Authentic spending habits – Millennials & their money

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Plain Millennial Jane. Melissa with one of her cats, Bella, chilling in bed.

Melissa Lee is a 23-year-old postgraduate student. She works a part-time job at an online copy editing company and lives in a small apartment with her two cats, Bear and Bella. Melissa is in a steady relationship with her boyfriend and she enjoys exercising regularly. You’re probably asking, “So what?” Well, generation-wise, Melissa is considered a ‘Millennial’.

 

Oh no! Who are they?

The Millennials, or Generation Y, are the individuals born between 1977 and 1995, though, there is a distinction made between older Millennials (31-39) and younger Millennials (21-30). This generation was brought into the world at a time when technology was rapidly developing, and producing extraordinary breakthroughs. The Millennial generation basically founded the social media movement and are often criticised for being addicted to the internet as well as digital devices.

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Not there yet. Melissa may be addicted to her phone, but her selfie skills are still lacking.

But the internet is life!

Even though that might be true, the world of marketing and brands have a dilemma on their hands. They need to be prepared for, and take into account, this generation’s specific wants and needs when it comes to spending their money. According to Business Insider, Millennials will become the dominant group in purchasing power by 2017, outspending their Baby Boomer predecessors.

How is this possible? Millennials now equal the Boomers in terms of numbers, around 20 million in South Africa. While many Millennials are still busy struggling to climb the income ladder, their sheer size is indicative of their future spending habits and purchasing power.

Just a bunch of brand-obsessed spenders, am I right?

Not exactly. Millennials are growing up in an age of severe economic turbulence comparable to the Great Depression. Taking a page from the history books, this generation is now placing more emphasis on camaraderie and less on material possessions.

Luxury products such as shoes, bags, and watches might have lured consumers in the past, but the companies who built their empires around exclusivity and luxury will have to alter their marketing strategies to accommodate the Y generation.

To them it is all about the experience and not the product. In a social media study done by The Nielsen Company, 61% of Millennials ages 21-24 said they would rather have dinner at a new restaurant than buy a new pair of shoes.

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Deals, deals, deals. 31% of Millennials’ spending consist of deals or other sales offers.

 

Food, glorious food

Food, no matter the kind, is an experience, and one that is often shared. “On many occasions I’d rather spend money on expensive sushi with friends than buy a piece of clothing I really wanted,” says Melissa.

Nielsen’s study showed that 44% of Millennials have posted a photo on social media of them or someone else enjoying food or a drink. These young consumers, pardon the pun, are now sharing photos on social media of fancy dinner parties, expertly styled pastries or frosty beverages in order to convey a sense of luxury.

The term “food porn” is now commonly used and has given Millennials the chance to show the world what is on their plate. This trend hints at a shift in the luxury-sphere: the new status symbol for Millennials is unashamedly food, and lots of it.

Yet, sharing a picture of a colourful sushi platter is considered much less pretentious than if they shared a picture of an expensive new product. Why? Because Millennials want others to know that they participated in something special and didn’t simply spend hard-earned money on a product.

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Indulgence. Millennials value food above material possessions, and Melissa is no exception.

So they’re savvy shoppers?

Exactly. Nielsen’s research showed that Millennials are more likely to live off of pay-checks on a month-to-month basis, meaning they have no choice but to spend responsibly and carefully.

Millennials are always on the lookout for a great deal. In fact, 31% of their spending consists of deals or other sales offers. It’s not surprising then, to discover that the top 20 apps used by Millennials around the globe are either trade or discount focussed, with apps like Groupon leading the pack.

This mindful spending means that Millennials take a lot of factors into account before buying a product. They place a premium on authenticity, meaning they care about where and how a product was produced.

“I’d rather buy a locally produced product at the supermarket than one I know was imported. They’re also cheaper sometimes than the imported ones,” says Melissa.

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Making the correct choice. Getting a good deal is a priority for Melissa, but she won’t compromise on quality.

What do the experts say?

Psychologist and fellow Millennial, Donovan Rudolph, says that this shift in spending and luxury is due to social status and class, and the image that is produced.  “This is best created through the places you go, the people you associate with, and the food you eat. Cars and jewellery will not be able to uphold that image.

“The talking points around those are also limited contrary to travelling and cuisine where you can really grip people’s attention and thus maintain that image and strive for social class,” he says.

Donovan says that Millennials are more socially aware than any previous generation. “They’re realising that conforming to societal norms is not that important anymore. There are many other things that are beginning to take precedence over issues like marriage and children. Life experiences and careers have become more valuable.”

Fascinating creatures

Aren’t they just? Though, making up 38% of South Africa’s population, Millennials are not to be underestimated. Their effect on the country’s economy will increase in the coming years as they join other generations in spending more.

The best way for businesses to capitalise on the opportunity that is the Millennials is to be upfront and real with them. As individuals, they want to be part of a larger discussion where they can make a contribution.

Relating to their lives and issues in an authentic way is the best possible option. How else are you going to sell Melissa something if she doesn’t feel like you took her and her cats into consideration?

“That’s very true to be honest,” she says.

Here’s a silly video about Millennial stereotypes:

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Author: walterhaywardbotha

I'm a Journalism Honours student at the University of Stellenbosch in South Africa.

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