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The Digital Solution Getting Millennials To Make Big Purchases

Millennial research, Millennial insight, Millennial marketing, Gen Z research, Gen Z marketing, Gen Z insight, youth research, youth marketing

Can retailers convince debt-weary Millennials to make big purchases? Enter Reel: a “guilt-free” shopping platform that motivates users to save up for big-ticket items—and click the “buy” button.

Debt is a vicious cycle, and Millennials want a way out. Their distrust of traditional financial institutions has lead them to innovate the way they save and spend. When we took a look at Millennials’ notorious debt burden, we found that about 30% of 18-35-year-olds have credit card debt. So it may not come as a surprise that Ypulse data shows that cash is king when it comes to how most Millennials pay for things, followed by debit cards. Credit cards still rank high, but young consumers’ fear of debt has made them credit card shy, compared to other generations. They are clearly looking to alternatives to allay their rising debt and reach their financial goals with forms of payment like peer-to-peer payment apps and prepaid cards on the rise. Retailers have gotten the hint. MarketWatch reports that stores like Anthropologie and Urban Outfitters have initiated layaway plans for big purchases, and they’re gaining traction. Then there are the digital solutions like Affirm, which lets consumers buy large items online with a payment plan over a set amount of time.

Millennial research, Millennial insight, Millennial marketing, Gen Z research, Gen Z marketing, Gen Z insight, youth research, youth marketingAnother platform answering young consumers’ wants and woes is Reel, which allows users to save up for specific purchases and buy the item, all in one place. Users’ bank accounts are linked up to the platform so that, for instance, a user can directly deposit $5 a day for 20 days towards the purchase of a pair of $100 Nike sneakers. Once it’s saved up, Reel automatically confirms the purchase, buys it, and ships it. Users can get the item they’re pining for and skip the buyer’s remorse, all while being encouraged to shop. So far, Reel reports a 73% retention rate—so users are making a habit out of “Reeling” instead of using it as a one-time savings strategy. Right now, the platform is focused on fashion but plans on expanding their brand portfolio for promising sectors like makeup, and branching out to categories like travel down the road.

We wanted to find out more about why solutions like Reel are resonating with young consumers, so we talked to their co-founder and CMO, Alejandro Quilici, to learn what brands young consumers are “Reeling” for the most, why delayed gratification appeals to on-demand generations, and more:

Ypulse: Can you tell us about the core audience for Reel?

Alejandro Quilici: Our core demographic is mainly 24-to-35-year-olds, and 24-to-27 is our core Reeler. These are Reelers that are coming out of college. They have massive student loans, and they’re mitigating that at the same time. They’re mainly female and they’re very aspirational. They want things that exist mostly in the fashion space. They’re coming out of college and going to their first or second jobs with entry-level salaries, but they still need to dress nicely.

The second group is 30-to-35 and they’re new moms. They’re looking to avoid unnecessary debt because they already are dealing with car payments, maybe a new home, etc. We let them have the ability to treat themselves to things from time to time by saving for items that they don’t necessarily want to put on their credit cards.

Millennial research, Millennial insight, Millennial marketing, Gen Z research, Gen Z marketing, Gen Z insight, youth research, youth marketing

YP: Our stats show that over half of Millennials are in debt, whether it be from credit cards or student loans. Can you speak to that problem?

AQ: Millennials are trapped in this kind of world [of debt]. They’re looking to mitigate that and depend less on that. But at the same time, they have a fear of missing out on experiences and things. They’re trapped between paying off their credit cards, their student loans, their car payments, and all those things, but they’re still young and want to be able to have fun. They should be able to get that pair of Louboutin heels that they’ve been dying to get for years.

Our research has shown us that people are looking to rely on credit less. Our point of view is that we are an answer to that pain point. You’re not getting into more debt because you’re using your savings as purchasing power instead of putting more stuff in your credit card.

YP: Young people are often called impatient while Reel revolves around delayed gratification. Do you think that the stereotype surrounding young people is a myth or do you think that Reel is changing that behavior?

AQ: I believe that Reel is changing that behavior and it is a myth to a certain degree. Immediate gratification is important but think about the emergence of the wish list. The wish list came about because it was a way for marketers to record the wants and purchases that people pass on. Cart abandonment is a huge problem. But Reel gives them an opportunity to compartmentalize purchases with time and be able to allocate a certain amount of money.

Seasonality also affects how people want to save. They’re able to save for things that aren’t out yet. The way Reel works is also a predictor of the things that people will want in the future even before those things are available for purchase.

YP: What are the most popular items and brands that young people are using Reel for?

AQ: Our main focus is fashion. Based on our research, after spending money on food and living expenses, most Millennials spend their money on fashion. At the beginning, we allowed people to input the things that they wanted to save for and 80% of the items they selected were fashion items. As far as the top brands that we are seeing, Gucci is by far the top one. I believe it’s around 38% of orders that we’re processing are coming from Gucci at the moment. The second one is Saint Laurent. Third I believe is Louboutin. And then I think it’s either Nike or Adidas, because we cover a wide range of products and prices.

YP: Do you think that brand names still matter, even in the midst of the minimalist movement?

AQ: I think people buy brands as statement pieces. You have your Guccis and your Saint Laurents and it’s very clear that they got that product because it has the logo on it. Think of it as the investment piece that you want to have and that gives you cache. For instance, heels from Louboutin have that red sole that has a lot of meaning and that people recognize from afar.

But Louboutin shoes might be more than just a red sole. They might be the thing that is going to give you the confidence to walk into a meeting room or your first job interview and because you feel powerful.

YP: What do you think sets Reel apart from, for instance, having a dedicated savings account?

AQ: Savings accounts are very money-focused. The experience of saving and savings apps is very monetary. We make aspirations front and center; the product and the feeling of having something is way more important and drives the experience more than the monetary aspect. There’s a very simple breakdown of how much you’ve saved and your daily or weekly contribution for the item, but in the foreground is the item. It’s mixing ecommerce and saving into one experience and the ecommerce side is more front and center.

Millennial research, Millennial insight, Millennial marketing, Gen Z research, Gen Z marketing, Gen Z insight, youth research, youth marketing

YP: How are Millennials’ finances changing today?

AQ: My last point would be that seven out of ten Millennials say they prefer to use debit cards rather than credit cards for their purchases. We’ve seen a shift in the way people spend. And there’s going to be a shift in the way that companies, especially retailers, process their payments. It is already happening today with the emergence of smaller banks and prepaid cards. Young generations are getting more financially savvy and they understand that credit is not the only way to achieve their goals. We empower people to see the potential of their own cash flow.

YP: What’s next for Reel?

AQ: We’re rolling out a referral program, and eventually we’ll be expanding into different verticals. Right now, we are very focused on fashion. We have some furniture, jewelry, and makeup, too. Eventually, we’re going to get into other types of verticals. It could get into the space of travel at some point, but that’s way down the line.

We want to evolve with the purchasing of our users. We want to be able to offer items in the long run that follow their spending patterns and allow us to be part of their journey into adulthood and eventually late life.

Millennial research, Millennial insight, Millennial marketing, Gen Z research, Gen Z marketing, Gen Z insight, youth research, youth marketingALEJANDRO QUILICI

CO-FOUNDER AND CMO

Quilici has over a decade of experience developing integrated communications for some of the country’s top brands, including Charles Schwab, Chase Bank, and Verizon. His experience in both paid and organic marketing strategies for the financial space allows him to understand the mindset of Reel’s customers, facilitating insightful acquisition strategies.

This interview has been edited and condensed. 

To download the PDF version of this insight article, click here.