The Millennial Generation May 13, 2020

Who are Millennials?

‘Millennial’ is a popular term coined by William Strauss and Neil Howe, which is used to define individuals born between 1980 and 2000.[1] They are the largest generation and forms approximately 31.5 percent of the global population in 2019 [2] and is expected to make up 75% of the global workforce by 2025.[3]

Figure 1 Millennials will form majority of the workforce by 2025
https://www.salehoo.com/blog/millennials-should-be-the-focus-of-your-ecommerce-strategy

 

What do we know about Millennials?

Millennials, being more educated and tech savvy, live a very different life from previous generations and have different values and outlook on life. Their active lifestyles created new trends and a change in demand for products and services. They might be known for being into fast fashion and online learning, but what else do we know about their financial and lifestyle decisions?

 

  1. They are big spenders

Millennials enjoy splurging on lifestyle choices that their parents did not even dream of and are generally bigger spenders than the generations before them. Today, the millennial buying power is estimated to be $10 trillion over their lifetime.[4] According to a forecast by the World Data Lab, the global spending power of millennials will soon be greater than other generations.[5] They are projected to spend $1.4 trillion by the end of 2020, making them the highest spending generation.[6]

Figure 2 By 2020, the global millennial spending power is set to overtake generation X and will continue to rise
https://www.ft.com/content/f81ac17a-68ae-11e8-b6eb-4acfcfb08c11

According to a study done by Charles Schwab, comfort and convenience expenditure, such as dining out, contribute to the higher spending by millennials.[7]

Figure 3 Comparison of different generations’ spending habits
https://www.cnbc.com/2017/06/30/heres-how-millennials-spend-their-money-compared-to-their-parents.html

It was revealed that 60% of millennials spend more than $4 on a cup of coffee, whereas Gen X and Baby Boomers spend 40% and 29% respectively. Millennials also enjoy dining out at popular restaurants, with 79% polled saying they would spend money on doing so.[8]

Besides indulging on pricey coffee and dining out, millennials also transact more on clothes than baby boomers. Very often, 60% of millennials make purchases for clothes they do not necessarily need and spends much more on clothes annually as compared to baby boomers.[9]

 

  1. They love online shopping

Shopping can now be done online easily within clicks. Owing to the ease and convenience of online shopping, e-commerce increased in popularity among millennials where they make up 54% of the purchases online.[10]

Having adopted online shopping for food, groceries and clothes, millennials are expected to drive the global food industry to reach $200 billion.[11]

Figure 5 Global e-commerce sales from 2014 to 2023
https://www.bigcommerce.com/blog/ecommerce-trends/

Evidently, the millennial generation is revolutionising the retail sector as a whole and will continue to fuel the future of e-commerce. Sales are expected to reach $4.2 billion which amounts to nearly 16% of the total share of global retail sales by 2020. This figure is also expected to increase in years to come and hit the $6.5 billion mark by 2023.[12]

 

  1. They were raised with technology

Millennials were exposed to technological devices including mobile phones, computers and the internet at an early stage of their lives. Technology has become such an integral part of their childhoods and reinvented the way they communicate and share information with the world.[13]

Figure 6 Evolution of social media
https://www.future-marketing.co.uk/the-history-of-social-media/

One notable example is the social media. Social media was first introduced in the 1990s and rose to popularity in the 2000s. The popularity of social media has resulted in the invention of many notable social networks including Twitter, Facebook, and Instagram in the past decade. These platforms remain largely successful, providing millennials with a space to create and share content, as well as connect and interact with each other.

Figure 7 Social media users by generation
https://sg.oberlo.com/blog/social-media-marketing-statistics

Leading the social media usage, 90.4 percent of millennials are active social media users, as compared to 77.5% and 48.2% of Gen X and Baby Boomers, respectively.[14]

Figure 8 Top social media platforms
https://www.digitalmarketingcommunity.com/indicators/social-networks-millennials-usage-2018/

Presently, Facebook is leading the pack as the top social network among millennials with 88% of membership, while Youtube takes the second place with 83% membership. According to a study by Global Web lndex, millennials are spending approximately 2 hours and 38 minutes on social media per day. They are not only spending time on just a platform, but an average of over nine social media accounts, making multi-networking a new norm.[15]

Technology has also transformed the way payments are made. For the tech-savvy generation, paying for food using scan-and-go technology or purchasing clothes with just a click online have turned into a normality. Following global digitalisation and the increasing rate of internet availability among users, millennials are backing away from cash and driving innovation in the digital payments industry and cashless economy.[16] This can be seen from how they form the largest customer base for digital payment company PayPal in the United States.[17]

 

  1. They feed on online videos

For millennials, cable and satellite broadcasting has become a service of the past. Online TV and streaming services are now their preferred choice when it comes to video content consumption.

According to a survey done by Pew Research Center, 61% of US young adults turn to streaming services as a primary way of watching television. This is compared with 31% who watch TV via cable or satellite subscription and 5% via digital antenna.[18]

Figure 9 Online streaming service is most popular among young adults
https://www.pewresearch.org/fact-tank/2017/09/13/about-6-in-10-young-adults-in-u-s-primarily-use-online-streaming-to-watch-tv/

Over the years, popular streaming services such as Netflix and Hulu have dramatically altered millennials media habits. [19]

Figure 10 Top entertainment choices among different age group
https://www.tubefilter.com/2015/07/16/ipsos-media-ct-netflix-top-entertainment-choice/

When compared with other entertainment outlets such as Hulu, ABC and HBO, Netflix tops the list with millennials spending at least five hours on the platform per week.[20] The popular streaming service is the number one brand among millennials for the past three years, new YouGov research shows.[21] Its service subscription revenue also rose from $21.5 million in 2011 to $158 million in 2019.[22]

It is predicted that TV viewing will continue to fall while online video consumption will grow from 64.8 million in 2019 to 65.1 million by 2020. Over these years, approximately 89% of millennials will be watching online video.[23]

 

The influence of millennials in the stock market

With the growing demand for products and services driven by millennials’ lifestyle habits, it is evident that this generation has a large influence on thriving industries such as food and beverages, social media and entertainment. These industries have greatly benefited from the rise of millennials and heightened the attractiveness and growth of stocks for companies such as Facebook, Netflix and Starbucks. Without a doubt, they will continue to redefine and shape the direction of the global economy in the years ahead.

For those looking to invest in millennial themed stocks, you may refer to a list of companies (under The Millennial Generation) to include in your watch list here.

 

References


[1] https://www.thesun.co.uk/fabulous/5505402/millennials-baby-boomers-generation-groups-z-y-x-explained/
[2] https://www.mentalfloss.com/article/555109/generation-z-will-outnumber-millennials-within-one-year
[3] https://www.charles-stanley-direct.co.uk/News_Features_Research/millennials-will-reshape-investment-landscape/
[4] https://www.martechadvisor.com/articles/ecommerce/how-millennials-are-shaping-the-future-of-retail/
[5] https://www.ft.com/content/f81ac17a-68ae-11e8-b6eb-4acfcfb08c11
[6] https://wwd.com/business-news/business-features/millennials-projected-spend-1203408696/
[7] https://www.thebalance.com/how-millennials-spending-habits-compare-to-other-generations-4240695
[8] https://www.cnbc.com/2017/06/30/heres-how-millennials-spend-their-money-compared-to-their-parents.html
[9] https://www.emarketer.com/content/millennials-make-more-apparel-purchases-than-other-generations
[10] https://www.invespcro.com/blog/millennial-online-shopping-habits/
[11] https://www.forbes.com/sites/sarwantsingh/2019/09/09/the-soon-to-be-200b-online-food-delivery-is-rapidly-changing-the-global-food-industry/#108d9d9eb1bc
[12] https://www.bigcommerce.com/blog/ecommerce-trends/
[13] https://www.forbes.com/sites/ashleystahl/2017/09/05/millennials-taking-over-the-internet-and-the-economy/#3c69299d7297
[14] https://sg.oberlo.com/blog/social-media-marketing-statistics
[15] https://www.digitalmarketingcommunity.com/indicators/social-networks-millennials-usage-2018/
[16] https://ikajo.com/blog/millennials-digital-payments-trends
[17] https://spendmenot.com/paypal-statistics/
[18] https://www.pewresearch.org/fact-tank/2017/09/13/about-6-in-10-young-adults-in-u-s-primarily-use-online-streaming-to-watch-tv/
[19] https://www.rev.com/blog/how-gen-z-and-millennials-consume-video-content-what-that-means-for-production-teams
[20] https://www.tubefilter.com/2015/07/16/ipsos-media-ct-netflix-top-entertainment-choice/
[21] https://yougov.co.uk/topics/consumer/articles-reports/2019/10/10/netflix-remains-most-positively-talked-about-brand
[22] https://www.newstatesman.com/culture/tv-radio/2019/12/n-netflix-rise-and-rise-ubiquitous-streaming-service
[23] https://www.forbes.com/sites/tonifitzgerald/2018/11/28/wow-millennials-watch-more-online-video-than-traditional-television/#5f102bd94138

About the author

Gina Ng
Marketing Executive
POEMS

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