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Millennials coming of age

One of the largest generations in history is about to move into its prime spending years. Millennials are poised to reshape the economy; their unique experiences will change the ways we buy and sell, forcing companies to examine how they do business for decades to come.

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Who Are They?

Who are they?

A different world, a different worldview. Millennials have grown up in a time of rapid change, giving them a set of priorities and expectations sharply different from previous generations.

Born Between

Born between 1980 to 2000
Source: Goldman Sachs Global Investment Research

A larger Cohort

The Millennial generation is the biggest in US history—even bigger than the Baby Boom.

M = Million

  • 5m
  • 4m
  • 3m
  • 2m
  • 1m
  • Population
  • 15
  • 20
  • 25
  • 30
  • 35
  • 36
  • 40
  • 45
  • 50
  • 51
  • 55
  • 60
  • 65
  • 70
  • Age in 2015

92 M

Millennials

Graph

61 M

Generation X

Graph

77 M

Baby Boomers

Graph
Source: US Census Bureau

The first digital natives

Millennials have grown up with the internet and smartphones in an always-on digital world.

  • Millennials
  • Gen X
  • Boomers
"Which online activities do you regularly do for fun and entertainment?"
Source: Prosper Insights & Analytics for the Media Behavior and Influence Study

Social and connected

The online world - and social media in particular - have given the Millennials a platform to reach the world.

"After searching online, how do you communicate with others about a service, product, or a brand?"
Source: Prosper Insights & Analytics for the Media Behavior and Influence Study

Less money to spend

Lower employment levels and smaller incomes have left younger Millennials with less money than previous generations.

Mean income for 15–24 year olds as a % of total population
Source: Bureau of Labor Statistics

Encumbered with debt

Student loan payments are taking up a growing chunk of postgraduate Millennials' income.

$
Mean Student Loan Balance for 25 year olds, in US Dollars
Source: Federal Reserve

different priorities

With less to spend, they're putting off commitments like marriage and home ownerships.

% of adults 18-31 married and living in their own household
Source: Pew Research Center,
Current Population Survey
Housing

Housing

As Millennials enter their peak home-buying years, their reluctance to enter the housing market could change. The cohort’s sheer size, plus its desire to settle down in the future, could lead to a surge in home sales.

Peak Home-Buying Years

y/o Peak Home-Buying Years y/o
Source: Goldman Sachs Global Investment Research

Snug in the nest...

A growing number of Millennials are choosing to live at home with their parents.

% of 18-34 year olds living with parents
Source: IPUMS-CPS, IPUMS-USA and
Goldman Sachs Global Investment Research
  • Current Population Survey

But waiting to fly

An overwhelming percentage of Millennials say they want to own a home sometime in the future.

% of renters who plan to buy a home some day
Source: Trulia
Love & Marriage

Love & Marriage

Millennials have been putting off significant milestones like marriage and children. But that doesn’t mean they want to stay single forever.

Median
marriage
age

2010s y/o 1970s y/o
Source: Goldman Sachs Global Investment Research

Marriage can wait

The percentage of young people married and living on their own has dropped by more than 50% since the 1960s.

23%
2012
27%
2007
43%
1981
56%
1968
% of 18-31 year olds married and living in their own household
Source: Pew Research Center,
Current Population Survey

Putting off parenthood

Millennials aren't just putting off marriage. They're also waiting longer to have children.

  • 1970s
  • 1980s
  • 1990s
  • 2000s
  • 2010s
% of women having children by age
Source: IPUMS-CPS and Goldman Sachs Global Investment Research

Never say never

Millennials may be putting it off, but polls have shown they do want to have their own families some day.

Source: Pew Research Center
Access, not ownership

Access, not ownership

It’s not just homes: Millennials have been reluctant to buy items such as cars, music and luxury goods. Instead, they’re turning to a new set of services that provide access to products without the burdens of ownership, giving rise to what's being called a "sharing economy."

“25 years from now, car sharing will be the norm, and car ownership an anomaly.”
- Jeremy Rifkin, Author and Economist Source: Goldman Sachs Global Investment Research

The Hierarchy of needs

The must-haves for previous generations aren’t as important for Millennials. They’re putting off major purchases—or avoiding them entirely.

  • 15%
    Extremely
    Important
  • 25%
    I might purchase
    one if I really need it,
    but indifferent otherwise
  • 5%
    I do not feel
    strongly about it
CAR
30 %
  • 30%
    I do not intend to
    purchase one in
    near future
  • 25%
    Important,
    but not a big priority
  • 10%
    Extremely
    Important
  • 10%
    I might purchase
    one if I really need it,
    but indifferent otherwise
  • 25%
    I do not feel
    strongly about it
LUXURY BAG
30 %
  • 30%
    Important,
    but not a big priority
  • 25%
    I do not intend to
    purchase one in
    near future
  • 15%
    Extremely
    Important
  • 15%
    I might purchase
    one if I really need it,
    but indifferent otherwise
  • 20%
    I do not feel
    strongly about it
TV
30 %
  • 30%
    Important,
    but not a big priority
  • 20%
    I do not intend to
    purchase in
    near future
  • 7%
    I might purchase
    one if I really need it, but indifferent otherwise
  • 8%
    I do not feel
    strongly about it
  • 15%
    Do not intend to
    purchase in
    near future
HOUSE
40 %
  • 40%
    Extremely
    Important
  • 30%
    Important,
    but not a big priority
House
Luxury bag
"How important is it for you to own the following?"
Source: Goldman Sachs Fortnightly
Thoughts intern survey, 2013

The Renter generation

A growing percentage of older millennials are choosing to rent, not buy.

Map Map
Pie

52%

2005

Pie

60%

2013

Renters as a % of total population, 25-34 years
Source: Organization for Economic Co-operation and Development
Brands and retail

Brands and retail

Millennials’ affinity for technology is reshaping the retail space. With product information, reviews and price comparisons at their fingertips, Millennials are turning to brands that can offer maximum convenience at the lowest cost.

% of Millennials
Who Compare
Prices in Store

%
Source: AIMIA Inc. “Born this Way: US Millennial Loyalty Survey” ©2012

Beyond the brand

When marketing to Millennials, a strong brand isn't enough to lock in a sale.

  • Strongly agree
  • Tend to agreee
  • Tend to disagree
  • Strongly disagree
  • Don't know
"When I shop, I always try to buy branded products"
Source: Ipsos MORI Global Trends 2014;
(16k respondents across 20 countries)

The Power of Social

If brands are shrinking in importance, social media is growing. Millennials are turning to their online networks when making purchasing decisions.

"When a brand uses social media, I like that brand more"
Source: Association of National Advertisers, Barkley, SMG, BCG

Clicking to Buy

Unsurprisingly, the generation that lives online, buys online.

Purchased something on the internet the last 12 months, UK
  • 16-24
  • 25-34
  • 35-44
Source: Office for National Statistics, United Kingdom

Searching for Value

Quality is still key for Millennials, but price is a more important factor than it is for other generations.

"What factors make you loyal to a brand?"
  • Millennials
  • Non-Millennials
Source: AIMIA Inc. "Born this Way: US Millennial Loyalty Survey" ©2012
Wellness Wellness

Wellness

For Millennials, wellness is a daily, active pursuit. They’re exercising more, eating smarter and smoking less than previous generations. They’re using apps to track training data, and online information to find the healthiest foods. And this is one space where they’re willing to spend money on compelling brands.

% of 12th graders who
disapprove of people
18 or older smoking
1 or more packs of
cigarettes a day

2013 % 1998 %
Source: monitoringthefuture.org

Defining Healthy

For Millennials, “healthy” doesn’t just mean “not sick.” It’s a daily commitment to eating right and exercising.

Eating right

  • Millennials
  • Gen X
  • Boomers
"What's your definition of healthy?"
Source: What's Your Healthy Survey, Aetna 2013

Smoking and drinking

As young Millennials pursue wellness, they’re turning away from unhealthy habits like drinking and smoking tobacco.

“Do you disapprove of people (who are 18 or older) doing the following…?"

Source: monitoringthefuture.org

Fitness Focused

How important is wellness to the Millennials? As their consumption in other areas drop, they’re willing to pay more for athletic gear.

  • Athletic Brands
  • Total industry (PCE)
Year-over-year sales growth of athletic apparel and footwear brands vs growth in total apparel and footwear spending
Source: Company data, Personal Consumption Expenditures (PCE) from Bureau of Economic Analysis, Goldman Sachs Investment Research

The Takeaway

The Millennial generation is the largest in US history and as they reach their prime working and spending years, their impact on the economy is going to be huge.

Millennials have come of age during a time of technological change, globalization and economic disruption. That’s given them a different set of behaviors and experiences than their parents.

They have been slower to marry and move out on their own, and have shown different attitudes to ownership that have helped spawn what’s being called a “sharing economy.”

They’re also the first generation of digital natives, and their affinity for technology helps shape how they shop. They are used to instant access to price comparisons, product information and peer reviews.

Finally, they are dedicated to wellness, devoting time and money to exercising and eating right. Their active lifestyle influences trends in everything from food and drink to fashion.

These are just some of the trends that will shape the new Millennial economy.

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