Millennials have been called a lot of names. Narcissistic, lazy, indecisive. They have been labeled the boomerang generation for the many unable or unwilling to leave their parents’ home, or even more negatively, the Peter Pan generation because they supposedly won’t grow up.
But now marketers, manufacturers and retailers are recognizing the group’s potential as something important to their bottom line: the consumers who will drive the economy in the decades ahead.
Since the 1960s – the era of “Mad Men” – the baby boom generation, born between 1946 and 1964, has dominated corporate strategies behind selling nearly everything. Still constituting one-fourth of the nation’s population, baby boomers created an economy fueled by credit cards and trips to shopping malls as they came of age in a time of relative affluence. For all the rebelliousness of the ’60s and early ’70s, most ended up buying houses in the suburbs, eating at fast-food restaurants, and acquiring spacious minivans and SUVs despite having relatively small families.
But now young adults in their 20s are moving to surpass baby boomers as the largest age group, changing the way everything is sold, even breakfast drinks and mattresses.
“Our whole consumer model is based on the baby boom,” said Diane Swonk, chief economist for Mesirow Financial. Now, the coming generation is “setting up a whole new consumer model.”
Perhaps the biggest change is that today’s young adults – in part because they came of age in a harsher economic climate, in part because they have many more choices – are putting off major life decisions as well as the big purchases that typically go with them. As a result, their consumer behavior is unpredictable.
“They’ve learned to live life in a different way,” Swonk said.
There are more 23-year-olds – 4.7 million of them – than any other age, according to census data from June. The second-most populous age group was 24, and the third was 22. There is no official age range for millennials, but the generation generally is defined as being born between the early 1980s and early 2000s. By 2020, they will account for one-third of the adult population.
At the same time, millennials are the most educated generation in American history. Far more members of this generation are going to college than of past generations.
The largest slice is now graduating and emerging in a postrecession landscape where the job market is still troubled but starting to show signs of improving. Many of the new college graduates have student debt to pay off. And wage growth for younger college graduates has risen slowly since the recession, lagging that of all full-time workers and making expensive purchases more difficult.
But they also have significant earning potential in the years to come and, because of the sheer size of the group, have the ability to reshape the economy in ways that haven’t happened since the huge baby boom generation was hitting the job market and moving into first homes.
Nathan Lipsky, 23, exhibits many characteristics of his generation that are prompting upheaval in numerous industries. Though he earns a good salary in a job in the financial services industry in Kansas City, Mo., Lipsky said buying a house and getting married were not on his radar for the near future.
“Right now it’s purely career-focused,” said Lipsky, who lives with his parents. “This is a very selfish time in life.”
Mortgage lenders and automobile manufacturers, who deal with the largest purchases most people make, have yet to figure out how to successfully tap this group of consumers. Mattress companies are another striking example.
In an article called “Meet the Millennials: Getting to Know Your Next Big Customer,” the trade publication BedTimes Magazine offered tips for marketing to young adults who are stalling on traditions such as marriage that in the past have prompted mattress shopping. The article advised mattress companies to sponsor a music concert or create online quizzes about mattresses.
“Tricky to sell to,” the article said of millennials, “they must be approached on their own terms.”
Still, many young adults are proving particularly baffling to marketers and researchers. While baby boomers have long exhibited consistent brand loyalty, 20-somethings “trade up and trade down,” said Jeff Fromm, who runs FutureCast, a millennial trends consulting company, and wrote a book about marketing to millennials.
Last September, the fashion magazine Teen Vogue worked with Goldman Sachs in a survey of young women ages 13 to 29 to come up with a list of the most popular brands sought by the cohort. Both Target and Louis Vuitton made the top 20 list.
Leslie Coronel, who is entering her junior year at Amherst College in central Massachusetts, said she was careful to shop for most groceries at major chains where she can buy bread at a discount. Yet she often stops at the bakery at Whole Foods for more expensive treats. She does nearly all of her other shopping online, and when she goes to a clothing shop, she heads straight to the sales rack. But if she finds an expensive dress or shoes she really likes, she splurges.
Such behavior has spawned a cottage industry of consultants who collect fees from companies clamoring to figure out what this age group wants.
The Center for Generational Kinetics in Austin, Texas, was founded four years ago and has worked with about 100 clients including Mercedes-Benz, Four Seasons Hotels, General Electric and numerous retailers who want advice on how to appeal to millennial tastes.
“What worked five years ago doesn’t work now in terms of marketing and selling and advertising,” said Jason Dorsey, the center’s chief strategy officer. “This has created a lot of urgency as more and more of these millennials enter the market and start to have money or spend money they don’t have.”
General Mills, one of the country’s largest food companies, last year revamped its frozen pizza brand, Totino’s, with black packaging and spicy flavors in an effort to appeal to millennials. The new Totino’s Bold products are marketed with zombie videos on YouTube instead of the picture of the matronly chef Rose Totino clad in a red-and-white checkered apron that graced newspaper ads in the 1980s, when the target consumer was baby boomer mothers.
“This is an incredibly big part of our mission when there’s an age group as large as this is,” said Maria Carolina Comings, a marketing manager for General Mills.
Breakfast drinks are also experiencing millennial-related upheaval. Marketers have found that young adults want something besides orange juice or coffee in the morning. Many of them, who exercise more than their parents at that age, have energy drinks for breakfast.
PepsiCo already has responded to that change with Kickstart, a drink it created with millennials in mind, which combines Mountain Dew flavor with 5 percent fruit juice. The company markets its citrus and fruit punch flavors of the caffeinated drink as a breakfast beverage.
Adapting to this new group of consumers should be worth it. While baby boomers, not surprisingly, outspend millennials by a wide margin, millennials already represent $1.3 trillion in consumer spending out of total spending of nearly $11 trillion, according to a study by Moosylvania, a digital marketing company in St. Louis. Young adults, the study found, need a lot of reassurance but don’t like to be marketed to.
“No one truly understand millennials,” the researchers summarized. “Not even millennials.”