A rather interesting, and recent Forbes article laid out some of the issues plaguing big retailers when it comes to Gen-Y spending. Yet one of the reasons why Gen-Y is considered a “toxic target market” really caught my eye. Gen-Y has become a generation of tight spenders due to the recession and massive amounts of debt they incur before they hit 30. As stated in this study, Gen-Y carries around an average of $45,000 in debt. Yes you read that correctly: $45,000. This same study also mentions that number could reach up to $78,000 by the time Gen-Y reaches 28-29. Couple this with the 48%-50% unemployment rate for Gen-Y and you have a recipe for and economic disaster, but we knew that already didn’t we? When the collapse of 2008 occurred, some assumed it would take a few years to begin seeing the ripple effects.
Now we’re starting to see the impact that collapse has had on Gen-Y’s psyche and their wallets. Coming out of college, students are racked with debt, and thrust into a competitive job market. More and more members of Gen-Y are forced into moving in with their parents, and possibly will never move out. This is merely a prediction on my part, but I believe over the next 15-45 years it will become more common for Gen-Y will take over their parent’s estates than purchase new houses. What was once a sign of economic maturity could become a measure of dire times, and forced financial responsibility. If we ever hope to get things progressing forward towards a better job market, housing market, and retail market, it’s imperative we tackle to debt problem.
But let’s take a step back for a minute though and address the problems facing big retailers. While the stats above are troubling, there is more at play here than just a cry for help in terms of helping us alleviate personal debt. Over the past few years the shopping experience has changed. Gen-Y demands an engaging and social experience. While some claim that Gen-Y is less about finding a deal than Boomers, I beg to differ. Gen-Y won’t cut out coupons from the middle pages of a newspaper, but they will sign up for services such as Groupon or Level Up, which offer deals or incentives all the time. Why? Because using those services allow for an infinitely more social experience. You can “share the wealth” with your peers. What if companies like The Gap changed their normal deal from “buy one get one free” to “bring a friend and get them a free pair of jeans when you purchase a pair”. It’s the same idea, but it creates a more social setting. Do you think this sort of concept would be successful? I do. And that’s the most important thing big retailers need to think about: CHANGE.
Evolve or die. It’s a little dramatic I know, but I say it all the time when discussing business with colleagues, or friends. If you want to continue to keep the lights on in your building, have clothes on your shelves, and your doors open to the public, you need to be able to adapt to the times. Gen-Y has already affected your business, and forced you to evolve. Look at the staggering number of businesses across all platforms engaging customers or clients on social media. Wasn’t that a by-product of the Gen-Y social media boom? As this research shows, Gen-Y outnumbers Baby Boomers and Gen-X. They are the most important demographic. Gen-Y will dictate shopping behavior for years to come. They’re going to comprise the largest part of your target market. Couple that with the fact that Gen-X looks to Gen-Y as fashion leaders (67% of Gen-X women identified Gen-Y women as trend leaders), and it’s apparent that if you want to survive, you have no other recourse than to win over Gen-Y. You have to evolve sooner rather that later, in order to establish your brand as a bond with members of Gen-Y. If you don’t start now, you’re retail company will cease to exist. It’s inevitable. So, what’s it going to be?