Wednesday, 4 October 2017

Living In The Now: How Millennials Are Spending Their Cash

Money. To many millennials it really is just a means to an end. They have lived through the biggest creation of wealth in history and yet now that they hold their own purse strings, fate would have it that the affordability of, well, pretty much everything their parents dared to dream of is financially beyond their means.

Image source: CNN Money

Wasn’t it Gahndi that once said, ‘The earth provides for everyone’s needs, but not enough for everyone’s greed.’ So with that in mind, along with a generation of disenchantment and a disposition for living in the moment, it’s no wonder that millennials are thinking twice about home ownership and the accumulation of material possessions and opting instead for experiences and social responsibility.

Last Thursday, four Master of Marketing students attended the annual Millennial Marketing Conference, hosted by Growth Tank, Chris Wirasinha from Pedestrian TV asked us to look past the smashed avocados and stigma that usually surrounds millennials and their spending habits. The insights presented were based on a quantitative study of 1,067 respondents as well as a qualitative deep dive with 8 young Aussies on the eastern seaboard.

From that study, four key findings have emerged that can help marketers position their brands against the goalposts for millennials.
  1. The big picture: extended adultification
  2. Day-to-day purchases: the new grocery buyer
  3. Larger purchases: saving for the medium term
  4. Entertainment and hobbies: the search for freedom
The big picture: extended adultification

Image Source: Mashable

Millennials are moving through adulthood markers slower than previous generations, instead opting to enjoy life and explore their options. And why not? With parental security nets being stronger than ever, as well the ability to claim a youth allowance from the government, the world is their oyster. Besides, aren’t they supposed to be entitled. Adulting is hard, the cost of living is expensive and their parents got to reap the benefits of the housing, super and mining boom, post GFC bounceback and low interest rates. What did millennials get?

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

Working hard and getting a degree no longer equates to getting a stable job with a high income. And with their grandparents spending the inheritance, millennials can pretty much kiss goodbye any chance of owning our own homes. So you can really understand why they feel that they should take the time to figure out what their passions are in life. You only live once, so you might as well enjoy life to the fullest.

Day-to-day purchases: the new grocery buyer

For those millennials living out of home and running their own households, being financially independent is like a badge of honour. 86% are responsible for all or most of their household expenditure, while 81% are responsible for doing their groceries. One of the most interesting findings was the trend of ‘Sunday Adultday’. Due to their busy work and social calendars, millennials prefer to get their adulting done in one day and do one big shop on a Sunday (32%).

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

The love for anything ‘gourmet’ extends beyond Saturday brunches, it also translates into the kitchen too. Millennials are passionate about cooking, and do it for 65% of their meals.

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

They also love a good bargain, paying close attention to prices and quality. However, they are also prone to premium purchases as a treat. Aldi is a firm favourite among young adults, while premium purchases are more likely to be bought from boutique vendors and specialty stores.

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

Larger purchases: saving for the medium term

Turns out millennials learnt something from the GFC. Most of them are in credit rather than debt, with 45% actively saving, holding an average of 5-6.5K stashed away for a rainy day. Granted, what they are saving for, will probably be spent in the medium term, with 76% signalling that they intend to spend the money on traveling overseas. Traditionally, young adults save for larger purchases such as cars and homes. However, only 20% indicated that they were saving for a car, while 49% were saving for the long term in the hope they can one day afford to buy a house.

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

It’s interesting to point out that as early adopters of technology, millennials are using budgeting apps and services to help save, invest and manage their spending. While many steer clear of credit cards in favour of debit cards, micro-credit offerings like Afterpay and zipPay are becoming more popular for splurge purchases.

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

Entertainment and hobbies: the search for freedom

Anyone can understand that with alcohol being so expensive and Australian lock-out laws in place, there have been shifting trends in going out. That’s why share house entertainment is on the rise. Millennials are hosting dinner parties, house parties and dabbling in adultification while they side hustle their way through uni or work.

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

1 in 3 working millennials have a side business and a whopping 2 in 3 have entrepreneurial ambitions. Often seen a way of identifying themselves to others, these side hustles are more than just hobbies. They are often the result of drunken ideas thrown together with a group of friends and can range between anything from jewellery making to craft beer brewing. What’s more, these endeavours have given millennials financial freedom and the ability to turn on and off their cash flow at their will. This means there’s a huge opportunity for brands to facilitate opportunity, insight and information for would-be millennial entrepreneurs.

Source: Growth Tank. Pedestrian TV presentation: How Millennials Are Spending Their Cash

Millennial consumption patterns along with the rapid expansion of the food delivery market, and the consumption of beauty products, present opportunities for brands to provide further value for this important customer segment. But beyond the shifting trends in consumption patterns, what else does this mean for brands?

These are the questions you should be asking yourself:
  • How are you positioning against the new goalposts for millennials? E.g. travel, cars, tech, education & major purchases.
  • How are your brands helping them move closer to the goal of adulthood?
  • How do you position your brand into the ‘treat yo’ self’ category and away from home brand commodification? 
  • How can brands own SUPER SUNDAY across digital and mobile?
  • How can we tap into their love and passion for food and cooking and the massive amount of eating at home that they’re doing?
  • What are your brands offering for purchases in the medium term?
  • Side hustles are the third most likely income source beyond traditional full-time and part-time work. Entrepreneurs are the new role-models. How are you aligning against this?
**All insights provided by Pedestrian TV, and presented at the Millennial Marketing Conference 2017, presented by Growth Tank. For the full summary of the all the MMC17 speakers’ insights and slides, click the link below for a free download:

Alyce Brierley
Current student in the Master of Marketing program at the University of Sydney Business School

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