By: Julie Companey, Director, Client Marketing - Grocery, Drug, Mass, Valassis
Published Tuesday, Mar 7, 2017
For years, many companies – including grocers – have focused their marketing on the baby boomer (boomer) population due to the size (74.9 million) and impact of this group on businesses. But as the boomer population ages and 10,000 reach retirement age each day, marketers have shifted their focus to younger generations, primarily millennials (also referred to as Gen Y). This is rightly so as the millennial generation is similar in size to boomers at 75.4 million and represents more than $200 billion in annual buying power.¹
Though companies want to reach millennials, many find connecting with this group confusing and difficult. Some traditional methods of advertising have proven ineffective at capturing their attention. This is partly due to the group’s wide age range – in 2017 millennials will consist of those age 20-36. Younger millennials are finishing college, starting careers and realizing how their school debt is impacting their monthly budgets, while those on the older end of the spectrum are getting married and starting families. Consider this: the average age for getting married in the U.S. is 28,² so it’s not surprising that millennials are having kids later in life as well. Among the older half of millennials, those age 25-34, there are now 10.8 million households with children.3
Compare this to the boomer generation: every year, more boomers (age 53-67 in 2017) are becoming empty nesters. But, some of their kids are moving back home post-college, searching for their first job, or saving to start paying down their debt.
The shifts in behavior and life stage in these two large generational groups have led to a significant drop in the percent of households with kids under age 18.3 In fact, in 2016, 42.3 percent of U.S. households had children under the age of 18, down from 44.6 percent in 2010.4
And, don’t forget the middle child, Generation X (Gen X), the smallest generation with 46 million,3 born between 1964 and 1980 and often referred to as the bridge between millennials and boomers. Gen Xers are now growing their families, juggling child care, own a home and are reaching the peak of their careers.
So, why are these insights important and how do they impact the grocery business?
Households with kids under age 18 in the home, spend a lot on clothes, electronics and yes – groceries! And, younger, growing families also spend a lot – on everything – baby food and equipment, toys, sporting goods, apparel, school supplies, groceries… the list goes on.
Note the difference in grocery spend, with and without kids in the home, by generation. As you can see, grocery spend is directly related to household size.
Source: Prosper Insights Aug 2016 Average Monthly Grocery Spend HHs with Kids and Without Kids by Age Range
In addition to the challenge that kids leaving home poses to grocers, new buying options are launched daily by both startups and traditional grocers, meaning lost foot traffic in traditional supermarkets. Click and collect, Instacart (deliver to home), Uber Fresh, Amazon Fresh, curbside pickup, Blue Apron, Hello Fresh, Boxed.com and Graze.com are just a few of the options available. Shoppers are trying these offerings and find them appealing – especially younger generations. And of course moms love the ease of click and collect or delivery, which eliminates the need to juggle the kids, shopping list and groceries to/from the car.
Even with all these new options available and despite the aforementioned generational differences, consumers of all ages continue to take the time to search for deals both in print and online. Helping grocery shoppers determine the brands they buy and stores they shop, coupons and ad inserts rank highly as preferred media. Direct mail also continues to resonate because it’s more personalized and often includes savings or coupons. With this in mind, marketers must not only be flexible in their approach based on the generation they are pursuing, they must tap into the right media to influence consumers with children, when they’re planning their grocery trip and while they’re buying groceries.
Source: Prosper Insights, Media Behaviors & Influence™ (MBI) Study, Jan. 2016 (Top five media influences)
Not only are consumers looking for coupons prior to their shopping trips, they’re also searching for them while they shop. In fact, once in store, 64 percent of Gen Y parents use their smartphone while shopping. The top reason for this? To find coupons and compare prices (40 percent).6
So, how can retailers attract highly desirable millennial shoppers to their stores? There is quite an assortment of media that influences grocery trips and purchases, both in store and online. Marketers are tempted to implement a primarily digital-driven strategy to reach millennials, but this approach would likely result in lost opportunities, since print media also ranks high – for Gen X and millennial parents in particular. In fact, Gen X parents tend to utilize more traditional media like their boomer parents, making an integrated approach the most likely strategy for success.
In the end, marketing to different generations and life stages requires a nuanced approach for each audience a retailer wishes to attract and retain – even for something as routine as grocery shopping.
3Jeff Fromm, EVP, Barkley and co-author of the just released book Marketing to Millennials: Reach the Largest and Most Influential Generation of Consumers Ever
5 Prosper Insights Aug 2016 Average Monthly Grocery Spend HHs with Kids and Without Kids by Age Range
6 Retale Millennial Grocery Report - 1,000 U.S. millennials were polled between May 2-6, 2016.