Key Takeaway
Traditional department stores and retailers are looking at an increasingly uphill battle: fight to stay relevant or face extinction as millennial shopping behavior continues to become more experience-driven and hold higher expectations.
If there’s one major way U.S. millennials differ from their coupon-wielding parents it’s that they’re far less likely to walk into retailers holding cutouts from yesterday’s flyer or to wait for the next cycle to purchase that dress they tried on ‘when it goes on sale’. They want things they’ll like, now – and they want to enjoy every part of the experience. For some, that includes avoiding the hassle of sifting through way too many options that don’t meet their needs.
Despite what some may think, today’s retail battle isn’t about online vs brick and mortar purchases – in fact, according to research by Accenture, millennials are just as interested in brick and mortar stores as their parents’ generation, and even more so in off-price shopping, evidenced by the ever-thriving TJX and Ross Stores.
What differs is millennials’ demand for a “seamless experience…being able to transition effortlessly from smartphone to personal computer to physical store in their quest for the best products and services.” Where traditional retailers appear to be falling short is in meeting their convenience, flexibility and personalization experience expectations.
Millennial shopping habits, by the numbers:
Big department stores are struggling hard to stay relevant, move product and remain profitable amid the endless new threats the digital era has brought on – from get-it-now Amazon with a seamless order and return process and predictive personal shopping algorithms, to fast fashion producers like Zara who have minimized the time gap from runway to mass retail, even to strictly e-tail players like Asos that can offer a wide selection, turnover product fast and offer one of the most automated and seamless online shopping experiences available.
Big brands like Sears and J.C. Penney are showing serious signs of fatigue, while Toys R Us recently shook the retail world by filing for bankruptcy. Stores like Macy’s and Nordstrom are also continuing to close doors, despite reports that they remain the most popular retailers. Today, Nordstrom is engaged in an ominous-looking effort to go private, while experimenting with new, localized shops that are devoid of merchandise andd 100% experience-based.
These brands need to look out at what consumers are saying and how behavior has changed – as well as insights like advancements in technology and online retail, slowed growth of competitors, an extreme emphasis on personalized experiences and new ways of shopping – to inform their next move, if they hope to remain alive in coming years.
Analyzing share of voice among major retail brands in 2017
Amazon remains most popular online destination for millennials
Out of the top apparel retailers, only two – Nordstrom and Macy’s – are traditional department stores. Amazon continues to top this list by a long shot, indicating that the dominance of one-click, fast delivery, online shopping is here to stay.
E-commerce innovators respond to changing consumer behavior
Note as well the growing market share of Stitch Fix, a subscription-based mail-order clothing service that, according to a NY Times feature, defies traditional logic by “offer[ing] customers little choice in what garments they receive, and [shying] away from discounts for brand name dresses, pants and accessories.” This is retail’s answer to the growing demand for an easier, more personalized shopping experience.
Unlike that of traditional online retailers, the Stitch Fix model does the shopping for you, using precise algorithms to predict which styles you’ll like and eliminating one of retail’s fastest growing threats: choice fatigue. As it turns out, more options aren’t always better.
Today’s shoppers are looking for more from their retailers in addition to low prices, and are turning to places like Alexa, who now offers shopping advice, and recommendations they know they can trust from machine-learning pros like Amazon.
Fashion is becoming increasingly more disposable and investments in high-cost wardrobe pieces more disparate, indicated by a focus on lower-cost alternatives like Neiman Marcus Last Call and “borrow or buy” models like Rent the Runway. It appears it was only a matter of time before someone worked out the profit margin behind the mail-order model in order to meet the needs of the ever-demanding millennial shopper.
Can yesterday’s retail giants keep up with the ever-changing demands of the next generation? Only if they continue to evolve and keep looking out.
