Are consumer tastes changing?
Photo: Victor Hanacek. Source: Pixabay
There’s a race among companies to “win the Millennials,” that cohort of consumers aged 25 to 35 years old. This is a constant quest. The idea seems to be that if you earn the next generation’s trust, you can have loyal customers for life.
But earning someone’s trust is hard work, especially this generation. The stereotype is that millennial consumers are more capricious and less loyal, choosing experiences over products, eating avocado toast rather than bacon and eggs. They’ve been marked as more idealistic, more socially conscious, and more narcissistic than previous generations, ruining everything from movies to music to marriage. Some have joked that there should be a millennial version of Monopoly, where players just go round and round the board paying rent, never able to afford anything.
Are tastes really changing, though? High-income consumers are travelling more, while lower-income consumers are spending more time at fast-food places. Indeed, trips to convenience stores, gas stations, and quick-service restaurants grew 16% last year. And everyone complains about being too busy. Surveys show that consumers make their purchases – both online and in-store – based on price and convenience far more than personalized experiences or alignment with their values. Getting the right product at a good price is always a formula for success.
No, to the extent Millennials are different, it’s because they have been shaped by different economic pressures. Median household incomes have risen about 30% over the past 50 years – barely more than inflation. The top 10% of households, however, have seen their incomes almost double. But to be part of that top cohort requires a college degree. And government spending on education has been flat, while college tuition has taken off. No wonder there are so many calls these days among politicians for student loan forgiveness and free college.
Source: US Census, Table A-2
Source: BLS, Bloomberg
Millennials are reaching some of their life-milestones later – marriage, home-ownership, children – because they face different financial challenges than previous generations. More of their income is consumed by nondiscretionary items, like student loans and health care, but their ability to access information and transact business globally has never been easier. They face more pressures today but they also have lower barriers to entry – if they can get through the starting gate.
Millennials are no more narcissistic, though, than Boomers or Xers or Post-millennials. There’s no accounting for taste, but fresh-baked cookies will always be popular, and the best way to earn consumer loyalty – from any generation – is to provide a superior product at an affordable price.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”