Are Millennials spending their cash on Oriental Rugs? What about designer décor and fancy artwork? If you’re a retailer that wants to sell home furnishings to millennials, these are questions that matter. Why care about millennials? Because even if the majority of your business still comes from Baby Boomers, Millennials are now the largest demographic group. They hold substantial purchasing power (spending an estimated $600B annually) and are entering the home buying years (defined as ages 25-45 by Goldman Sachs). Eventually, they will be a part of your potential customer base if they aren’t already.
An article by Business Insider shows some stark differences in how Millennials spend money versus the generation of their parents and grandparents. According to this research, Millennials are spending just 4.5% on the Furniture category, the lowest of any generation reported. Does this mean that there’s no way to sell home furnishings to Millennials? Not so fast. It’s not about appealing to all Millennials, it’s about finding your niche within this vast demographic. A niche for high-end home items includes those with the disposable income to splurge on such items—let’s call them the Affluent Millennials.
Affluent Millennials—Who are they and what do they want?
According to Forbes, Affluent Millennials are composed of the more than 6.2 million individuals born after 1977 that make an annual household income of 100k or above. As more Millennials age and enter the house-buying stage, this number will continue to expand.
When it comes to decorating, many Millennials have a well-developed sense of taste, but also want good looks at good prices. Affluent Millennials are working professionals who spend equal time at work and at leisure. The ideas for what they want their home to look like come primarily from the web (think Pinterest, Instragram, bloggers, and so on). They crave new, interesting designs and contemporary aesthetics for their interiors.
They also want their living space to be social media worthy, and reflective of who they are. In a study by Impact Consulting, more than 40% of Millennials aged 25 to 34 say their home furnishings must be a reflection of their personal style, as compared to only 27% of the rest of the population.
Principles of Millennials
- They believe they are unique and value individualism. They want to be treated as individuals; they don’t want mass marketing. They don’t want the same thing everyone else has.
- They are tech-obsessed. Technology is part of their everyday, and they expect great user experiences.
- They crave simplicity. They don’t want anything to be overly complicated or clunky.
- They prefer to communicate via text, email, or social media. Face-to-face or phone conversations are not ideal for reaching this audience. They are more likely to turn to online resources (FAQs, help boards) than ask a real person.
- They believe in a “shared economy,” being more reluctant to buy items (cars, luxury good, homes) and more likely to turn to services that provide access without ownership
The Realm of Digital
When it comes to the digital world, Millennials can’t live without technology. Reports show that they check their phone 150 times per day. As many as 20% of them are mobile-only users, preferring phones and tablets over desktops altogether.
What does this mean for your retail store? A couple of things:
- You need to have digital marketing in place
- You need to have a presence and products online
The first is the way millennial customers liked to be reached by brands. Five out of six Millennials connect with companies on social media networks, and on average they share six pieces of content per day on social media. Do you have a strong presence on your social media accounts? What about your digital promotions? Based on the needs of Millennials for targeted content, you should send out personalized promotions based on these customers’ interests, behaviors, and past purchases.
The second is a requirement for how millennial shoppers actually purchase. Studies show that a majority of Home Furnishings purchases by Millennials are still happening in stores. The difference, however, is that ample research and browsing happens before they set foot in a brick-and-mortar location. Most millennial shoppers already know what they’re interested in before they enter a physical store, and they already know a lot of information about the product from their online research. Successful brands will be those who
A. Have an online presence that enables millennials to easily find and learn about products
B. Present a unified (aka omnichannel) experience across digital and physical selling channels.
From staying in touch with relatives, to buying groceries, to dating and beyond– Millennials do it online. In fact, a study by the Center of Generational Kinetics found that 40% of Millennials would prefer purely online customer service given the option.
For Millennials, experiences win out over products. A study by Harris Group found that 72% of Millennials prefer to spend cash on experiences over material possessions. That doesn’t mean they won’t buy your stuff—it just means you need to provide more than just a product. Today, the internet means products can come from hundreds (thousands) of places. Brands need to offer the best experiences so they can relate to millennial interests, and they need to be engaging and authentic in how they communicate.
How is your brand focusing on experience over product? Do you host in-store events? Do you make shopping in your store simple and seamless? You could provide features such as buy online/same-day picking up in store, or self-checkout so there’s no waiting in line.
Many brands are scrambling to adapt to the Millennials prioritization of experiences. One brand that has capitalized on this insight is Drybar, a premier salon that offers only blowouts – no cuts or other services. While other companies are trying to be everything to everyone, Drybar understands the needs of Millennials. Their luxe environment, straightforward service offering, and specialization resonate with affluent Millennials. It’s a place they want to go with a friend and talk about on social media, they don’t just go for better hair.
Haven’t heard of the Bandwagon Effect? Essentially, is a psychological phenomenon where people only do something because other people are doing it, regardless of their own sentiments. This isn’t a new concept—but the internet has changed the game.
Today, product reviews from others have huge influence on whether a customer chooses to do business with you… Especially for the Millennial generation. A survey from BigCommerce found that out of all generations, Millennials put the most value on what others have said about your brand. That means collecting positive reviews—whether on Facebook, Google my Business, or your own website, is crucial to making this demographic your customer.
For Rent, Not Buy
In the days of ride sharing and media streaming, ownership has become less a requirement among most millennials. With this trend in note, home décor is hopping on the trend, with several companies now offering rental for home items. Would you consider offering the same in your retail store? Several companies have already launched based on this concept, offering furniture and home décor items as a rental, not a purchase. A few worthy names to check out:
The Final Word on Retail’s Newest Customer
In conclusion, Millennials are the foreseable future of retail, that we know. By reaching them digitally, engaging them, and providing personalized experiences, there is a path to sell home furnishings to Millennials. It’s just a matter of being willing to step outside the comfort zone for many retailers who are accustomed to the Baby Boomer generation, and reach these shoppers in new ways.