Retailers should stop wasting so much time trying to win over millennials because they’re often broke. Instead, they should target older shoppers with more money to spend.
That’s a key finding from a report by Forrester Research Inc. called “The Future of Shopping,” which looked at income and demographic changes over the past 40 years. The bulk of consumer spending has shifted from those younger than 45, who now make up a smaller percentage of the population and are strapped with student loans, to those 45 and older, who have equity in their homes and bigger incomes.
The recommendation runs counter to retailers’ frenzied push to court millennials, the generation born after 1980, with new gadgets and fashion trends.
“There’s this obsession with millennials,” said Sucharita Mulpuru, the analyst who wrote the report. “The truth is millennials aren’t spending any money with anybody because they don’t have any.”
Retailers also need to stay lean if they want to be competitive in coming years, Forrester found. The chains that are able to cut costs without compromising customer service will win, according to the report.
One example: The supermarket chain, Trader Joe’s Co., based in South Pasadena, California, has fewer stores but better- trained personnel. That helps it get higher sales volume from each location while containing costs. Home Depot Inc. and Nordstrom Inc. also were praised for using self-checkout tools to reduce cashier expenses, freeing up employees to serve customers and stock shelves.
Equipment that helps stores stay open longer without additional costs, including self-checkout kiosks, will help retailers gain an edge, Forrester found. Those advances may ultimately make a bigger difference than other technology, such as beacons that use smartphones to detect a customer’s proximity to a product and send them a coupon, Mulpuru said.
Traditional brick-and-mortar retailers that rely on new stores for sales growth will have a tougher time. They’ll face more competition from e-commerce companies such as Amazon.com Inc., household-goods seller Wayfair Inc. and discount retailer Overstock.com Inc., according to the report. Chains like Best Buy Co. and Toys “R” Us Inc., meanwhile, may have to close additional stores until they can make more fundamental business changes, Forrester said.