Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Prophet Consulting blog.
Kit Yarrow, co-author of Gen BuY: How Tweens, Teens and Twenty-Somethings are Revolutionizing Retail, says Gen-Y has clearly become less impulsive and are more interested in cheap thrills and sales promotions than they were pre-recession. But they haven't cut back their spending as much as older generations.
"It makes sense when you consider that Gen Y had less and so lost less during the recession," said Ms. Yarrow, a professor of psychology and marketing at Golden Gate University. "They're also highly optimistic about their earning potential and consequently less cautious when it comes to spending. This generation was trained by their parents to have high expectations. Lastly, Gen Y "wants" feel a lot like "needs," especially when it comes to technology."
She likewise said that while Gen Y has become more knowledgeable about personal finance issues and money management as a result of the recession, she doesn't expect to see any noticeable frugality lasting in the long term.
"Gen Y has not been psychologically damaged by the recession in the same way that Depression Babies were," said Prof. Yarrow. "Not even close. I've heard more Gen Y's scoff at the futility of saving than I have those who have stopped spending (though neither extreme is the norm)."
Still, she said retailers will need to make adjustments to appeal to Gen-Y customers in the decades ahead. One key is to get them involved and to acknowledge and reward that involvement. Communication also needs to be more visual, symbolic and intuitive.
"Honestly, transparency, humor and humanness go a long way too," said Prof. Yarrow. "There also needs to be more activity, product turnover and sensory involvement than what satisfied previous generations. Lastly, it makes sense to rethink absolutely everything with a nod toward what's technically possible today."
In messaging, she said Gen-Y consumers always gets their say, but are not always heard.
"What Gen Y craves is to be seen and heard. Status is no longer about money, it's about influence," said Prof. Yarrow. "Therefore the messages that resonate with Gen Y are those that champion the customer. Listen, respond, notice and reward -- that's where it's at."
Discussion Questions: Do you agree that the recession ultimately will have little impact on the Gen-Y consumer's purchasing behavior? What do retailers need to understand about this generation to successfully win their attention and loyalty as they move into their prime consumption years?