Millennials’ shopping habits change the retail landscape

Drew Maloney’s holiday shopping plans are music to the ears of retailers wooing and catering to one of the most coveted groups of shoppers — millennials.

“I am spending more,” said the Massapequa resident. “I have a full-time job so I can, and it is OK to splurge a little bit.”

Maloney, 23, started his job at a visual effects company in September, and plans to take advantage of his new income during the holidays by buying gifts for his family as well as electronics and camera equipment for himself. He has already started shopping, taking opportunities to buy when he chances upon good sales.

What he has done and plans to do as the holidays draw nearer are why the nation’s 75 million millennials, the generation of consumers ages 18 to 34, have become a purchasing powerhouse. This year, they are projected to spend $63 billion during the holiday season, according to a retail outlook report from PricewaterhouseCoopers, or PwC, a finance and tax advisory network. That’s 10 percent of the $630.5 billion the National Retail Federation expects in sales in November and December. According to the federation, a trade group that represents retail businesses, that’s a 3.7 percent increase over last year.

To capture those sales, retailers are focusing on digital advertising, convenient mobile apps and unique in-store experiences. That includes traditional draws like having a Champagne night in store, or as is the case with sporting goods brand The North Face, allowing customers to try on virtual reality goggles to experience what it’s like to base jump.

“The millennial shopper is a much more universal shopper,” said Marshal Cohen, retail analyst with The NPD Group, a Port Washington-based market research company. “They use online, they use mobile technology and they absolutely are out there looking to get the best bang for their buck.”

New buying habits

While studies indicate millennials have less predictable shopping habits than older generations, retail analysts said millennials are smarter and more prepared shoppers and that their habits will continue to dictate future trends as they age and earn more. Compared with older generations, millennials are more likely to plan ahead and research items they buy, be influenced by their peers via social media and favor convenience over customer service. And they also spend more money on themselves than older generations of shoppers do.

“Ten years ago, you had a much more linear path to purchase,” said Nicole Larrauri, president of EGC Group, a digital marketing firm in Melville. “Now there’s this big circle that a millennial takes before making the purchase decision.”

The trend is reflected among Long Island’s younger shoppers.

Brittany McGrade, 24, of Middle Island, shopped recently with her friend, Reetu Mulcaniyan, 25, who lives in Ronkonkoma. McGrade, who works in the hospitality industry, said she usually waits until Black Friday to start holiday shopping but started early this year. She has already purchased clothing for her sister and wineglasses as stocking stuffers.

“I browse around ... and wait for something to pop out and say that reminds me of somebody,” McGrade said.

On Cyber Monday, Maloney plans on being a big spender and a big researcher. He wants to buy a camera lens to take pictures underwater. But before he pulls out his credit card to make a large purchase, Maloney said, he always reads reviews of the product. And if he is unfamiliar with the website offering the deal, he does his research.

“I check on where I’m buying things from if it’s over $50,” he said. “I’ll do enough to read any reviews I can find.”

For Steph Eick, 23, a graduate student who lives in Seaford, convenience is a top priority. She said she prefers to shop online late at night.

“I shop online because I can get a lot done at once,” Eick said. “And I’m not dealing with an entire day’s worth of running in and out of stores and waiting in line.”

Eick said she occasionally gets sucked in to shop online via social media, especially when she sees products she likes on her friends’ Instagram accounts. If the brands are tagged, she said she will often look up the products online to check prices and browse.

Eick and Maloney are among the majority. Overall, 79 percent of consumers will use a computer to make an online purchase this holiday season, according to a PwC survey. The most popular gift categories are gift cards, clothing, toys and electronics, according to several retail surveys. Online shopping continues to make a dent in overall holiday spending, with the National Retail Federation estimating that about one-sixth of 2015 holiday spending, or roughly $105 billion, will be done online.

Retailers are ramping up their online strategies to attract those customers. Target announced in October that it will allocate 61 percent of its holiday media spending to digital platforms, a boost from 51 percent last year, according to trade publication Advertising Age.

Like other millennials, Hofstra grad student Amala Nath, 21, of Uniondale, uses her phone to shop. She said the RetailMeNot app notifies her of sales and coupons of stores she is near. She made several purchases recently at The Arches at Tanger in Deer Park, along with her boyfriend, Denvol Haye, 22, of Hempstead. Though they were shopping for themselves on that trip, Nath said that when she does start buying gifts for her loved ones, she will splurge a little.

“I’ll have money saved up for the beginning of November, and from there I budget the money and how I spend it and what deals I can get and what products I want to buy,” she said.

For millennials, being more prepared with holiday lists and budgets also means an earlier start on shopping that has stretched the buying season from well before Black Friday into what many retail experts now call “Black November.”

By early this month, weeks before the unofficial start of the shopping season, Phil Duchatellier Jr., 32, of Huntington, had already purchased a vacation package for his parents on Groupon as well as electronics for his sister. Duchatellier, a wedding cinematographer, said his early buys are more a function of his job, as he becomes less busy when the wedding season wanes in November, and wants to get his shopping out of the way since he doesn’t like to deal with crowds at the last minute.

“I start early because I have more time,” Duchatellier said. “I actually just started my holiday shopping, and I think I’m getting close to what I spent last year already.”

Influential shoppers

Catering to millennials’ shopping preferences has also become increasingly important for retailers because of millennials’ ability to influence other generations, including baby boomers, those born between 1946 and 1964, who still hold the most overall purchasing power of any age group in the United States, according to retail analysts.

“Millennial habits have turned into everyone’s habits,” said Larrauri. “The trends we saw with millennials over the past three years ... that’s now been adopted by boomers and other consumers.”

Bianca Singer, 22, of Plainview, said her father got into shopping online during Cyber Monday — the Monday after Thanksgiving that is the busiest online shopping day of the year — because of her brother’s influence. Singer, a substitute teacher at an elementary school, said she is more of a traditional shopper. She is always out and about on Black Friday, prepping a rough gift idea list before the week starts.

But Singer said she started shopping earlier this year as well, and has already bought a present for her brother at a Bloomingdale’s friends-and-family sale. She’s mirroring a trend among her cohorts. According to PwC, 66 percent of millennials plan to complete most of their shopping before Dec. 1.

Singer said she also tends to spend quite a bit on herself during the holidays. Millennials spend more on themselves than older shoppers do, according to PwC.

“I start out with the idea that I’m shopping for my family, then I’ll find items I want and I’ll get those as well,” Singer said.

Though Singer tends to shop in stores, she said she keeps a Groupon app on her phone that she checks daily for sales.

The importance of both the in-store and mobile experience to capture spending like Singer’s will be paramount among retailers this year.

“Retailers focusing on demographics, mobile and the in-store experience are the ones that are going to win this holiday season,” said Steve Barr, retail practice leader at PwC.

Plugging in new preferences

Besides changing shopping habits, millennials also differ from previous generations in what they buy. Electronics and experiences are especially coveted. Experiential gifts, such as entertainment and travel, which can help build lasting memories and stronger connections with family and friends, are high on the priority list. That includes exercise passes, cooking classes, travel or concert tickets, analysts said. According to PwC, 52 percent of millennials’ spending will go toward an experience-based gift, compared with 39 percent for older shoppers.

Maloney, who works at a visual effects company, said his family bought his mother a hot-yoga pass for her birthday this year. It was well-received, and he said he is strongly considering similar gifts for the holidays.

Singer is considering a gift in that category too. She said she is leaning toward gifting her mother with a SoulCycle pass so the two can cycle indoors together.

“I want her to come with me,” Singer said. “I figured that it would be fun. It’s an expensive thing that I normally wouldn’t get myself ... but as a present to share with someone, I will.”