Five Millennial Shopping Trends that Impact How We Invest

by Nicole Dugan With the hard-working Baby Boomers as our parents, millennials may be one of the most privileged generations in American history. We were also the first generation to grow up around internet technology. The internet became widely accessible when many of us were children, paving the way for ebooks, smartphones, and tablets and rendering things like libraries, paperback novels, and beepers unnecessary. Thanks to the internet, we’ve grown up with easy access to almost everything. This gave us a reputation for valuing material items, instant gratification, and designer name brands.

Since we’ve entered the workforce (many of us during the Great Recession), our values are fundamentally changed, which impacts how we manage our money. Below is a list of 5 prevalent money spending trends among millennials.

1) Seamless online experience

As I noted above, the internet came of age at the same time many of us did. Therefore, we value brands that offer sleek apps or convenient online shopping experiences. As many of us know, you can often find better pricing through retailers that operate exclusively online, such as Amazon or Gilt.

Recently, Urban Outfitters has been praised for mastering omni-channel retailing. They effectively sell to their customer base in stores, on mobile apps, and on their website. Clearly, Urban Outfitter is a brand that has grasped the importance of providing an accessible online shopping experience in addition to an in-store experience

2) Fear of large financial commitments

Trust me, it’s not that we don’t want to save for retirement or own a home. According to time.com, 90% of us do- it’s that we can’t afford the down payment. Besides the crushing amount of student debt that many millennials are saddled with, the costs associated with renting homes and apartments are growing much more rapidly than our salaries. According to Zillow, it costs about 30% of our income to rent- it’s no wonder that so many millennials are stuck living paycheck to paycheck. This spurs on the vicious cycle that many of us our stuck in: we can’t afford to own, so we rent and the high rents we are forced to pay prevent us from saving up for a down payment so we can own. And on and on it goes.

Many millennials have extended their inclination to rent versus buy to other facets of their lives. Zipcar, for example allows its members to have access to cars without making a large financial commitment. Rent the Runaway allows users to rent designer apparel that they may not otherwise be able to afford.

3) Need to get “buy in” from others

Millennials exhibit brand loyalty, but only after continuously having positive experiences with a certain brand. If they have a bad experience, they aren’t afraid to share their feelings online.  Millennials often research items before making a purchase in order to read reviews and find the best possible price.  According to CMO.com, 72% of millennials assess their options online, and often make a purchasing decision, before even setting foot in a brick and mortar store.

4) Buying private label or store brand products

Many cost conscious millennials have become loyal private label product consumers. According to mediapost.com, 97% of millennials are more likely to buy store brand products than brand name products. In the past, buying private label products was merely a cost saving measure. However, many millennial shoppers have discovered that private label brands have stepped up their game and their quality is comparable to their brand name counterparts.

5) Focus on experiences, rather than material items

According to a survey conducted by the Intelligence Group, millennials value travel above most material possessions (I say most as I am pretty sure smartphones would rank high for many of us). According to the survey, millennials value travel because, unlike material possessions, life experiences cannot be taken away. Many Millennials are suspicious of the retirement plans out there and; therefore, don’t want to wait until their “golden years” to see the world.

How Shopping Impacts Our Investing Habits

One purchasing trend that is underlying in many millennial shopping habits is the conscious effort to do things differently than our parents did. We saw our parents work hard for decades and then suffer through the recession. This brings us to and often highlighted facet of millennial money management: fear of the stock market following the Great Recession.

For many of us, investing is a far off thought, or not even a thought at all. We are stuck in a continuous loop of paying too much rent, paying down debt, and being afraid to invest what little disposable income we have in stocks. Besides the inherent fear that often accompanies investing, investing has traditionally been a daunting process in which you could only access your portfolio from your computer and you either had to make decisions completely on your own or rely on a “trusted” financial advisor. So, how can millennials learn to invest confidently?

This is where DriveWealth and Chaikin Analytics come in. DriveWealth offers an easy-to-use, low cost investing platform and Chaikin supplies investors with the means to make more informed investing decisions through stock research and analysis. The Chaikin power gauge, is an easy-to-understand rating of a stock’s potential performance relative to the Russell 3000 Index and is now available in the DriveWealth investing app.

Together, DriveWealth and Chaikin give millennials a means to invest at their own speed and the ability to get a “second opinion” on stocks they consider adding to their portfolios.

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