Millennials are savvy shoppers and are often smart about their spending. They research items before they buy them, get their friends’ opinions, find the best deals, and search for discounts or coupons. However, they’re also interested in luxury items and to make such purchases, they embrace high-low budgeting. This means, they’ll splurge on items they really want, such as a tablet or handbag, but they’ll shop at more affordable stores, make their own items, and prepare their own food in an effort to cut back on spending. According to Ypulse research among 1200 14-34-year-olds, 51% say they’re sometimes willing to splurge on luxury items, but they always buy inexpensive items to balance it out. We’ve been noticing this behavior which reflects how resourceful Millennials are and how they’ve adapted in today’s economy.
For example, technology is of huge importance to Millennials and they’re willing to buy the latest devices, which they consider crucial for entertainment and communication purposes. They’re also willing to splurge on some staple clothing items that they know they’ll get plenty of use out of. They’ll even buy designer items on occasion, however, they’re highly aware of how to do so in the most affordable way. They embrace flash deal sites like HauteLook and Gilt Groupe, where they can buy such items for less. They also pay close attention to when stores offer free or reduced shipping and when coupon codes are available. In fact, 43% say they won’t buy an item online if they can’t get free shipping.
Additionally, they’re interested in designer collaborations for less such as Target for Neiman Marcus, which enable them to have a taste of luxury in an affordable way. They’ll also buy inexpensive basics at mass merchandisers such as Target or Walmart, trendy items at fast fashion stores including Forever 21 and H&M, and they’ll dish out a little more for accessories to add new elements to their wardrobe. Three in 10 (31%) say they’re willing to spend a little extra when it comes to shoes or bags, even if the price is outside their budget. This way, they don’t need to buy tons of new clothes each season, but can add to their closet and constantly rework their style in cost-efficient ways.
Additionally, Millennials are a creative and innovative generation. They have a DIY attitude and find ways to make what they want, often turning to sites like Pinterest and YouTube for guidance. They shop at thrift stores, upcycle, and even rent luxury clothes since they know they’ll get little use out of them. For these reasons, we imagine H&M’s global recycling program will be a huge hit among Gen Y since they can recycle old clothes from any store and receive a discount for future purchases.
But beyond clothes, they’re finding ways to save on other expenses. To balance out buying expensive items, attending costly concerts, or going out to special meals, they’ll find ways to cook flavorful foods themselves. They frequently share recipes and are inspired to make their own dishes that they’ll want to share with their friends. Sure they may buy organic or local ingredients which are expensive, but they do so in ways that even out their spending and often shop at affordable stores that sell healthy food.
To reach Millennials who are hyperaware of their spending, companies need to reward their consumers. Free shipping is key to them, as well as discounts for liking or following your brand on social media. They’ll also be more interested in signing up for your email alerts and text messages if they’ll receive exclusive savings without being bombarded with information. Brands could also offer discounts for consumers who tweet a picture of their purchases with a specific hashtag, or provide loyalty reward cards so that people will want to continue making purchases. Millennials have huge spending power, but to target them, brands need to be aware of their habits and how they’re balancing their budgets.