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Five Things Retailers Need to Know about Millennials and Baby Boomers

BY Pavel Radda

We all know mobile apps are on the rise, especially in retail where traditional brick-and-mortar store are searching for new ways to compete with online retailers like Amazon. The e-commerce powerhouse was responsible for about 44% of all U.S. online sales in 2017 and about $200 billion of all U.S. retail store sales.

Embracing mobile apps to create a hybrid online/in-store shopping experience can bridge the gap between digital and physical to bring customers back into stores while also increasing brand loyalty. And since certain age groups are more receptive to retail apps, increasing their use is critical to retailers’ top line.

To better understand the digital and in-store shopping habits of young Millennials (18-24) and Baby Boomers (55-64), Aruba, a Hewlett Packard Enterprise company, conducted a global study of more than 350 shoppers. Based on the response, Millennials use retail mobile apps significantly more than Boomers but also are more attracted to brands with loyalty apps and were less cost-conscious than their elder counterparts.

Here are five facts retailers need to know about their millennial and Boomer customers that can help bring these customers back into stores.

1. Everyone is loyal, but some are more loyal than others.

Loyalty programs have gained popularity with the rise of smartphones. Having a limitless number of loyalty program apps organized into a single mobile device also makes it easier for shoppers to use them when visiting retail establishments.

Millennials love their loyalty apps, with 66.3% indicating they are more likely to shop from stores where they are part of the loyalty program, vs only 33.3% of Baby Boomers answering the same. For Baby Boomers, price was the biggest driver for a purchase decision, with 40.7% indicating it’s more important than a loyalty program versus only 22.5% of Millennials indicating price as the driving factor.

2. It’s all about the in-app features.

What benefits attract consumers to download and use loyalty apps? When asked what incentives would make consumers download a retail mobile app, here is how Millennials differed from the Boomer generation.

Millennials Baby Boomers
#1 Parking spot locator #1 Product availability and comparison
#2 Product availability and comparison #2 Find a sales associate
#3 Digital payment through retailer mobile app #3 Obtain special incentives or coupons

There is a clear distinction between the generations. Baby Boomers treat retail mobile apps as a tool to execute more traditional shopping habits: they still want to find a sales associate and interact with people face-to-face, are more price conscious, and value coupons and incentives more than Millennials. In contrast, Millennials are focused on convenience and speed; they want to find parking and make payments from their phones quickly and easily.

3. It’s not if they have it, it’s about how often they use it.

Getting buyers to download a mobile app by drawing them in with a special incentive may result in a high volume of one-time users, but it’s all about how often they use the app. Raising the frequency of use is critical to growing retailers’ top line.

The study found that Millennials used retail apps more frequently than Baby Boomers with 61.8% indicating they use them 1-5 times a week vs 48.2% for Boomers. This spread became more evident when the frequency of use hit double digits. 13.5% of Millennials reported using retail mobile apps more than 10 times a week, while none of the Baby Boomers reported doing the same.

4. No sales associate? There’s an app for that.

Younger generations have grown up with portable electronics as part of their daily life. They are accustomed to interacting with electronic kiosks vs live attendants and most actually prefer it.

When asked how they prefer to search for products inside retail stores, more than half (53.9%) prefer using a mobile app vs a sales associate. In contrast, Baby Boomers favored human interaction with less than half (44.4%) opting to use an app to find products.

5. To eat out or to eat in, that is the question.

Younger generations are accustomed to eating out more and cooking at home less frequently. The variety of food and cost-efficient options available today make eating out very appealing for Millennials on the go. When asked what kinds of retail mobile apps they use most frequently, Millennials’ top selection was mobile ordering for express food pick-up (55.1% vs 33.3% Boomers). Conversely, the Boomers’ top selection was grocery and convenience store apps (40.7% vs 18% young Millennials) as they tend to eat at home more often.

When going head-to-head with e-commerce retailers, brick and mortar stores need to embrace new technologies, like mobile apps, to stay competitive and attract shoppers. By understanding their customers’ habits and needs, whether they are Millennials or Baby Boomers, retailers can create a personalized and efficient shopping experience that will keep their customers loyal.

Pavel Radda is senior director, market intelligence, Aruba, a Hewlett Packard Enterprise Company.

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Regulatory Wrap-Up: Efforts gain ground to raise minimum wage in N.J.; paid leave legislative passes in Md.

BY CSA Staff

Wages

New Jersey: Governor Murphy and Democratic legislative leaders are “not anywhere close” to aligning on the details of a $15/hr. minimum wage bill. Some Democratic leaders favor exemptions; however, Murphy campaigned on a “clean” bill without carve-outs for certain workers. The timing and phasing in of a wage increase are also in question and currently being negotiated. Once Democratic leaders agree on a compromise, expect the bill to move quickly.

Pennsylvania: Governor Tom Wolf is proposing an update to the state’s overtime salary threshold. The proposal would raise the state’s overtime eligibility threshold above the federal minimum rate ($455/wk., or $23,660/yr.) to $610/wk. or $31,720/yr. in 2020. The overtime threshold would further increase to $39,832/yr. in 2021 and to $47,892/yr. by 2022. The proposed regulation would need approval from a five-member board that has a 3-2 Democratic majority. The approval process could take more than a year, meaning that Wolf, who is seeking a second term in November’s election, must get re-elected to ensure the process continues.

Virginia: The slate of proposed minimum wage bills died in a senate committee early in the state’s relatively short legislative session. As a result, the general assembly is not likely to take up the wage issue but is still expected to debate paid leave and other employment issues.

Paid Leave

Maryland: Late last Friday, the legislature voted to override the governor’s veto of paid leave legislation that passed both chambers during the 2017 session. The bill is slated to become law 30 days from passage. Business groups are lobbying for an extension of an additional 60-90 days to allow for more time to comply. The law requires employers with 15 or more workers to provide five days of paid leave a year and applies to full, part time and seasonal employees. The bill contains no preemption language so localities in the state could still pass more generous proposals which happened in Montgomery County.

Pay Equity

Washington: An equal pay bill passed the house. It would mandate that employers pay workers, performing similar tasks relative to difficulty and responsibility, the same amount regardless of gender. Previous iterations have passed the house and died in the senate, but because the upper chamber has now shifted to a Democratic control, the bill has a better chance of final passage.

Health Care

California: A Los Angeles Superior Court has given class action certification to a lawsuit charging 17 restaurants with price fixing. The restaurants included a healthcare surcharge on customer’s bills. The claim is that the restaurants named in the complaint colluded in establishing the surcharge in violation of state antitrust laws. Surcharges, such as this, have become popular in some areas of the country and a number have faced legal challenges. 539e

Wage Theft

Taco Bell: Over five hundred employees of a Michigan-based franchisee are pursuing a class action claim for alleged wage and overtime violations. Workers claim that the franchisee engaged in systematic wage theft by “doctoring” employees’ hours. The case is expected to go to trial in 2019.

Joint Employer

McDonald’s: The NLRB is looking to settle a high-profile lawsuit against McDonald’s USA. NLRB General Counsel Peter Robb asked an administrative law judge to pause the case against McDonald’s and various franchisees so they can discuss a “global” settlement of “all pending charges.” Board attorneys under the previous administration said that McDonald’s USA should be on the hook for possible labor violations by franchisee restaurant owners. This case has been closely watched as a potential precedent-setting joint employer case.

Immigration

U.S. Senate: Following a three-day government shutdown over the weekend, Senate Democrats and Republicans agreed to a continuing resolution to fund the federal government through Feb. 8. The House is expected to follow suit, sending the short-term funding bill to the President’s desk for signature. The major political impasse has centered around immigration — a solution for DACA recipients combined with increased border security funding. Leader McConnell agreed to hold an open vote on DACA and border funding in the near future, in exchange for Democrat votes on the funding bill.

Trade

Federal: The House passed the Miscellaneous Tariff Bill, which applies temporary tariff cuts to nearly 1700 imported goods and could result in the elimination of over $1 billion in import tariffs. The Senate is expected to take up the issue later this year.

NAFTA: The sixth round of talks around the potential revamp of the three-country trade agreement began in Montreal this week. Reports indicate growing animosity between the U.S. and Canada as both countries have moved further apart in negotiations on key aspects of the deal. The pending presidential election in Mexico could further erode talks on the more contentious topics.

Legislature Status for Week of 1/22/18

• The United States Senate is in session this week
• The United States House is not in session this week, but will reconvene for shutdown vote
• Thirty-seven state legislatures are meeting actively this week:
o AL, AK, AZ, CA, CO, DE, FL, GA, HI, IA, ID, IN, KS, KY, MA, MD, ME, MI, MO, MS, NC, NE, NH, NJ, NM, NY, OH, PA, RI, SC, SD, TN, VA, VT, WA, WI, WV

Key Takeaways

• The impasse on DACA, the current government shutdown, and the acknowledgement last week by the White House that a border wall is highly unlikely is going to put more political pressure on the Administration to deliver on their immigration promises. This will make additional high-profile workplace raids even more likely as the President works to placate his pro-enforcement base. This is yet another important reason why employers need to take these raids seriously and prepare accordingly.

• The CEO pay conversation is escalating quickly. Just two weeks into most state legislative sessions, numerous states are proposing laws to address the compensation gap between CEOs and frontline workers. Many are considering a tax, just as the one Portland, OR passed in 2016. Due to the new SEC disclosure rule, initial data from public companies will become available early this year while at the same time, numerous states are revising their tax code in response to federal tax reform. In short, the perfect environment exists for this issue to be embedded in those broader conversations and could go mainstream very quickly.

Podcast

Check out our Working Lunch podcast each week that includes further analysis into these legislative issues, policy, politics and much more. You can find Working Lunch on the Nation’s Restaurant News website, or by clicking here, and when you download the podcast and subscribe on iTunes here.

 

The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Align can provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.

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Commentary: CVS’s Photoshop ban will spread

BY Eric Schiffer

The beauty industry is and always has been about selling an ideal. For a long time, that ideal centered on youth, thinness/fitness, shiny hair and perfect teeth. Creams and serums, paints and powders, help achieve those ideals, and marketing demographics for the products skew decidedly female, and younger.

The beauty industry has in the last few years seen a backlash from the effect its marketing has on its consumers, particularly the youngest among them, as rates of eating disorders and body dysmorphia are thrusting upward at jet speed. AdMedia’s Media and Body Image study showed eating disorders increased by 400% since 1970, and the growth of the $33 billion diet industry over the last 20 years is largely attributable to media and advertising.

Photoshop and image retouching has been a default step in the advertising process nearly since its inception; after all, brands are selling an ideal, so the fewer “flaws” in an advertising image the better, right? The issue, only brought to light in the last decade or so, is the long reaching effects on the human psyche of selling this flawless image when even the most amazingly beautiful people have flaws.

Ad critic Jean Kilbourne documented the “toxic cultural environment” that food and beauty advertising creates and how that environment impacts self-esteem and our relationships with food in her film “Killing Us Softly.” Speaking at Harvard’s T.H. Chan School of Public Health in 2015, Kilbourne said “Women and girls compare themselves to these images every day…and failure to live up to them is inevitable because they are based on a flawlessness that doesn’t exist.”

Brands take strong stand
At the National Retail Federation’s annual convention in New York in January, CVS Pharmacy president Helena Foulkes announced a ban on photo manipulation in the imagery it creates for its store-brand beauty products. The ban applies to the imagery used its stores, website, social media and marketing. Foulkes hopes to push the chain’s beauty suppliers in a similar direction.

Many smaller brands have also agreed to non-retouched advertising images. Fashion brands ModCloth and Aerie, media outlets like Seventeen and Darling Magazine and Dove’s not-without-its-missteps “Real Beauty” campaign.

The CVS move is not small time. With over 9,600 stores in the U.S., CVS is the nation’s largest drugstore outlet and one of the largest retailers of beauty products. CVS’ beauty aisles boast such massive makeup brands as L’Oreal, Maybelline and Coty, and body care brands Procter & Gamble, Johnson & Johnson, Unilever and others. The effects of this decision will impact the landscape in a giant way.

Will beauty and retail industries follow suit?
Yes, men suffer also from body dysmorphia and negative self-esteem due to idealized images of masculinity — but there’s no question the vast majority of beauty advertising is geared toward women and girls, many of whom are striking back against the “expectation of beauty.” This means shunning brands that only feature default thin, white models Photoshopped to near super-alien levels of perfection.

The buying power of women is immense in the beauty industry, and any brand knows it must follow the consumer to keep profits flowing. The question is, how far has that pendulum swung? While the backlash against airbrushed idealism is undoubtedly underway, how far will beauty brands be willing to go with that change? After all, they’re selling self-improvement; “you’re perfect just the way you are” doesn’t move as much product.

CVS taking a strong stance here will ultimately put pressure on the largest beauty brands to make a “must” change or face the brand soul crushing call-out. CVS pledged to specifically label any products sold in its stores that don’t commit to non-retouched imagery by 2020, a label likely to offset aspirational effects of retouched images. Advertisers may scream, but will most likely fall in line, especially as the issue gains more visibility and impact in the media.

Target, which has positioned itself as one of the more progressive retail brands, and Walgreens are going to face the same decision based on CVS’ declaration. Which side of the debate will they want to be on?

The truth in today’s sociopolitical climate, brands can‘t afford to stay silent on social issues. A recent survey by Sprout Social states that around two-thirds of consumers believe it is either “somewhat” or “very important” for brands to take a stand on social/political issues, with only 11% saying it was “not at all important.” Consumers appreciate brands that become part of the conversation and show their core brand DNA.

The CVS ban is a major change in the way consumer brands approach advertising and marketing; specifically with health and beauty. Other factors, including showing more diverse kinds of beauty and helping light up positive social change, will also be a must to build and maintain meaningful brand loyalty with consumers.

Eric Schiffer is CEO and chairman of Reputation Management Consultants and DigitalMarketing.com. He works with Fortune 500 companies and mid-size market leading firms on branding and image management.

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