Millennials Are Driving Growth in This Emerging Retail Channel
Among the many distinct shopping habits of millennial consumers, there is one retail channel in particular that makes up a significant position of this group’s spending power.
Subscription box services, a growing business model where companies offer customers access to product or service at a recurring (usually monthly) price, are highly favored among millennials, according to a new study conducted by First Insight.
The study, titled “The State of Consumer Spending: Millennials Flexing their Retail Market Influence in U.S. and U.K,” surveyed more than 500 British and 1,000 American respondents on their shopping habits, purchase behavior and influences that drive their purchase decisions. The study looked at how the spending power among millennials is contributing to to heat around several retail models, including subscription box services.
Popular examples of these programs include Stitch Fix, a personal styling platform that just recently entered the U.K., and Dollar Shave Club, which was acquired by Unilever. The convenience, flexibility, and customization aspect of subscription boxes appeal to a generation who value the speed and ease of home delivery. In fact, brands and retailers who have never operated on a subscription service-based model are experimenting with the service on their own accord.
According to the First Insight study, 25% of respondents in the U.S. and 23% of the respondents in the U.K. currently subscribe to subscription boxes. The millennial segment leading the charge for these services in both countries, as 31% of millennials currently subscribe to subscription boxes in the U.S., versus 21% and 8% of Generation X and Baby Boomers, respectively. In the future, more and more millennials say they plan to subscribe to a service, with 32% of study participants in the U.S. intending to subscribe in the next six months.
“Millennials continue to be the dominant force in retail both in the U.S. and the United Kingdom, as their shopping habits can be a deciding factor in what makes or breaks the success and longevity of retail models,” said Greg Petro, CEO of First Insight. “Our study found that where millennials shop, how they shop and when they wear the brands they love are in close alignment with how they define themselves. Retailers must be able to connect with this generation through the right shopping experiences and unique products if they want to capture the attention of this important generation of shoppers.”
As for the other key findings, millennials are the biggest spenders per visit both in-store and online. They are also the group most likely to shop impulsively and add unplanned items to their carts.
In addition, these consumers are the biggest adopters of “flexing,” or showing off the brands they purchase to show their personal association with the labels they buy in order to display wealth or status.
As for which brands are being flexed the most, sports brands like Nike and Adidas were found to be the most popular in both countries, even more than luxury fashion and heritage brands. Sports brands typically feature prominent logos and prints that make a statement, which makes flexing an easier tactic, although there are more and more fashion brands who tend to do the same thing. The line between sport and fashion has been diminishing more and more the past couple of years, particularly in footwear, as the two categories are finding new ways to team up and collaborate.
The results of these findings were announced during the World Retail Congress in Amsterdam.
