We are all fans of the newest consumers to come of age, the Millennials. These young adults, who are now aged 19 to 33 and number almost 70 million, are the darlings of the marketing world. But in their rush to capture the hearts and minds of these young consumers, who are now forming their first real households, many brands are forgetting about the other generations.
To help our colleagues drive sales to adults in various life stages, we created an easy chart to start the conversation. A discussion of these groups is like teenage sex: everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it.
Generational Market Segments
|· Swing and World II|
|· Baby Boomers|
|· Gen X|
|· Gen Y / Millennials|
|· Gen Z|
Source: JB Research Company
(For a Printable Chart, Click Here.)
Each generation has a special way it likes to be approached, and each responds differently to messaging. For example, Boomers still shop in department stores, although certainly not as much as when the oldest boomers, now 69, were kids. Gen Y rarely shops in department stores unless it is one of the “cool” ones, which include Nordstrom’s or Barney’s. Or when they are shopping for their parents’ Christmas gifts, so they can be easily returned to a convenient location.
In terms of amount spend per visit to the mall and department store, the 45-54 age group cuts across two generations, Gen X and Baby Boomers. Department store spending, however, is highest among Boomers, while all other spending is highest again across Gen Y and Boomers. Teenagers visit the mall most frequently, but understandably, do not spend much per visit.
In terms of wealth, an interesting analysis indicates that Gen X, a sector largely ignored by great brands, is a real contender when it comes to income, net worth and wealth. The difference between income and wealth is that income is what you earn every year, and wealth is the totality of your assets minus your liabilities. According to the United States Department of the Census Current Population Survey, net worth and total income is as follows in 2013:
In terms of net wealth, Baby Boomers hold the highest percentage of net worth dollars at 34% and the highest share of total income dollars, at 39%. The second highest is held by Gen –X at 29% of net worth dollars and 31% of total income dollars. Millennials hold 21% of net worth, and about 18% of total income dollars. Again, markets with the most money are Boomers and Gen-X. But that is because Gen Y is young, and on their way to being the consumer heavyweight in the next 20 years.
Some salient characteristics of each of the largest buying generations, Boomers and Gen-X include the following:
. Gen- Xers have money! They make up 25 % of all adults, but hold 29% of all net worth and 31% of all annual income earned. Half of them want to provide for their kids’ college, and almost all want to save for retirement. Two thirds plan on traveling for pleasure in the next year, and half will buy one or more luxuries.
· Boomers on the other hand, buy things for themselves and their grandkids. They are omnichannel and know their way around the Internet of Things. They expect hype in their advertising because they invented it (Mad Men, anyone?) They are early adopters of smart medical devices and are very critical about experiential retail, again because they invented it.
While we’re at it, here are some characteristic of Gen Y and Gen Z. Gen Y is completely omnichannel, and have said that they will pay for responsible products, although this has not yet been proven in the market. They will be early adopters of smart wearables, especially sport gear such as watches. They want a seamless shopping experience and they DO NOT WANT HYPE. Because of all the information thrown at them by their various smart devises, they want their lives simplified, so they have invented “curated” everything from experiences, to vacations, to cooking, shopping, to putting together furniture, to decluttering their lives. Think YouTube, Yelp, H&M and Zara (fast fashion), shopping sites, and Pinterest. Because there are so many of them, and because they are just starting to become a force as couples, they are the generation that will take over next.
Gen Z is a whole other puzzle. They are not old enough to have much money of their own, but they will in the next ten years. They are overscheduled, but they are completely omnichanneled, cutting across every platform of technology. They are extremely entrepreneurial and want to be heard. They also want to try out products before they buy. In order to appeal to them now, you have to continually innovate and evolve digitally because they live on their devices.
The world is complicated today and is becoming more complicated as we evolve and innovate with our shopping methods and choices. The Internet of Things, such as magic RFID tags, augmented reality, delivery drones, curated experiences, wearable technology and life hacking are among the many new experiences we must excel at and then change our products and communication as they change. It is a brave new world!