The Impact of Millennials on the Retail Industry

Millennials are a fascinating phenomenon that has hit the industry, and we’ve spent the last couple of years helping retailers understand the impact. Most retailers really didn’t factor in that this was going to be something they’d have to deal with. If you look at it from two standpoints, Millennials are basically the generation of people who have grown up with nothing but high-speed internet access, mobility, social networking, high-speed computing, and the digital lifestyle.

Some fascinating statistics have come out about how this generation is different than any that has ever existed. For example, they process information five times faster than any generation in history. A great example I love to tell: one morning I walked into my daughter’s room a couple of years ago. I think she was 13 at the time. It was 8:00 AM, and I went to ask her what she wanted for breakfast. She was sitting there banging on the computer. I asked her what she was doing—because, coming from Microsoft, I’m proud she’s on the computer at 8:00 in the morning. She said, “I’m IMing.” I told her, “Honey, just pick up the phone and call the person; you’ll get twice the conversation in half the time.” She said, “Dad, I’m talking to all my friends.” She had nine IM sessions going at once. Nine conversations at one time.

Most of you can probably relate: if I’m on a conference call, reading an email, and I have two IMs going, I’m maxed out. Nine conversations didn’t even faze her. These kids today will manage nine conversations, post on Facebook, and do homework at the same time because they don’t know any different.

Why is that important to retailers? Look at it from the consumer side. These kids are typically on not one, but two or three different social networking sites. They feel, for some amazing reason, compelled to tell the world about everything they’re doing as they’re doing it. I don’t understand it, but my mom didn’t understand why Zeppelin was the best thing that ever happened to my generation. So instead of fighting it, ignoring it, or arguing with it, accept it. Figure out that this is what they do. If they are communicating this way and have a fervent need to leverage this technology, harness it. Tap into it, hear what they have to say, look for the trends and patterns on Facebook, and use it to try and attract critical, strong talent for your organization.

In terms of leveraging the technology they’re going to use—whether it’s mobility or the web—I love some ideas that CIOs have come up with. For example: “Why don’t we create a community for girls at this department store where they design a fashion line amongst themselves? They all vote on it, and then we make it.” Suddenly, you have an instant target market because they designed it, built it, and feel connected to it. It will sell out. Those are great ways to leverage Millennials’ fervent need to tap into technology.

Then look at it from the retail associate side. You are hiring a lot of these kids to work in your stores; they are your face to the customer. Think about what they go through before they get to work. They’ve been texting on their phones because they don’t talk anymore—they text in their own language, and email is considered legacy technology. They’re texting, they’ve been online, they’re communicating, and they’re getting all this information. Then they walk into your store environment, and you don’t have any of that. It’s like hitting a brick wall doing 60 MPH. They think, “Wait a minute. I’ve got stuff to say, people to communicate with, and I need information, and you’re telling me I have to use a phone and a notepad? I don’t think so.” They get frustrated.

There are two problems with this. One: are they going to gravitate toward retailers providing technology in a more compelling way? Yes. Two: are you tapping into their knowledge, experience, and insight? They are actually pretty smart and have great ideas. Companies that have put portals into their stores and figured out ways to gather feedback are finding amazing things that are changing their environments. If these are the people talking to your customers every day, who do you think knows more about your customers—them, or the people in the glass houses at corporate? Them. Collect this information. Allow them to talk to each other. They’re going to find ways to do it anyway, whether it’s on Facebook or MySpace, so you should tap into it.

This is truly a force to be reckoned with. We might not understand them—our parents didn’t understand us—but this isn’t going to change. It is only going to get more critical as these Millennials eventually become adults and enter your target demographic. I love the story of one retailer catering to an older generation who said, “My customers are never going to use this type of technology.” I told him, “Well, that’s great, but in 10 years they’re all going to be in greener pastures. You’d better start factoring this in because you’ve got a growing customer pool.”

It’s fascinating.