Retailers should be terrified of millennials and Gen Z
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Millennials should terrify retailers.
They want different things than their parents did.
"Millennials are considered to be risk averse, so they tend to be savers rather than investors in the stock market, because they've seen their parents or whomever go through the 2000s," Ernst & Young's Global Sector Leader for Consumer Products and Retail, Kristina Rogers, said to Business Insider.
She said they'll spend on things that give them "personal value," like a $5 coffee from Starbucks or a great vacation — things their parents might not have spent on.
"What I don't see them spending on is brand for brand's sake. It’s very personalized what brings them value. That is very difficult for these companies to sort through. What is value for these consumers? Because they’re willing to spend, but not ... necessarily the way in which their parents spent," she said.
And more concerning is the generation behind them — Generation Z — which Rogers' colleague Marcie Merriman has called "millennials on steroids." They are even more fickle than millennials.
"It’s like a massive tsunami," she said. "The speed with which that goes through their social media, which is generally where they get so much of their information, is phenomenal. The speed with which change can occur — whereas it might have taken in the past several years for a brand to lose its luster ... that happens on a dime now. I think that's why you do see some of these retailers that were very popular with teens and probably this generation two years ago are filing bankruptcy."
(Though Rogers couldn't comment specifically on brands, it's no secret that once-favored teen brands like Aeropostale and PacSun have fallen by the wayside and filed for Chapter 11 bankruptcy this year.)
Retailers scratching their heads.
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It's an important question to ask, because companies that can't adapt are scrambling, and their futures could be potentially dire.
These "traditional companies" practices are "becoming obsolete," Rogers said, "and it's because of their heritage and established practice, which at one point was possibly an advantage, it is becoming baggage."
"Those companies that are unwilling to change, that are really sticking to the legacy of things they've done in the past ... I think they’ll just go away."
After all, she said that only about 20% of companies that she spoke to recently believe they have the in-house staff that can deal with what she called the current "disruption" in the retail and consumer world.
The trick, then, would be to hire top notch talent, by looking at the sort of people that might go to Silicon Valley. One way to attract that sort of talent is to have corporate headquarters in urban areas, she said.
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