Millennials Turn to Money-Saving Shopping Behaviors

As millennials age (now spanning ages 25-40), their core values have evolved, with convenience, personalization and sustainability weighing more on their minds. In a report from GWI, research shows a 16% increase in the last two years in millennials wanting brands to be inclusive — and they’re more loyal to companies who prioritize social responsibility as well. In fact, 23% of millennials are more likely to say the brands they buy reflect their values, and they’re willing to spend extra to do so, research shows.

Based on current trends, inflation may cause millennials’ purchase behavior to actually be more practicality-minded and less values-driven.

“To take the environment as an example, our data shows that year-on-year the number who advocate based on behalf of the environment has dropped 18%, and the number who support environmental causes has dropped 9%,” Chris Beer, GWI’s data journalist, told Retail Leader Pro. “And we’re seeing more millennials saying that things like public service, supporting good causes and supporting the U.S. are less important to them — all signs they’re more focused on their own personal security. We see signs of this in their purchase behavior as well, with consumers in this age group sacrificing those value-based premiums; for example, the number who don’t buy any organic products is up 16%.” 

Millennials’ focus currently is on money-saving. Where millennials do buy in accordance with their values, increasingly a cost-cutting element is associated with it, such as the number buying seasonal produce, which is up 12% year-on-year, Beer said.

Experience with Economic Uncertainty

In early 2021, financial optimism and daringness peaked in the U.S. Now that life is getting more expensive, this trend has reversed. In the last year, consumer confidence among millennials has dropped 27%, GWI reports.

While millennials will be re-evaluating their purchase priorities and cutting back, in March 2022, 28% of millennials said they were spending more money compared to two years ago, which is 10 points higher than the national average. Millennials also are less worried about tax increases and more likely to think their current financial situation is secure than previous generations, GWI said, which is surprising given they have less financial reserves. 

Still, millennials have faced two recessions, as well as high student debt and living costs. So, economic uncertainty is familiar to them and they define financial security differently than their parents – with their timeline for buying a house and retiring up in the air. 

As a result, compared to the U.S. average, millennials are 41% more likely to track their spending, and 21% more likely to say they save a lot throughout the year for special occasions and holidays. As a group, they plan ahead and scrutinize their outgoings.

Another reason they’re less concerned about their future financial security is because they have more confidence in their ability to earn and are focused on doing something meaningful with their money. They’re more likely to look for advice when making decisions, to have invested in crypto, and to say they’d switch banks upon finding better deals.

Cultural Changes

This year, inflation and the state of the economy will have a big impact on how millennials shop.

“Millennial purchase behavior will change in two ways,” Beer explained. “First is the more pragmatic side, with consumers looking for cheaper alternatives and a better deal. We’re seeing strong year-on-year trends in millennials buying more own-label products, in categories ranging from ice cream (up 35%) to household cleaning products (up 19%). Millennials are likewise becoming less brand loyal.”

Price has naturally become a more important factor in millennials’ purchase behavior. Year-on-year it’s up 12% as an influence in buying household products, up 11% for skincare, and up 9% for devices and tech, GWI reported.

“It’s not just price though,” Beer said. “Other aspects of marketing will be important in communicating a sense of good value.”

For example, special offers (up 22%) and product size (up 15%) are the fastest-growing influencers for purchases of household products, Beer said. 

The second important change is cultural. 

“Similar to what we saw in the Great Recession of 2008-2009, a tight economy makes thrift a virtue, and consumers are taking a more modest approach,” Beer said. “They’re becoming less interested in splashing out on expensive goods and are favoring a ‘make do and mend’ mentality.” 

The fastest-growing character traits among millennials are selflessness (up 16%), and dutifulness (up 11%), while the fastest-declining ones are being daring (down 10%) and adventurous (down 7%).

“This has an impact on what they want from brands and how they should communicate,” Beer said. “Novelty and status will count for less, with a 14% drop in the number who are influenced by what’s cool or trendy. Instead, they’re looking for timeless styles, with the number who want traditional fashion styles up 18%.” 

Beer also expects a move toward more homely pleasures. “The personal interests falling most out of favor year-on-year among millennials include opera/ballet and wine, while the fastest-growing list includes things like astrology, baking and cooking,” he said. 

The GWI report also shows millennials will tap into their wallets to get what they want, impacting the kind of content and products they’re seeking:

• 47% say they strive for good work/life balance, and 33% want encouragement to switch off outside of work.
• Raising a family ranked fifth among millennials' priorities; this is a sharp uptick compared to it ranking 11th among their priorities in Q1 2022.
• Millennial parents are also more likely to use TikTok and Pinterest than their non-parent counterparts, with many using these sites for parenting and product inspiration. Similarly, there’s been a 22% jump in millennials watching children’s TV since 2020.

Retailers need to remember that millennials stand out from previous generations in various ways; they can’t use the same tactics and expect results, GWI says. For example, millennials are more diverse than previous generations. This means they’re 44% more likely to prefer brands that feature people who look like them on TV, and companies will benefit from ensuring this relatively big group of minorities have high-quality representation across all types of media.

A Tech-Driven Cohort

In general, consumers’ heavier reliance on tech also has evolved retail, and millennials are driving the next wave of online shopping. For example, 31% of U.S. millennials say their online shopping behavior has risen in the last year, and 30% expect it to increase in the future. 

While discounts and special offers have declined in importance among millennials, the research shows more want same-day delivery, live-chat functions and personalized recommendations. A large number also continue to wait for online retail events to make major purchases, but that number has dropped since 2020. 

“Helped by the pandemic, technology has made speed even more important to millennial shopping behaviors,” Beer said. “The fastest-growing online purchase influencers are next-day delivery (up 8%) and repeat order functionality (up 7%).” 

Interest in buy now, pay later (BNPL) services is lower for millennials (42%) than Gen Z (50%). Still, millennials are 48% more likely than previous generations to use BNPL services weekly. Millennials also are most likely to use BNPL for the convenience, while Gen Z (and all other generations) prefer how it lets them spread out payments. 

Common mobile shopping behaviors that have all increased for millennials since 2020:

• 49% — Do most/all of their online shopping via mobile (up 23%).
• 31% — Purchase products online weekly (up 17%). 
• 30% — Use Instagram Shopping Bag/ Facebook Marketplace (up 11%).
• 39% — Visit e-commerce sites/apps weekly (up 9%).
• 21% — Say they often make impulse purchases (up 7%).

Impulse purchasing behaviors climbing can be linked to the growth of social commerce, GWI reports. For example, millennials using TikTok have risen 57% since 2020. Almost half of U.S. millennials use the app, with a third logging on daily. Retailers targeting millennials could benefit from getting involved, especially as this generation of TikTok users are the most likely to participate in hashtag challenges initiated by brands, GWI researchers said. 

“There’s another aspect of technology in shopping, which is social media rivaling search engines as a source of information,” Beer said.

Beer also expects continued growth in social media as a source of inspiration.

“We've already seen the number who use social media for that reason rise 10% year-on-year,” he said. “As users look for inspiration, they appear to be less interested in looking for information, as those researching products before buying has declined at the same time. Thanks to the growth of TikTok, algorithmic feeds and social commerce in general, millennials are now more comfortable making impulse purchases based on what they see in their Reels or TikToks – largely spearheaded by Gen Z.”

Gen Z are often the first audience that come to mind when thinking about the metaverse platform due to this demographic engaging more with platforms such as Roblox. But GWI’s Sports research shows that millennials are the most likely to purchase digital collectibles like NFTs. As well as being the biggest group of luxury shoppers, more millennials are playing Minecraft year-over-year, and they’re the most likely to want brands to be cutting-edge and exclusive. These virtual spaces hold a lot of promise for both millennials and the brands that market to them, GWI researchers said.