By Amy Langfield
Originally posted on CBS MoneyWatch.
Millennials are growing up, buying homes and starting families. That is causing their values and technology expectations to change the ways companies do business, Goldman Sachs says in a report Monday.
Brands such as LEGO, Carter’s, Hasbro, Netflix, Whole Foods Market, Starbucks, Chipotle Mexican Grill, Blue Apron, Zulily, Etsy and Amazon.com are well positioned to serve millennials; companies at risk, include McDonald’s, Kellogg, Campbell Soup, Coca-Cola, Mattel, The Children’s Place, Toys ‘R’ Us, J.C. Penney and Kohl’s.
In fact, Whole Foods last week said it was working on a new type of grocery store aimed at millennials.
Most new mothers are now millennial moms, and the most populous group of that generation — now 23 to 26 years old — is reaching the average age of a first-time mother, 26. The number of births is increasing and last year was the first time millennials accounted for the biggest group of home buyers, according to the National Association of Realtors.
When it comes to food, they want brands to be more transparent, more organic and more value conscious. When it comes to household and personal care, they want safer and less toxic options. As for toys, they should be geared toward child development and pegged to entertainment titles, such as Hasbro has done with deals for Transformers, G.I. Joe, My Little Pony, Star Wars, Marvel and Frozen.
Millennial parents have a high reliance on smartphones and little time for brands that don’t have their digital act streamlined. “The logistical challenge of distributing content and merchandise across multiple channels remains high and under-appreciated by this generation,” according the Goldman report.
Also, “immediate access to information (through smart mobile devices) has empowered millennials to expect instant gratification. Free shipping is becoming the standard and same-day delivery is not far behind.”
Millennials also change their social media habits after become parents, the study notes. They use Tumblr 56 percent less, Twitter 48 percent less and increase their use of parenting communities, Pinterest, Instagram, Facebook and YouTube.While many established brands are changing, the new disruptors and small niche brands have strong opportunities to thrive.
One company singled out in the report is Zulily, which is “representative of two significant trends emerging with the millennial shopper – shopping as entertainment and uniqueness of merchandising.””Zulily has invested significantly in its mobile experience to enable moms to fill white spaces of time with a mobile-friendly user interface in a highly personalized experience with 1-click checkout. The company also merchandises the site in a ‘flash-sale’ model, enabling a fresh, new experience daily,” the report states.
Millennials’ saving habits help debunk stereotype
The top factors considered important by millennial moms when making everyday purchases are safety, convenience to purchase, brands that provide good value, good product reviews online, products that simplify life and recommendations from other parents.
Those findings aren’t surprising, according to Dr.Liraz Margalit, a psychologist at Clicktale, a firm that helps companies understand how customers are using their websites. Margalit said the Goldman report findings are in line with millennial shopping patterns she has observed.
“A factor such as ‘convenience to purchase’ or ‘simplify my life’ that didn’t play a role in the past” becomes legitimate criteria, Margalit emailed. “If a few years ago parents would only have looked at the end results (product functionality), now the purchasing process becomes central calculation.”
The stakes are high as Goldman estimates $1 trillion is spent annually in the United States, including on housing and food, for children 17 and under. The average family is expected to spend $304,000 to raise a child from birth to 17. College costs excluded, of course.
The Goldman report is also quick to point out that what experts think they know now about millennials is still changing. “How their parenting styles – and by extension their decisions on education and healthcare – will compare to Gen-X and Boomer parents, ” are among the topics we still don’t know, the report states. Also unknown: “How their value system will evolve as they get older and as the economy improves.”