To best your competitors in 2022 you’ll need to help merchants offer consumers the convenience to shop wherever they are, whether in the store, online, or engaging on their smartphones. It means providing payment flexibility, pickup and delivery options, and loyalty rewards. Most of all, it means delivering the experience that keeps customers coming back.
While convenience, flexibility, and a memorable experience are expectations of any consumer, generational trends reveal the nuances between age groups and what they consider great customer experiences. Understanding who currently holds the buying power, as well as how buying habits shift between generations, can help businesses in the service industry win more market share.
As 2022 approaches, the millennial generation is quickly emerging as the demographic group with the most influence. Consumers in this generation represent $600 billion of spending and lead all generations at 46% of total income in the United States.
To win millennials — as well as Baby Boomers, Gen X, and Gen Z — businesses need to understand what drives the spending behavior of each generation.
Millennials (born 1981-96).
Millennials total about 72 million consumers nationwide. This generation is socially and environmentally conscious, as well as politically engaged. Furthermore, their ever-changing economic environment has given them a keen understanding of what they are looking for and the desire to match how they spend their money with their busy lifestyles.
In general, millennials:
- Are willing to pay more for ethically and sustainably made products.
- Are driven by omnichannel accessibility.
- Prefer in-store and online shopping equally, often making less frequent, bigger-basket trips than other generations.
- Favor Amazon for online shopping (millennials represent 65% of Amazon users).
- Are influenced by social media in about one-third of their purchases.
Baby Boomers (born 1946-64).
Though Millennials are quickly outpacing the Baby Boomers in buying power, this generation still represents $548 billion of spending annually in the United States. Convenience drives Boomers, who care less about the social aspects of shopping or hunting out a bargain.
While this generation scores the lowest when it comes to intent to shop online, convenience drives their habits. As the pandemic drove businesses to implement more convenient online shopping experiences, Boomers’ online purchasing habits increased more than five times than in 2019.
Baby Boomer shoppers are:
- Typically brick-and-mortar shoppers but convenience will win their business online.
- Highly engaged in loyalty programs (26% of Boomers are active when they are loyalty members).
- Likely to prioritize customer service above all else.
Generation X (born 1965-80).
This generation represents $357 billion of annual spending in the United States. While skeptical in their purchasing behaviors, they are highly influenced by their Millennial and Generation Z children, who can get them out of their comfort zones when it comes to trying new products.
Gen X consumers are:
- Bigger on brand loyalty than other generations and love freebies and coupons.
- Likely to spend more on takeout food, fashion, health, and beauty.
- Prone to research online before making purchases, although they prefer to buy in-store.
- Focused on unique and innovative products.
Generation Z (born 1997-2012).
The oldest among this generation shop online daily, but also enjoy the social aspect of shopping at brick-and-mortar stores — especially for the instant gratification component of receiving their purchases immediately after buying them.
Gen Z consumers:
- Are influenced by reviews.
- Like luxurious products and will prioritize lower price or quality in less critical categories to accommodate the ability to spend luxuriously in others.
- Are prone to let their desires direct their behavior — going online or shopping in person to get the item they want.
Silent Generation (born 1925-45).
Keep in mind that Baby Boomers aren’t the oldest shoppers with buying power. While most within the “Silent Generation” will rarely order from mobile phones or tablets and prefer to do in-person shopping, the youngest members represent a fast-growing collection of internet users who made purchases online in 2020.
Consumers from the Silent Generation:
- Rarely shop via phones or tablets.
- Are less likely to make impulsive purchases.
- Respond well to direct mail promotions.
Remote work is influencing generational spending.
Your accounts should also be aware that the pandemic wedged a divide between consumers across generational categories who work at their homes and those who work in the office. Remote work impacts shopping behaviors, some of whom now view making a trip in-store after a day at work at their home as less convenient than those who stop from the office on their way back to their home. This could drive a faster decline in physical shopping as those who work from home have stated that they are less likely to shop as much or more in-store than prior to the pandemic.
Tailor solutions to generational demographics.
Payment providers need to work with merchants to understand their ideal customers and the generational trends that dictate their buying behavior. Help tailor solutions to meet the expectations of their customers, attracting them and their buying power to help increase revenues and grow their businesses.
