Why millennials still matter
Understanding the purchasing power of this group can be tricky, but it’s well worth the effort
According to Statistics Canada, those aged 20
to 39 years old represent 27.5% of the Canadian population, with males at 13.9% and females at 13.7%. This equates to about 10 million people. As a cohort, millennials spend, on average, $509 per household per month across fast-moving consumer goods (FMCG) categories (compared with $685 for the boomer generation), accounting for just 12% of overall FMCG dollars. Millennials are currently spending less than what we’d expect, given the size of the overall cohort; however, the importance of this group is expected to grow in the coming years as they move through different life stages and income levels.
Now that we understand the size of the prize of the millennial group, the question becomes: how can we capitalize on the opportunity millennials represent?
On the whole, Canadians continue to make fewer total shopping trips—with steep declines from 2012 through 2017. This means manufacturers and retailers face fewer opportunities to capture shoppers at the shelf and influence in-store decisions. Millennials are no exception to this trend. In the last year, millennials’ rate of decline in trips per household was approximately twice that of the overall Canadian population. In addition, millennials make 28 fewer trips than the average Canadian household annually.
Despite making fewer trips, on average, these young consumers are likely to spend more than other cohorts per shopping occasion. Here lies the opportunity. While the number of trips millennials made declined by 5% in the last year, the amount they spent per household grew by 4%. So when compared with the total Canadian population and the boomer generation, specifically, millennials tend to shop less frequently but spend more per trip. In fact, millennials spent just over $7 more per trip than the average Canadian household and close to $11 more than boomer households in the last year.
Millennials may be swapping trips to the store with trips to restaurants. They led other age cohorts in trips per capita to restaurants during the last year. And given the constraints felt by city core dwellers, this makes sense. It’s not uncommon for millennials in city centres to forgo a traditional dining room or additional storage space in their homes due to costs of living. Furthermore, the high concentration of restaurant options with eclectic cuisines makes dining out a desirable and easy alternative to cooking at home.
Millennials with kids make more trips to the store than their counterparts without kids. But basket size, or the amount they spend during those trips, truly differentiates these two groups. Regardless, declining traffic is a trend that all millennials are driving. Time, convenience and life stage all play a role in challenging millennials’ trip rates. In order to boost trips among this cohort, manufacturers and retailers should focus on boosting traffic across all millennial homes, regardless of whether there are children in the mix. That said, armed with the knowledge that millennials with kids spend substantially more per trip than millennials without kids, there is an opportunity to identify and capitalize on where this consumer group is spending the most dollars, and what they are spending their money on.
Planning ahead requires understanding the new paths to purchase. Digital disruption and considerable population shifts are upon us, and millennials are at the helm of these changes. These consumers are in their early adulthood, approaching key milestones while still intertwined and influenced by the generations before them. This generation is, quite literally, the future. While understanding and harnessing their purchasing power can be a challenging task, it’s imperative that manufacturers and retailers remain at the forefront of consumer decisions and—more importantly—millennials’ decisions to get a share of their spending dollars.
This column appeared in Canadian Grocer’s May 2018 issue.