It’s hard to ignore the millennial shopper generation. Known for their tech prowess and social influence, this demographic – born between 1980 – 2000 – have got retailers and brands pulling out all the stops to capture their fleeting attention.
Face it, retailers cannot afford to elude this market. Even more so when they have money to spend. According to Accenture, millennials will have a collective spending power of more than $1.4 trillion by year 2020. That’s a huge increase from their $600 billion spending power today.
If you’re not shaking in your leather boots yet, you should now because millennials are spending 8% more on apparel than their baby boomer counterparts. Granted, they are not representative of the entire fashion consumer market but you will want them on your side as a potential voice for your brand.
So what is the fashion industry’s response to a community with volatile preferences and shifting brand loyalties? Fast fashion.
Let’s Talk Speed
Fast fashion’s ability to turnover their collections in a short span of just one week has made them a millennial favourite. And it is inevitable as that is how fast fashion trends are evolving now. The Deloitte Fashion and Luxury Report stated that “millennials were three times more likely to be driven by trend than older consumers and were less defined by routine.” The same reason why #OOTDs (Outfit of The Day) have such a cultish following on social media because what you wear today can be obsolete tomorrow.
To further illustrate this, we will take a look at the sellout rates of renowned millennial-focused retailer, Zara and luxury brand, Calvin Klein, from January 1 – March 31 2018.
It’s obvious that Zara as a fast fashion name had a high sellout rate for all three months as compared to Calvin Klein. But does that mean the former’s product turnover is higher too?
Bingo. Replenishment rates were higher for Zara and it should be so since they sold out at a faster rate. Sure enough, Calvin Klein’s turnover was slower and it was expected with such posh clientele. It’s also important to note that we’re not making any comparisons on sellout and replenishment rates for both brands as they are each vastly different in terms of price points offered. We are, however, acknowledging the differences between the two and supporting these points with real-time data.
While fast fashion is all about imitating style and trends seen on runways and replicating them at a much lower price and quality to sell to mass markets, luxury brands such as Calvin Klein that has been serving the baby boomer market all this while are not bothered by speed or quantity and choose to maintain the integrity and uniqueness of their products.
Having said that and bearing in mind the rapidness of stock movement for fast fashion, Zara’s high sellout rate could also be attributed to active discount strategies. We’ll take a closer look in the following segment.
Cracking The Discount Code
Even in today’s growing economy and greater spending power, millennials are more price sensitive and most purchasing decisions are affected by the cost of a product. An Adroit Digital research paper noted this: Of all the factors that influences a millennial’s shopping decisions, a whopping 62% was based on price points, followed by peer recommendations, brand reputation and product quality.
The message is clear. Millennials will spend if they find value in a product but most of the time, they are searching for a good deal. They have the power to compare prices instantly and save on almost anything they purchase. Being cool and trendy no longer burns a hole in their pockets – as long as the price is right with even better discounts, they are in.
As mentioned in the previous segment, we wanted to know if Zara experienced a high sellout due to active discount strategies.
Zara did adopt high discounting practices with majority of their products discounted at 50-54%, as shown in the bar chart above. While Calvin Klein also had discounted products, it paled in comparison with the former brand as their customers were not fazed by high discounts and will purchase at full price, regardless.
Rallying Millennials In Marketing
But times are changing. Luxury brands realised that without the patronage of millennials, they can’t survive as fast fashion brands infiltrate the market on a daily basis. Remember the fact that millennials will spend for a product with value? Even though they are frugal with their spending dollars, they will splurge for a valued buying experience and this is what luxury brands are investing in now.
Gucci is a prime example of adapting to the next generation.
CEO, Marco Bizzarri along with his team have cracked the millennial code. “Millennials tend to have an appetite for new things and they are driven by content, emotions and personal connections. They value self-expression and they value sustainability,” he said.
With this, the Gucci team integrated digital strategies into their marketing, including e-commerce, digital marketing, social media and mobile. Along with enhancing their in-store service, it led to an omnichannel customer experience like never before.
Even Calvin Klein is anxious about being current and released a global ad campaign in November, 2017, featuring influencers and artists like Solange to attract young shoppers. They even embraced digital media fervently by using a hashtag #MYCALVINS as part of their call to action.
Overall, millennials are a tricky market to navigate. If you’re considering tapping into this demographic, you’ll need to respond quickly and understand your younger customers in order to stay ahead. Your product assortment would have to change and price points be altered to compete in the millennial industry. Fast fashion brands are excelling at this.
However, just because they are doesn’t mean you have to as well. If your business goals are about value and exclusivity, you might erode your brand name among your existing non-millennial customers. The best way to work around this is to use data to analyse your current offerings and build a brand that is unique to your target consumers. Millennials don’t call the shots, you do.
Want to know whether you should tap into the millennial market? Drop us an email at email@example.com and we’ll be in touch
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The data above was obtained from Omnilytics, real-time market data platform. The numbers and statistics may vary, as the platform is updated every day. The time period of the information taken was between 1st January, 2018 to 31st March, 2018.