Millennials’ spending habits have been a hot topic this past week, and the conversation isn’t helping our reputation. Here’s the deal: While many young people are struggling, there are a number of well-heeled young professionals willing to splurge on discretionary, luxury items without thinking about the long-term consequences. Here’s what's missing: For now, there are no consequences.
On one hand, this spending is preposterous, yes. Young consumers increased their spending on premium luxury fashion by 33 percent in 2011 over the prior year, and the majority was either unemployed, underpaid or weighed down with student loans. One in four millennials has more debt than savings; 94 percent of college students graduate with debt. The unemployment rates among workers ages 20-24 is at 18.1 percent — more than double the national rate of 8.1 percent. Times are tough. The odds aren’t in our favor.
But most of us have very few responsibilities. We take our work seriously, we pay our rent, a few bills, and with what’s left over, we buy luxury items. For some reason, brands matter. That’s why millennials are the largest demographic purchasing new technological gadgets and fashion apparel. We’ll live without air conditioning — maybe — but we won’t live without Apple’s latest toy or Kate Spade’s newest handbag. It seems crazy to boomers, but it’s worth taking note. Brands matter, so what are you doing to reach Gen Y?
There’s a wave of innovation in commerce to keep up with my generation’s spending habits. There is creativity to how consumers are going to discover a product, and what really matters in those businesses is the loyalty they create.
In a Women’s Wear Daily article two weeks ago, Wade Gerten, the founder and CEO of 8thBridge, the Minnesota-based company that has created the technology many brands use to enable social shopping on Facebook, websites and mobile apps, said this:
“If you added up all of the shopping activity over the last two to three years on Facebook, almost all of it is friend-to-friend. Less than 10 percent is brands pushing at you. If you want social commerce to be a significant driver, it has to be re-shaped around people. Instead of taking a product catalog and putting it on a website or Facebook, people have to be at the center. Then it will become much more significant from a total revenue point of view.”
So, what are you doing to have people as the center of your products? You might not think Gen Y has the right to spend, but they are spending, and as long as they are, don’t you want them buying your products — your learning, your development and an investment in your company?