s, “The Economic State of Young America”, young adults of 2005 were worse off on nearly every dimension of economic well-being other than education than young adults in 1975. Here’s how The Nation summarized the DEMO’s findings:
Men without a high school diploma suffered most, their annual income plummeting by 34.2 percent, while men with a high school diploma or the equivalent earned the runner-up slot, with an income drop of 28.5 percent. As for women, those with less than a high school diploma, as well as those possessing just a diploma, lost less ground than their male counterparts; but then again, they’re still doing worse than before and, perhaps more to the point, they still fare significantly worse than men their age.
At the same time, today’s young workers have had to do more with less. College tuition rates have skyrocketed–in fact, rates for four-year public universities have more than doubled since 1980–with the unsurprising result that nearly two-thirds of students graduating from four-year colleges in 2008 left in debt. The cost of childcare now eats up as much as 10 percent of a two-parent family’s income in many states (as much as 14.3 percent in Oregon). And young people between the ages of 19 and 34 are the most likely population to be uninsured–not because they don’t want health benefits but because employers don’t offer them. A case in point: 63.3 percent of recent high school graduates had employer-provided healthcare in 1979, whereas just 33.7 percent had it in 2004.
“What we’re looking at is a situation where young people entered the recession already feeling the brunt of thirty years’ worth of pretty gradual but nonetheless dramatic economic and social changes,” says Nancy Cauthen, director of the Economic Opportunity Program at Demos. “The recession just made a bad situation worse.”
This BLS positive employment news was welcome, but doesn’t change the fact that unemployment among young adults is at an all time high, much worse than for older age cohorts. Sixteen to nineteen year old unemployment in March was 26%, twice what it was in March 2000.
An article in The Fiscal Times (“The American Dream Dilemma“, March 23) draws a vivid portrait of today’s Gen Y as ‘broke, unemployed, moving home, and living on food stamps.” The part about living on food stamps appears to be no exaggeration. Salon magazine this week also offers an extensive profile of Millennials signing up for EBT cards from the government’s Supplemental Nutrition Assistance Program (SNAP) , then attempting to satisfy their foodie and organic cravings once they have them (“Hipsters on Food Stamps“, March 15) — “Is it wrong to believe there should be a local, free-range chicken in every Le Creuset pot?”
Marketing to a target audience that faces true economic uncertainty is a challenge, especially a market that is used to thinking of what used to be considered ‘luxuries’ (cell phone and computer, high quality food, Internet access) as necessities. They are trying to stay away from credit, using debit cards for purchases and cutting corners whenever possible. Marketers who are winning are careful to explain the real benefits of their products, not just the sizzle.
Despite their current dire straits, Millennials strongly believe better days are ahead. Marketers that reach out to them in meaningful ways now could reap significant benefits later.
Target is a retailer that seems to understand the Millennial “thrifty yet hip” mindset best. According to Nielsen, Millennials are more inclined to shop there more often relative to other age groups as well as to outspend them. (Nielsen, “Mining the Generations Gap”)
“Certain store banners hold a unique appeal for the younger generations, and Target is at the head of that retailing class. Target stores have managed to maintain a hip, trendy image with a strong value message with whimsical advertising; strong, almost pop art in-store merchandising; and a roster of high profile designers for everything from housewares (Michael Graves) to bedding (Todd Oldham) to women’s fashion (Mossimo) to cosmetics (Sonia Kashuk). And, with the interest in at-home meals, Target recently announced a new partnership with TV cook show host Giada De Laurent is for a store-brand line of specialty food items and cookware.
