Millennials are shelling out big bucks on their hunt for value and fashion-forward items, and retailers are noticing as they pounce on the opportunity to capture this burgeoning market.
On Wednesday, Macy’s became the latest retailer to hone in on the spending potentialof the Millennials, the country's largest and most diverse generation. The department store chain outlined its multi-year plan to grow and develop its business among shoppers between the ages of 13 and 30 years old.
This group is increasingly drawing the eye of retailers as the older Baby Boomer generation shifts its spending to necessary purchases and retirement savings at the expense of more discretionary items.
"We believe we have great opportunity to accelerate sales growth among customers in this generation,” said Jeffrey Gennette, Macy's chief merchandising officer. “Doing so requires us to think from the customer's point of view about our assortments and store experience and to align our internal resources so we can move quickly and with focus."
Over the next three years, Macy’s plans to implement the new initiative in its "mstylelab" section, which primarily serves customers 13 to 22 years old, and its "Impulse" department, which targets consumers 19 to 30 years old.
After analyzing Millennials’ buying habits and shopping preferences, Macy’s has divided this group into four customer lifestyle profiles. The company’s various teams will use these profiles to develop brand assortments to appeal to each customer type.
Although some of these brands will be familiar names for the store, Macy’s plans to bring in new brands and lines to its accessories, beauty and home departments. To cater to this tech-savvy generation, Macy’s will also refine its use of QR codes, tablets, texting, tap-and-go transaction processing and mobile offers.
Providing consumers with value will continue to be a key part of the Millennial strategy. Data shows that this age group exhibits a pronounced barbell-like spending strategy, said Edmond Jay, senior vice president at American Express Business Insights. They are very value conscious and are drawn to both to luxury and value-priced items but tend to avoid the middle market, he said.
The company also wants to “appeal to the sense of style and fast fashion that Millennial customers seek” through local events, microsites on its website that will highlight key fashions and tips and posts by expert bloggers who will provide direction and advice.
Implementing a fashion-focused strategy is retailers' best bet for capturing the consumer dollar, said Catherine Moellering, executive vice president of The Tobe Report, a fashion retail consulting firm.
Although focusing on fashion is risky for retailers because they have to get the trend right, it could boost store profits because customers are more likely to pay full price for items that incorporate the latest trends, she said.
“I would argue that these fashion items, in this new reality that we’re in, have a higher profitability,” Moellering added.