Retailers wrong ‘to woo Millennials over older generations’

Retailers are losing out on valuable sales from wealthy Baby Boomers due to their relentless focus on wooing Millennial shoppers, according to new research.

Research from Hitachi Consulting found that 74 per cent of physical stores are targeting consumers in the 19-38 year-old age bracket in order to maximise sales from mobile and digital, along with a view to securing the loyalty of the next generation of shoppers.

But despite the apparent wisdom of this strategy, the study highlighted a significant discrepancy between the average national wage of a Millennial - £23,700 - compared to the £31,146 average salary of shoppers aged between 39 and 60, commonly referred to as Generation X or the post-war Baby Boomers.

Pierson Broome, senior retail supply manager at Hitachi, suggested that retailers targeting Millennials to the exclusion of other shoppers could be making a “grave mistake”.

“Clearly, Millennials are digitally savvy and their earning potential may be higher than that of older shoppers, but their actual earnings are significantly lower,” he said.

In fact, the divide in target market is so stark that just 14 per cent of retailers surveyed said their operations are specifically optimised for those over the age of 39. Broome warned retailers against overlooking the fact that those in the 40-49 age group have the highest average wages in the country.

The study also found a difference between the way large chain stores and smaller independent retailers approach these age groups, with 89 per cent of independent retailers saying they were targeting Gen Z and Millennials, compared to 73 per cent of chain stores.

Only eight per cent of chain stores said their strategy was to target all age groups equally, compared to three per cent of independents.

In fact, the desire to appeal to digitally-savvy Millennials is driving retailers to invest heavily in new technologies, with more than a quarter saying the most important feature of their flagship store of the future will be augmented or virtual reality or drones.

By contrast, just 14 per cent said they were focussed on more mainstream technologies such as till-free shopping and improved digital signage (13 per cent).

Broome commented: “Retailers could be making a mistake by alienating older, relatively loyal shoppers who may be empty nesters benefiting from high property values and in some cases final salary pensions.

“Retailers focusing on novelty rather than innovation may succeed in grabbing attention for a season or two, but if done in isolation, it becomes a race to the bottom.”

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