ike. Millennials like me grew up listening to stories about the ‘good old days’; We were fed a diet of tantalising soundbites, “Study hard and you will land a decent paying job” and, “Save up and you will be able to buy a three-bedroom house in a nice suburb.” And we listened. Boomers were born of an era that was hard-working, goal focused, full of grit and resourceful. A picture of hard-earned success, boomers were the ultimate source of wisdom. But things didn’t turn out to be that simple. Reality hit hard, and the Millennial future wasn’t the ‘dream life’ they were pitched. In news that will come as absolutely no surprise to their parents, Millennials, who now comprise more than 5.4 million people in Australia, have become one of the most debt-laden generations of our times. Mind the generation gap The statistics are sobering. In 1970, boomers could buy a house for five times the average household income. Fast forward to the lives of Gen X and a house cost six times their income. And for Millennials, houses cost eight times the average household income, AlphaBeta data shows. That increases to 10.4 times an averagefull-time salary for those living in Sydney, according to CoreLogic. Home ownership at age 40, let alone at 30 or 20, seems like a far-fetched fantasy. Millennials might as well be known as ‘gen-flation’, a generation besieged by the double-whammy of debt plus inflation. Their households are overleveraged with debt that is triple the size of their incomes. This is six times the debt levels of those aged over 65. The latest lending indicators from the Australian Bureau of Statistics (ABS) show that the average mortgage size was about $580K in 2022. That’s an increase of 20 per cent since the pandemic started. Only half of all Millennials own their own home in 2023. This is compared with 62 per cent of Gen X and two-thirds of Baby Boomers at the same life stage. Finder data shows that one in four Millennials now choose to live at home after they hit their 30s. And the debt burden isn’t getting any better with the cost-of-living crisis. An optimist might argue to the contrary – that Millennials are better off, since they earn more money. That’s true, true. But whilst the median weekly pay cheque for Millennials ($1527), is higher than that of Gen X ($930) and Boomers ($520) at the same stage in life, for Millennials, it doesn’t stretch anywhere near as far. And it’s not just because of their love for smashed avo’ on toast with a warm, almond chai latte – although even that’s becoming an expensive habit thanks to inflation. In fact, the latest Finder data has found that 60 per cent of Millennials are now experiencing financial stress, compared with 45 per cent of Gen X and 29 per cent of Baby Boomers, amidst the fastest rising prices in 30 years. Millennials are reinventing what it means to go through a midlife crisis. Indebted, but determined With its cost-of-living woes, this generation has learned to be savvy. Living through multiple financial crises, recessions and now inflationary conditions has shaped how they manage their money. They are characterised by their resilience, their cautious approach to discretionary spending, and their confidence in how they are adjusting their savings habits. Millennials are 30 per cent more likely to save regularly than their parents, and more than 80 per cent of Millennials are budgeting. They have $27,000 in cash savings, on average, compared with Boomers’ $51,000. New data indicates that they are also building up their emergency savings and putting in place a budget buffer, along with ‘cash stuffing’ – a practice of allocating cash weekly to specific spending categories to avoid increased debt. In news that won’t please the retail sector, however, Millennials are also making some tough cuts. The latest CommBank IQ data shows that people under 35 they have decreased their discretionary spending on apparel by 8.4 per cent and on retail services by 0.6 per cent – a trend that is likely to endure as the cash crisis continues. Retailers will need to tune in to these shifting spending patterns in the short term if they want to capture a share of Millennials’ tightening wallets. What Millennials (really really) want Millennials are coming into the prime-earning years of their lives. This presents a huge opportunity for retailers to capitalise on their spending power. Afterpay research shows that Millennial spending accounts for 35 per cent of all retail spend in Australia. This is set to increase to 38 per cent by 2030. Millennials are already the biggest spenders, in terms of generations, across both bricks-and-mortar and online. On average, they spend $308 a week online, compared with Boomers, who spend a low $54 a week online. And the latest global research from ESW shows that 73 per cent of Millennial shoppers plan to spend the same or more online this year, making this generation the leader in global e-commerce spending. So how can retailers capitalise on the Millennial market and what drives this generation’s interests? Sustainability, but at a price Macro trends pull and push consumers when it comes to how they spend their hard-earned money. Trends such as ‘eco’ have been prioritised in the past few years, with everyone hopping on the enviro-brand wagon. Millennials, unlike their predecessors, have a laser-like focus on sustainability. Big Commerce, in conjunction with Google, reports that 33 per cent of Millennials and 41 per cent of GenZ indicate that sustainability is ‘very important’, while 54 per cent and 51 per cent believe it is ‘somewhat important’ in their purchase decision-making. These consumers are looking for brand experiences and attributes that are centred around sustainability. Searches for the terms “sustainable packaging” and “sustainable products” have increased markedly amongst this generation in the past five years, and brands need to build this into their narrative to target this younger, values-oriented demographic. But a new consumer dilemma is looming. Millennials’ desire to be green is in direct conflict with their need to save money amid the cost-of-living crisis. Sustainability, it seems, has a prioritisation problem. ‘Green’, is not the nice, catch-all, idealistic concept it once appeared to be for brands. Instead, savvy brands attempting to target the equally savvy Millennial market might need to head for ‘green but lean’. Most consumers, when asked directly, will say they want to shop sustainably. And, why wouldn’t they? It makes us feel moral, ethical and good. But there’s a difference between what is good for the world and what’s good for our wallet when push comes to shove. With the cost-of-living crisis deepening, consumers will buy sustainably only if it doesn’t break the bank. GWI research found that 85 per cent of people recycle, 61 per cent reduce their use of plastic packaging, but only a fifth of consumers are buying sustainable clothing – simply because it is perceived (rightly or wrongly) as an additional cost. Brands looking to capitalise on the sustainability story can beef up their green credentials (and integrity and depth) to deliver better perceived value to consumers; however, brands shouldn’t blindly follow the green herd if it doesn’t fit the brand. Millennial cynicism towards greenwashing is at a max, and their BS detectors are finely tuned. Experience-seekers, in-store and online Despite the cash crunch, it’s critical for retailers to remember that value during the cost-of-living crisis isn’t weighed up in dollars alone. It’s also weighed in experience. Not all strategies to target cash-tight Millennials mean cutting prices. This generation is searching for engagement, entertainment and an enhanced retail experience. That means an interactive relationship with their retail brands, as well as multiple touchpoints through which to connect with the brand across both digital and physical store environments – an experience (r)evolution. Millennials have a preference for shopping online, sure, but that doesn’t mean the in-store experience is irrelevant. In fact, it’s far from it – physical stores account for a meaningful share of Millennial spending. A Vicinity Centres report found that three in five consumers want in-store retail therapy. Melding shopper journey information online with in-store visitation data will give retailers better consumer visibility so they can anticipate shoppers’ needs and delight them at each touchpoint, rather than just meet their basic expectations. Coupling this with tech-activation in-store will enhance the CX. Keep in mind, however, that Millennials are switched on to deals, with 82 per cent of them using apps to seek out personalised deals while in-store and online and 57 per cent of them doing price comparisons on their mobile devices while in-store. The upshot? An amped up CX should never come at the expense of too-good-to-refuse offers. Millennials are ahead of the curve when it comes to willingness to try emerging technologies. For example, Bain found that 37 per cent of Millennials have used virtual try-on tech, compared with only 28 per cent of Gen Z. And Yahoo! reports that 59 per cent of Millennial and Gen Z Aussies are eager to deep dive into metaverse e-commerce to elevate their everyday experiences. Other innovations, such as consumer-facing technology via digital check-in points in-store can be employed to add value. Greater tech integration into the store servicescape can help tech-savvy Millennials search inventory, request assistance remotely and check deal information. Even integrating digital ads into the in-store shopper experience supports targeting of this segment. Where to from here, for retail? The long and the short of it is that, for Millennials and non-Millennials alike, tapping into consumers’ search for joy throughout the shopping journey is a strategy that works for every brand when it comes to finding ways to add perceived value. Perceptions of value and an engaging purchase journey are box-tickers for all consumers. Spending isn’t just a practical activity and a banal means to an end, it’s an enriching, immersive and emotional journey, too. This story first appeared in the August 2023 issue of the Inside Retail Australia Magazine.