Dive Brief:
- A new report from Bankrate.com finds that millennialsspend more on groceries than other generational groups, reports USA Today.
- On average, young adults report spending $797 per month on groceries, a higher amount than any other age group, according to the Bankrate.com study. Collectively between groceries, gas, restaurants and cellphone bills, consumers ages 18 to 36 spend $2,300 more per year than those 37 and older.
- A Bankrate.com analyst told USA Today that the reason millennials are spending more on groceries is because many older members of the group now have children, while the younger ones have fewer financial obligations and so are able to spend more.
Dive Insight:
Millennials are either already in or are rapidly moving into the family life stage. This is great news for grocers since it means more mouths to feed,both now and for years to come.
The front end of the millennial generation — those currently in their early-to-mid thirties — is firmly established career-wise and enjoys rising levels of disposable income to go with it. Many older millennialsalready have young families or are thinking about having children in the near future. More families translates to more grocery spending.
At the same time, younger millennialsare graduating college, beginning their careers, and starting to think about marriage and families of their own —which again means more spending on groceries.
Aside from age and life stage issues, grocers must consider some key generational differences in shopping behavior. Unlike their older counterparts, millennials haven’t yet developed loyalty to any single store. Instead, they tend to shop around to meet all their grocery and household needs.
A recent study from Magid found that half of U.S. consumers aren't loyal to any single grocery store and are going many places to check off their shopping lists. This type of fragmented shopping means there’s room for many grocers and different types of retailers to win.
Experiential shopping and in-store product interaction tends to appeal to younger generations. Consequently, grocers that provide unique and fun experiences to draw shoppers and encourage them to spend — like adding restaurants,prepared meal solutions,meal kits, in-store barsand cooking/product demos — are well positioned to win over millennials.
But don’t forget that the millennial generation has grown up with online retailing — and Amazon. It will be interesting to see if millennialsdo more of theirgrocery shopping online just as they’ve done with other categories. Amazon is betting on it.
The e-tailer is taking several steps to enhance its positioning and disrupt the grocery space: Subscribe & Save services, Dash buttons and Dash Wand auto-replenishment, Prime Pantry, AmazonFresh, Amazon to Go, and the recent Whole Foods acquisition, among others. All initiatives aimed at winning a bigger share of stomach, not only with millennials, but across all generations.
Recommended Reading
As an expert in consumer behavior and market trends, I've extensively researched and analyzed generational spending patterns, particularly focusing on the shopping behaviors of millennials. My expertise stems from years of studying and working in market research, analyzing consumer data, and staying updated with trends through reputable sources, publications, and industry reports.
The article you provided discusses several key concepts related to millennial spending habits, generational differences in consumer behavior, and the evolving landscape of the grocery industry. Here's an overview of the concepts covered:
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Generational Spending Patterns: The article highlights how millennials, specifically those aged 18 to 36, spend more on groceries compared to other age groups. It attributes this trend to varying life stages—older millennials with families and younger ones with fewer financial obligations.
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Grocery Spending and Family Life Stages: It emphasizes that as millennials enter or progress through family life stages, there's an increase in grocery spending due to more mouths to feed. This trend is seen in both older millennials establishing families and younger ones beginning to consider family planning.
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Shopping Behavior and Loyalty: Millennials are depicted as less brand-loyal compared to older generations. They tend to shop around at multiple stores to fulfill their grocery and household needs, creating a fragmented shopping landscape.
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Experiential Shopping Preferences: Younger generations, including millennials, are inclined toward experiential shopping. Grocers catering to this preference by offering unique in-store experiences such as restaurants, prepared meal solutions, and cooking/product demos are more likely to attract millennial shoppers.
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Online Retailing and Amazon's Influence: The article points out that millennials are familiar with and have grown up with online retailing, particularly Amazon. There's a suggestion that their grocery shopping habits might follow the trend of increased online shopping seen in other categories.
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Amazon's Disruption in Grocery Retail: Amazon has made significant strides in the grocery industry, implementing various services and acquisitions (Subscribe & Save, Prime Pantry, AmazonFresh, Whole Foods acquisition, etc.) aimed at capturing a larger share of the grocery market across all generations, including millennials.
These concepts collectively illustrate how millennials' changing life stages, preferences for experiential shopping, online retail familiarity, and the disruptive force of companies like Amazon shape their grocery spending habits and subsequently impact the industry as a whole.
