by Tina Kong
Generation Y often referred to as Millennials, are the group of people born approximately between the years 1982 to 1996.
Living in a world starkly different from the Baby Boomers, individuals born between 1946 and 1964.
The spending behavior of Millennials and Boomers contrasts significantly; Millennials buy products that their parents may not have even known about.
This is largely due to the technological advancements and the exponentially increasing popularity of social media platforms, which rendered the consumption of products that would have been almost taboo to Baby Boomers to be a new norm.
According to research from Business Insider, notable goods and services now consumed more abundantly include plastic surgery and therapy. Because everyone’s lives are now documented on social media platforms such as Instagram and Snapchat, and we only post our best pictures; some people are struggling to live up to perceived expectations.
Therefore, to fulfill their desire of looking like models, Millennials have turned towards plastic surgery and injectables such as Botox.
In addition to this and as a result of the competitive society we live in, depression has skyrocketed by 47% in the population since 2013.
Fortunately, Millennials are less reserved about seeking therapy and are more open to talking about their struggles, partly due to the role that celebrities, who themselves have gone through struggles, play on social media.
Next, we must examine the Global Financial Crisis of 2008, which left ‘15% of Millennials out of work in their 20s.’
On top of that, Millennials at the time were struggling to pay back student loans. This experience changed how Millennials look at the world and their future.
Materialistically, many are quite uncertain; worries about finding stable employment, buying housing are common amongst their generation.
Statistics back up their worry: those unemployed during the 2008 recession struggle to financially keep up with those employed for 20 years.
Therefore, although Millennials do not hold back spending, the effects of the financial crisis continue to resonate in their daily lives, playing a part in their decision-making, notably with their finances.
Currently, Millennials dominate the population, with over 80 million in the United States alone, and purchasing power of approximately $600 billion per year.
With that said, businesses today are basing their marketing strategies heavily on the preferences of Millennials as they reach their major spending years. This means that businesses have to conform to Millennial spending patterns.
For example, Millennials place a heavyweight on social responsibility and take into account customer services - ‘73% of global Millennials are willing to pay extra for sustainable offerings.’ Study shows that Millennials are willing to pay more if it is necessary to contribute to a cause close to heart.
Another noteworthy spending of millennials includes renting. There has been a significant rise in renting clothing, as millennials prefer this sustainable and minimalist method of updating their wardrobe.
Apart from clothing, there is Airbnb to rent housing while travel, Uber to rent cars, Netflix for entertainment, etc. Millennials prefer the freedom that they get while renting and as a result businesses have shifted to subscription models.
For businesses keeping up with the demands of Millennials, it is crucial to be transparent with their Corporate Social Responsibility (CSR), something valued by them.
Exaggeration or failure of businesses to be honest with their CSR efforts could result in a fall in demand. Therefore, businesses should comply with ethical production and build loyal consumer-business relationships and produce for the benefit of society.
This shines a light on the direction of consumer expenditure in the generations to come as well as reveals the difficulties businesses face to keep up with the changing patterns of tastes and preferences.
Examining the expenditure patterns of Millennials also allows us to take a step back and appreciate the way human behavior has changed due to the progression of society and the associated challenges.