How Can the Retail Industry Survive Millennials?
We highlight the trends that might be the saving grace of both startup and traditional retailers.
Do you feel it? The entire fashion industry is currently free-falling over the cusp of traditional retail into a chasm of uncertainty, pushed in that direction by you and I — otherwise collectively known as millennials. Not since the baby boomers has there been a force as powerful in reckoning as the millennial generation. Coupled with the organized chaos that is the Internet, the fashion and retail industries are only now beginning to realize that their traditional supply chains are broken, and wholly inadequate to receive the oncoming and highly lucrative hordes of Generation Y and Z who are fast maturing into their peak purchasing years.
Aboard that doomed raft, retailers are finding it increasingly difficult to make online, mobile and physical retail profitable — indeed, only those established brands who are willing to take drastic leaps of faith, such as introducing see-now-buy-now models and doing away with the traditional fashion week calendar, are the few able to adapt somewhat to this brave new world. But it’s really the brands made by millennials for millennials that are proving to be the most adept at catching the millennial wave. To decipher these new currents within retail, we turned to Erica Ng of global trend forecasting agency WGSN to identify the biggest trends and their most out-of-the-box solutions in the industry, as well as her tips on how brands can stay afloat in these uncertain times.
Shift to serviced lifestyle
As a whole, millennials face increasing lifestyle pressures in the wake of baby boomers due to ever-decreasing salaries and living space compounded by ever-increasing rents and living costs. In the UK, 60 percent of the population will be renting in nine years’ time, while home ownership rates in the U.S. have fallen every year for the past eight years. “Increasingly, we see a future where consumers see owning things as a burden,” Ng says. “The whole thing is less about ownership and more about experience.” As a direct result of having less space to store things in increasingly congested cities, millennials have developed a more fluid relationship with their possessions, with a larger emphasis on self-expression through experiences and services used (Travis Scott’s “Uber Everywhere” comes to mind) as opposed to actual objects. In this void, the sharing economy has ballooned to fill the space, with consumers having become more accepting of renting what they don’t have from others as well as loaning their own items out to members within the same community.
To this end, a recent Nielsen global survey found that 68 percent of online consumers are willing to share or rent personal items for payment, a figure that reaches 78 percent in the Asia-Pacific region. Millennials are also increasingly seeing their possessions not as objects imbued with sentimental value that must be kept for life, but assets that, once exhausted of their ability to bring the user joy, can be loaned or traded to provide a small injection of cash. At the end of the day, it comes down to a shift from the concept of ownership to access — having first transformed the music industry thanks to various streaming services, it is now taking root within fashion and the physical economies, freeing consumers of the hassles of owning an object while still providing the satisfaction that comes from obtaining coveted product, albeit temporarily. Within this concept, new retail services such as Rent the Runway and Yeechoo now offer the ability to rent an unlimited number of items offered by users within their online communities for a flat monthly rate, expanding your wardrobe a thousandfold for a fraction of the price.
However, in some cases this expanded range of choice might prove too overwhelming. In this instance, services have also popped up to accommodate consumers who want to outsource the heavy responsibility of choosing their personal wardrobe. Ng cites the example of the Mark Zuckerberg x H&M collection that, although an April Fool’s joke that poked fun at the Facebook founder’s repetitive outfits, highlighted a market segment that would rather not have to go through the daily hassle of wasting mental energy on looking good. Taking a page from this book, Ya Joe offers its target customer of young tech professionals curated outfit combinations based on life events like “professional expedition” or “reservations for two.” On the other end of the spectrum, the Three Stripes is the first major sportswear company to launch a subscription service called Avenue A, which for a fee of $600 USD per year locks customers into a subscription service that send them a package of the latest exclusive releases from the brand — a smart move that builds brand loyalty in times where increasingly there is none.
It’s safe to say that in this day and age, we’ve all effectively become digital zombies. A 2015 study by KPCB found that the average American spends a whopping 2.8 hours staring at their smartphone screen, up from 0.4 hours in 2010. Within that figure, one out of every five minutes is spent on Facebook or Instagram, while just five mobile apps (either social media or chat apps) account for 88 percent of mobile device usage. So if millennials aren’t leaving the walled garden of social media, how are retailers supposed to reach them?
“Where eyeballs go, money follows,” Ng explains succinctly. This trend has been observed with the online publishing industry gradually and reluctantly migrating towards an all-social publication model, and is slowly making its way into the fashion retail industry. Examples include Endource, a website that directs visitors to fashion items that have been featured in at least 150 media outlets and takes a cut whenever a sale is made. Increasingly, it’s through these trusted third-party mediators that brands will have to channel their product through, but how does a brand create a holistic customer experience when the consumer is going nowhere near it? Nowadays, people go online first thing for inspiration on what to buy and how to dress, and their go-to source are influencers who have cultivated a following for honest opinion delivered in a relatable manner.
A years-old trend, influencer marketing has repeatedly proven its worth, with a Nielsen study finding that 90 percent of consumers trust peer recommendations, with a similar ODM survey finding that 74 percent of consumers rely on social media to inform their purchasing decisions. With the promises of breaking into the social space come a new set of restrictions, however. As consumers primarily use social media to chat and catch up with friends, brands must be aware that they are in an environment where product cannot be sold directly.
One result of these unique circumstances is the rise of a conversational, curated form of marketing in chatbots on messaging platforms that allow brands to directly connect with their consumers where they already spend most of their time. Online retailer Spring was one of the first to explore this territory with a chatbot on Facebook Messenger that gave its users recommendations based on a questionnaire. Others have gone further by injecting a real human element, like U.S. retail startup Operator, which uses a mix of AI and category experts to create personalized recommendations for online shoppers. “The human element is adding value at the moment, and creating genuine experiences beyond just playing with the new technology,” Ng says. “The customer is already in the space, and they are expecting that from [brands].”
At the end of the day, according to Ng, “Brands have to accept that they need to relinquish control in some cases, but it doesn’t mean losing control completely.” It’s now that retailers need to reconfigure their whole operation to prepare for the future, lest they fall by the wayside as millennial shopping habits continue to change without rest. After all, Ng ominously warns, “If retailers are not willing to invest in this, consumers can easily migrate to another platform that is.”
- Nirvana Garreffa/HYPEBEAST