KPMG shares tips on how companies can capture larger market share through the engagement of Millennial in its 2016 Global Consumers Executive Top of Mind Survey. This annual survey of 400 of the worlds largest consumer retailers and manufacturers looks at consumer company executives Top of Mind priorities and challenges over the next two years.
Millennials are spending inordinate amounts on experience, explains Willy Kruh, Global Chair for Consumer Markets at KPMG International. For example, depending on what country youre in, more than 75 to 85 percent of new mothers are Millennials. So what does that mean for your consumer strategy going forward? And how do you tap into their trust of friends and social media over advertising?
Millennial needs vary by country and age level, but the common thread is their value of experience. Restaurant dollars have gone up, while grocery dollars have gone down, because folks want to go out and have a wonderful meal. Millennials of course are also heavy users of technology and value seekers, says Kruh. But the key way to engage Millennials is by providing a compelling experience. There is a pub in Toronto where the t-shirts of the waiters and waitresses say; Price, quality, service pick any two. But in todays world, consumers, particularly Millennials, want all three.
To respond to the millennial challenge, Kruh recommends becoming laser focused on the customer. To be really customer centric, companies need to know every nuance of a customers needs and behaviors. That means having the right data, the right tools, the right strategy, and the right people. Kruh recognizes that this may require major change, but he believes that in such a fast-moving environment it is important to take hockey player Wayne Gretzkys advice and skate to where the puck is going to be, not where its been.
“With Millennials now accounting for two billion of the worlds 7.4 billion population, this segment is fast emerging as the number one source of consumer spending.”
At the same time, Millennials present challenges for consumer companies. Surveyed executives cited a range of hurdles when selling to this generation of young adults. At the top of their list of challenges are: lower level of disposable income (30 percent), aversion to traditional advertising (26 percent), influence by online reviews and endorsements (25 percent) and their tendency to browse but not buy (24 percent).
Whether they pose more of an opportunity or a challenge, Millennials are a driving force impacting consumer-oriented companies. Colleen Drummond, Head of the KPMG Innovation Lab in the US, believes that Millennials are key influencers of consumer market trends. Millennials tend to be early adopters, says Drummond.
Their influence spreads virally and their behaviors transfer between generations very rapidly. Uber is a great example. Many Boomers heard about if from their children and then started to use it. Their behavioral change happened in days or weeks, not months or years. Our survey revealed that companies are using an arsenal of techniques to target Millennials. The most common approaches include adding value-priced products (45 percent), providing more product information (38 percent), increasing investment in mobile channels and apps (34 percent) and creating an integrated omni-channel platform (33 percent).
In particular, fast-growing companies, those that report at least 10 percent revenue growth last year, have Millennials in their cross hairs. More than half (51 percent) of these companies said they would be adding value-priced products, 40 percent are creating integrated omni-channel and e-commerce platforms, and 39 percent are building customer experiences that specifically target Millennials. Of all the currents of change running through the consumer marketplace, Millennials are the greatest disruptor, says Willy
Kruh Boomers also spend heavily, but Millennials have growing influence and the extraordinary ability to shape consumer behavior. If the majority of Millennials do not trust traditional advertising, asks Kruh, what does that mean for your marketing strategy? He believes that many companies have yet to fully adjust to the rising influence of Millennials. Millennial habits, says Kruh, are turning business conventions on their heads.
Developing a digital-first mindset
From the web to smartphones to technology-enabled stores, digital channels will replace bricks-andmortar as the center of gravity for a customers shopping experience. Digital transformation will enable consumer companies to rethink their strategies, operations and business models and, in the process, generate new levels of growth, efficiency, productivity and competitiveness.
“Companies should consider what their business would look like if they were born digital.”
KPMGs Jeanne Johnson suggests that in order to understand how to play in a digital market, companies should consider what their business would look like if they were born digital. Executives need to think about running their businesses with a digital mindset. That doesnt mean that there isnt a role for physical stores but they need to relate to a digital conception of the business and its operations. One challenge for companies is reconciling the need to be digitalfirst with customer demand for better in-store experiences. On the one hand that might lead you to say, No, what customers really care about is being in the store, not digital, explains Johnson.
But what companies need to understand is that your in-store experience should be as digitally relevant as sitting at home in front of your computer or browsing on your phone. To engage the next generation of tech-savvy customers, most consumer companies recognize the need to extend digital transformation throughout their businesses. Indeed, slightly over 30 percent of the executives surveyed said driving digital transformation would be their top business priority in two years. Nearly as many (just under 30 percent) said they planned to increase their use of social media.