Millennials a better bet than boomers

Companies that sell consumer goods to millennials have been urged to take a more demystified approach to the swelling demographic cohort.

Marketers have been making wrong assumptions about the spending habits of millennials, who now outnumber baby boomers by two to one.

Companies that sell consumer goods to millennials have been urged to take a more demystified approach to the swelling demographic cohort — and also to avoid unhelpful labels such as lazy avocado scoffers or “preachy vegan environmental activists”.

As the influence of e-commerce and related data harvesting swells, marketers have been making wrong assumptions about the spending habits of millennials, who now outnumber baby boomers by two to one.

There are now two billion millennials — those born after 1998 — with an average age of 29. Only 10 per cent of them live in the US and Europe.

“There’s a lot of really interesting conflicting and strange thoughts out there about the millennial consumer,” Mark Livings, co-founder of BrandLink Group, which includes marketing consultancy The Kinetic Agency, told the UBS Australasia conference on disruptive technologies.

Mr Livings said while selling in the social media era was “a little different”, humans fundamentally were “no different from the cave dwellers that we evolved from” in terms of how they process messages.

“So consumer behaviour is quite predictable and it’s quite easy to observe … when you’re looking at millennials,” he said.

But one notable trend is that e-commerce has shifted the power from retail intermediaries to the brands, who can now communicate directly with millennials.

“The rise of e-commerce has disintermediated the traditional retailer relationship,” he said. “For the first time, probably in two decades, brands have an opportunity to communicate directly with consumers again.”

What’s also changed is the brand owners’ access to product-by-product spending data which, Mr Livings said, made Cambridge Analytica’s controversial activities look like “primary school data collection”.

He noted millennials were willing to sign up for subscription arrangements that were convenient for them, but enabled the provider to harvest swathes of usage data.

The subscription-as-a-service trend was not lost on Woolworths CEO Brad Banducci, who last year cited Uber Eats rather than Aldi or Amazon as the grocer’s greatest existential threat.

Mr Livings said while millennials were comfortable with their buying data being tracked, it remained to be seen whether such surveillance would become “creepy” rather than a tool of mutual convenience.

“There’s a line there and I think we’re going to find out exactly where it is,” he said.

Data tracking was now providing a “very intimate look into people’s private lives”, concurred Markus Bihler, co-founder of Builders Union, a London-based global investment manager focused on the consumer sector.

“Where’s the line between an innocent recommendation and a really severe … infringement of personal privacy?” he asked.

Manager of Cooper Investors Asian Equities Fund, Qiao Ma said 60 per cent of millennials lived in Asia.

For the region’s tech-focused consumer companies this created “the most exciting investment opportunities in at least a decade”.

Ms Ma said China was a leader in customer data tracking, led by the online giants Alipay and Alibaba.

“They know roughly where you live and they know your income level and they will hit you with the exact tailored promotion that gets you to go to a particular grocery store,” she said.

Mr Livings said marketers would “salivate” to get their hands on the sort of data being harvested by the Chinese payments giants, who had benefited from skipping the credit card era.

“The richness of the data that’s being presented back to these companies in different parts of the world is extraordinary,” he said.

Mr Bihler said there was a widespread misperception of millennial buying preferences, which show some unexpected trend to “old world” products and services.

For instance, in value terms vinyl record sales are outselling digital downloads in Britain and the US, while sales of mechanical typewriters have grown in the triple digits.

Cruise ship operator Norwegian Cruise Lines reports that millennials — not bucket-list retirees — are its fastest-growing customer segment.

Mr Bihler said young consumers were equating spending with “voting for the future that they want to live in”.

Such “impact signalling” is reflected in the renaissance of the 117-year-old SodaStream and its home carbonation products that banish single-use bottles.

But Mr Livings cautioned against making “binary” assumptions about millennial attitudes, noting they were not all “preachy vegan environmental activists”.

While green-tinged millennials have flocked to SodaStream, they shunned Coca-Cola Amatil’s Mt Franklin brand after the bottler introduced thinner “crinkly” plastic.

“That shows us there is a line where people are prepared to make a better choice with regards to the environment and sustainability,” Mr Livings said. “But if you cross that line and affect their consumption experience, it can be disastrous.”

Entrepreneur and former head of development for Sir Richard Branson’s Virgin StartUp Ian Mason said cynical millennials were wary of “green washing” and were quick to shun a business that “talks the talk but doesn’t walk the walk”.

“That’s because a lot of ‘social purpose’ brands don’t really fulfil the promises that they’re offering in the first place,” Mr Mason said.

He said the brands that did best with the audience had integrated “social purpose” in the business model, rather than as an afterthought.

One exponent is the coffee roaster Change Please, which has thousands of coffee carts in London, Singapore and New York.

“With the exception of the founder and the CEO, everybody employed there is homeless.”

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