Millennials’ New Value Proposition
Millennials (now approximately 21 to 38 years old) have been examined, dissected and even ridiculed for returning to live with their parents after graduating from college. Their future is likely to be much different – and a boon for retailers, advertisers and account executives at local TV stations.
To date, their “value proposition” for the general economy and retailers has been, according to Bill Smead, CEO of Smead Capital Management, “living off discretionary spending.” He claims the days of Millennials spending their money for “Apple devices, craft beer and Chipotle burritos” may be transitioning to a more mature period when more of their income will be directed at buying a home, raising a family and all the other considerable costs.
Mr. Smead labels this “necessity spending,” and predicts it will be Millennials’ new “value proposition” – and it is likely to affect/change the economy and the retail landscape, significantly.
Already numbering more than the huge Baby Boom generation, the approximately 89 million Millennials are about to unleash a tide of spending that will exceed any amount Baby Boomers and previous generations pumped into the economy when they reached the same tipping point.
Mr. Smead added Millennials also have the advantage of the lowest interest rates in US history to make their major purchases on homes, cars, home furnishings and family apparel very affordable.
Mr. Smead also forecasts the Millennial generation, and then the potentially larger Generation Z, will earn so much money during the next 20 years that the contributions to Social Security should finally exceed the amount being paid to Baby Boomer retirees, despite their numbers.
If Mr. Smead is correct in his assessment, then advertisers and retailers of all types will want to feed at the trough of Millennials’ “necessity spending,” which could result in the allocation of more ad dollars.
Sharing Mr. Smead’s outlook with your prospects and clients and helping them to adjust their products and services and advertising today may put them in an advantageous position to reap the rewards of this transition during the next 20 years.
