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NEW YORK – Millennials are expected to outspend the Baby Boomer generation by 2017, but retailers continue to underestimate the purchasing power of these consumers, according to a new research study by Berglass + Associates and Women's Wear Daily.
What Happens When Millennials Get the Wallet found that retailers don't fully understand the needs of Millennials and are employing business strategies and tactics that don't apply to this customer.
"Millennials have different motivations, attitudes and behaviors than previous generations, and retailers need to adjust their business strategies accordingly in order to thrive," said Les Berglass, CEO of Berglass + Associates. "For the first time in several decades, we will see a new member of the C-suite, who will be responsible for driving two-way communication between the Millennial customer and the brand and for developing initiatives that will deliver long-term growth."
The online survey was conducted in September and queried 121 U.S. business leaders in all sectors of retail (including department stores, specialty stores, home shopping and direct-mail catalogs) primarily in the apparel, accessories, footwear and beauty sectors. Key findings include:
- Approximately half of respondents are unaware that Millennials are expected to outspend Baby Boomers annually within five years.
- Millennials rely most on their friends to make buying decisions, but more than a quarter of respondents mistakenly believe that online advertising is the greatest influence on Millennials' purchasing activity.
- More than 30 percent of the executives surveyed are CEOs or presidents who plan to significantly increase their digital leadership over the next three years.
- Sixty percent of respondents are not conducting any research or analysis of the Millennial customer.
- And only 36 percent of respondents from companies with both physical stores and e-commerce sites offer a seamless customer experience, yet Millennials expect the channels to be integrated.