Retailers: Look not upon ‘Millennial’ as a segment, but as a lifestyle
There are few demographic segments that have generated as much discussion in the retail community as Millennials. A great deal of literal and virtual ink has been spilled discussing the importance of catering to this large and influential group of young adults. From their spending habits to their social and behavioral characteristics, addressing the priorities and preferences of Millennials is seen as critically important for any retailer that wants to remain competitive in today’s marketplace.
What is remarkable is that there is a strong argument to be made that all of the attention Millennials have gotten is justified, and all of the breathless think pieces discussing their impact and influence are not hyperbole, but a reflection of an important and fundamental demographic evolution. Millennials might be a buzzword, but the buzz is justified.
From a retail perspective, the importance of connecting with and appealing to Millennials has not been overstated. In fact, some may say it is understated. The degree to which brands and businesses are adjusting their offerings, operations and messaging to appeal to Millennials is profound. We continue to see new examples of the commercial horsepower of Millennials in action, as certain segments and specific retailers have clearly been elevated by their ability to tap into this significant population of spenders and trendsetters.
[quote-from-article] Dallas-based restaurant and entertainment brand Dave & Buster's, for example, has always targeted young adults, with their unique combination interactive games and dining. They have increased the brand's relevance among Millennials by introducing more high-profile digital games, emphasizing their amped-up sports viewing areas and adding new menu items that they describe as "visually impactful and innovative." All of these initiatives are tailored to appeal to Millennials looking for new experiences. New technology and customer convenience were also a theme in 2016, as Dave & Buster's rolled out their new RFID merchandise-including a wristband and a wearable lanyard-that guests can use to activate games.
And it’s working. A January 2016 report published by Nation’s Restaurant News revealed that Dave & Busters led the dining and entertainment segment with estimated sales-per-unit of $11.3 million in 2015.
Dave & Buster’s is hardly the only brand offering Millennial-friendly entertainment. The proliferation of newly interactive and experiential entertainment concepts like PinStripes Bowling and iFly Indoor Skydiving is a testament to the fact that entertainment is becoming an increasingly popular and profitable retail segment.
Millennials not only want to be entertained, they also want to be physically active and healthy. Which is why creative new fitness concepts and sports and exercise brands are on the rise: from indoor climbing to engaging and interactive new cycling gyms. At the same time, established fitness brands are working to connect with Millennials by offering attractive deals and flexible and convenient hours. Planet Fitness, for example, has found success by not only offering a high-value gym concept at an appealingly low price point, but also by offering 24-hour access. The convenience and flexibility of the 24-hour model is aimed squarely at Millennial members.
Successfully appealing to Millennials requires more than just a gimmick or a promotion. It demands a holistic, top-down approach. Decision-makers need to think critically about every aspect of their operation, from their offerings to their operations, and from content to communications. Retailers need to recognize that this is a lifestyle, and that adapting to Millennial preferences and priorities permeates through their brands and businesses in ways both subtle and significant.
It can also be complicated and seemingly contradictory. For example, partly because so many Millennials came of age in an era where their parents were being cautious about spending in the midst of a sustained recessionary cycle, this is a group that values value. But it’s also a group that is very brand-conscious and brand loyal. So, while discount concepts are well positioned, as the recent success of TJX brands demonstrates, retailers would do well to look beyond discounts and offer value-oriented name brands. Established brands like Whole Foods Market have been successful using their own labels as generic options, for example. Grocery is the hottest segment going right now, partly because many grocery brands are rolling out new value-oriented and prepared foods, as well as new in-store bars, café and dining elements.
Retailers need to be more active online to make sure they are connecting with this famously tech-savvy demographic. That means more than just having a website. It means building a legitimate omnichannel model with online and mobile components capable of handling transactions and communications. One option is to partner with or acquire an internet retailer and leverage their expertise and experience, as Walmart is attempting to do with Jet.com. Retailers also need to be strategic and thoughtful when it comes to communicating with Millennials, with a sophisticated and relevant social media presence, and promotions that resonate with Millennial expectations.
Retailers that dismiss the importance of Millennials or view Millennial-friendly concepts as a “fad” do so at their peril. This is a profound and long-term demographic shift, and savvy operators understand that these trends cannot be ignored. Retailers that can get Millennials to literally and figuratively “buy in” will likely find that – as with brands that successfully connected with Baby Boomers before them – they will be positioned for sustained and substantive long-term success.
Jim Stokas is a principal with Detroit-based Stokas Bieri Real Estate, an X Team International partner. Jim can be reached at [email protected].
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