• Jamie Leeper

The impact of millennials on retail facility management

Updated: Mar 25, 2019


In an ever changing world, today we look at Millennials, their shopping habits, and the impact on the retail industry. Some of these trends may shock you and force you to make some serious changes in your current retail facilities management behavior.

What is a Millennial?

Before jumping into this article, let's first take a look at what is actually meant by one of the most frequently used terms in current society. Millennials (also known as Generation Y) according to Wikipedia are "the group of society born between 1982 and 2000 and are the children of the Baby Boomers". This segment of society seems to be mentioned all the time these days, so here we take a look at how Millennials have impacted the retail world.


The struggle faced by brick and mortar retailers

In recent years we have witnessed a massive increase in e-commerce, and with this comes a reduced need for brick and mortar stores. Many companies have consolidated their locations and now have a significantly smaller portfolio than they did 10 years ago. We are seeing mall based stores seriously struggling to stay afloat due to the reduced foot traffic in these shopping centers.

Less mall traffic is impacting brick and mortar retailers

There are several reasons mall traffic is suffering, directly impacting store traffic:

  • Every store in the world is literally in Millennials’ pockets; they can hang out with their friends, sip lattes and shop online – all at the same time. So why spend all the time and effort traveling to, and traipsing through, big, old, largely boring malls with a limited number of cool stores that don’t offer any great experience in the first place?

  • And the Next Gen is driving declining mall traffic. According to a recent study by The Intelligence Group (TIG), a division of Creative Artists Agency, conducted through online polling of 1300 consumers, ages 18-34 years old, 72% of Millennials research and shop their options online before going to a store or the mall.

  • Having thousands of places to shop quickly right at their fingertips, or in a niche boutique conveniently located across the street, Millennials are increasingly pursuing special, exclusive “just-for-me” products — because they can. Given this shift in behavior, why would they want to go to a store selling clothes that appear on the bodies of millions of their peers? And a good majority of those Millennial-targeting stores with ubiquitous brands are in the malls.

Location, location, location

So first off, my advice is to re-think your distribution strategy and store locations. More non-mall, mixed-use neighborhood lifestyle shopping areas, and localized assortments selected according to consumer preferences would be a start.


The shopping habits of millennials are changing retail

In this blog, we delve further into the shopping habits of Millennials, that cohort generally viewed as ranging in age from 15 – 33. We find that while there are indeed many differences from how their parents (the Baby Boomers) shop, there are also surprising similarities.

Among our conclusions:

• Millennials love to shop

• Nearly 80% buy in store after researching online

• Prefer to shop “local”

• Favor “responsible” retailers

• Spend on quality, even if that means buying less

• The experience is a major driver

• Pets rule

• The ultimate experience - travel

85% of Millennials indicate that they either “love to shop” or “enjoy” shopping. Shopping is seen as a form of entertainment and is often done as a group activity. Social networks drive shopping activity whether through ratings from their peers, Facebook posts, Twitter coupons and the like. This is especially prevalent among Millennial Moms who are always looking for bargains and new ideas.

Therefore there is a strong desire to support the retailers in the community and those easily accessed by public transportation.

Multi-use developments are the place to be

This phenomenon leads many Millennials to want to live, work and/or shop in transit oriented multi-use developments. The growth of car share options such as Zipcar and ride share services such as Uber provide transportation options when public transportation is not available. Costco and Zipcar recently teamed up to provide prepaid Zipcar cards at a 20% discount to regular pricing (furthering Costco’s reach to those without cars). Zipcar has cars available at several NYC area Costco locations to make shopping easier for those without their own cars. This combination has proven effective marketing for both Costco and Zipcar. Millennials show a strong propensity to shop at socially responsible retailers, such as Tom’s Shoes, Warby Parker and Whole Foods.

e-commerce vs. Brick and Mortar retail stores

These retailers provide guidance as to ways to attract the Millennial shopper, with one important example being to give back to the community. Millennials grew up with the internet and their mobile devices. They use the internet to become a wiser consumer. 77.1% say they research online before buying in stores. Significantly greater than the 60.5% of all consumers that research online first. 58% of Millennials indicate that they often “showroom” i.e. browse in the store and then buy online.

Information in the palm of your hand

A majority indicated that they use their mobile devices to research and compare products while in a store. Ironically, only 25% of Millennials say they seek the best deal online as compared to 33% of all adults. This seems to further support the idea of the internet being a place to research and stores, particularly local, being a place to buy. 92% of Millennials are influenced by availability of an item and prefer not to wait for an item to be delivered or to come into the store. A vast majority, 89%, say that the economy is impacting their spending. Nevertheless they are prepared to splurge for what they deem special, whether a special meal, electronic gadget or sporting event.

“foodies”

Food is not just for sustenance, it is part of a lifestyle. Nearly half of Millennials describe themselves as “foodies”. Food is part of their personal story; they share their experiences on Instagram, Twitter and other forms of social media. Trying new places is part of the experience. Millennials spend more on alcohol than others and are second only to Gen X on their coffee spend.

Apparel tends to be a big spending item for many Millennials. They would prefer to buy less of what they really like that costs more than to spend less on each item but get more things. Natural fabrics, cotton and wool, are more popular than synthetics. Discounts stores are far less appealing to them than to their parents. The retailer who understands their style will become their “go to” store. 80% of the group indicated that they prefer to shop in the store for clothing rather than online.

They love their pets

Pets and pet supplies are a fast growing category for the Millennials. Pets are replacements for children often times for the Millennials who are delaying starting a family. Designer dogs and rescued animals are the fastest growing types of pets. The Millennial pet owner is spending money on items for their pets that are important to them. The “foodie” tends to purchase gourmet pet food. The gluten free Millennial favors gluten free dog food. Pet clothing and costumes are big sellers to the young pet owner.

They love to travel

A growing budget item for the Millennial is travel. The Millennial that is traveling is spending more per day than other age groups. Travel is more exotic than their parents tended to be. This translates to significant spending on the travel itself as well as travel supplies including luggage, clothing and other accessories. This has led to an increasing number of travel agencies, luggage stores and other retailers in the city neighborhoods where the traveling Millennial lives.

Malls should not be written off. They are gaining favor with Millennials. In past years, Millennials indicated that they preferred to avoid malls; but Christmas 2017 demonstrated a great acceptance of malls for a number of reasons. Malls allow the shopper to take their purchases with them thereby eliminating the possibility of shipping problems. Many malls offer gift wrap services, a time saver. Online retailers are opening brick and mortar stores, often in malls. Retailers opening stores in malls include: Athleta, Piperlime, BaubleBar, Rent the Runway, Boston Proper, Bonobos, Warby Parker, Birchbox, Just Fab and Frank & Oak.

Millennials’ behavior of 24/7 shopping, but not buying, was validated by the TIG study. Results reveal that nearly 50% of those surveyed say they regularly browse for items that they don’t necessarily plan on buying. And while these young consumers are shopping or browsing almost non-stop, on every conceivable electronic device and also in stores, 36% say they are only buying things they feel are necessary (for which only one-third say they will pay full price). This seeming lack of impulse or “wants” buying is somewhat confounding since marketers are bombarding Millennials in-store and on every device all the time with every conceivable type of ‘deal’ one could imagine.

Look but don't touch, or buy...

The study calls this kind of shopping, but not buying, behavior “fauxsumerism”. And those shoppers practicing the non-buy are “NOwners.” The study further amplifies how Millennials’ values and lifestyles demand serious strategic online re-thinking among retailers and brands. Millennials find that browsing and shopping on all of these devices is more like entertainment acquisition, and they are beginning to favor renting, bartering, trading, and sharing (what TIG calls a whole new “sharing economy”), over ownership. And there is another wrinkle: Millennials are disintermediating the whole retail platform by becoming entrepreneurs in their own right. With low barriers to entry, they are setting up shops online and creating more websites. Trust me, the world does not need one more entrepreneurial website. Look at examples from Shark Tank where t-shirts, jewelry, make up etc. have literally been started over night from someone's basement.

Socially responsible behavior is a must

And there’s a growing social justice challenge for brands: 32% of Millennials have stopped buying from companies that have social practices they find unacceptable. If you don’t stand for something, they will make it up for you.

So how does one manage this “double trouble?” First of all, if Millennials view shopping as entertainment, which is more important to them than actually buying, the malls and the brick-and mortar stores must become compelling destinations for entertaining experiences. Hey, The Robin Report has been shouting from the rooftops about the importance of experience for years! If it’s not fun, not meaningful, and not memorable, there really is no reason for consumers to shop there.


Secondly, retailers should analyze merchandising strategies to see how they might participate in a whole new “sharing economy,” trading, bartering, or whatever other behavior the Millennials are finding desirable over traditional transactions. There are many brands already doing this with success: SquareSpace, Uber, and Airbnb, Rent The Runway and RealReal.

And finally, you better get on the “do-good” train or it will leave the station without you.

Total online shopping for this year's Cyber Monday topped $3 billion, a record amount and an impressive 21 percent increase from the previous year. Combined with the news that Alibaba hauled in more than $14 billion in November for Single’s Day, entrepreneurs could (and should) conclude that the traditional retail shopping experience may be on its final legs.


I have opined on many occasions that retail is dead or dying. A recent study, however, from Blackhawk Engagement Solutions, an international incentives and engagement company, may offer a ray of hope to small retailers. The study, a compilation of two distinct studies, examines the means, the devices and the influences along millennials' paths to purchase. The first study was conducted in April 2015 and surveyed more than 500 millennials, focusing on specific shopping behaviors. The second study was conducted in October 2015 and included an additional 500 millennials and their mobile app and gift card preferences. The results demonstrated that millennial shoppers are plugged into mobile and social shopping and are completely disrupting historically traditional shopping patterns. For me personally, as a 34 year old, I strongly dislike going to the mall or store where there are kids running everywhere, and pandemonium exists from start to finish. This is made even more challenging by the fact that I have 3 young sons aged 6 months, 2 and 4, and getting them out the door is in itself a monumental challenge. I prefer to shop from the comfort of my home knowing that I can read reviews, find the best price, easily locate coupon codes, text to receive 10% off of my order, and can also have the luxury of the goods being delivered to my door step, free of charge with programs such as Amazon Prime.

New technologies such as digital lockers are also making it easier and safer to purchase your goods online. This obviously has a huge negative impact on facility management companies who are experiencing a continual decline in business.


Another negative of heading out to the mall or a store is that there are those extra charges that you don't think about, that quickly add up. $4 for parking, $2 for a hamburger, $3 for ice cream, $2 for a soda, the list goes on. These are not factors that need to be considered when shopping online. I also like the convenience of being able to shop when it works for my schedule, which with a 6 month old, literally can be at any time of the day.

Millennials are leading a change in purchase trends, said Rodney Mason, global vice president of marketing at Blackhawk Engagement Solutions. As such, it's incredibly important for retailers and retail marketers to understand how to appeal to this demographic. Millennials are savvy shoppers and many have come of age in a post-recession era, and our our research shows that this group routinely comparison shops on mobile to get the best value and shopping experience. The market, however, has not yet capitalized on those habits.


Contact Royal Services today to see how our technology solutions can help make your business more appealing to the fastest growing segment of our population.

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