Retailers may be concerned that Millennial customers may not want to take on credit card debt, but in the long run, lower debt and higher savings is good for the economy. Retailers, as they have done so many times before, will need to adapt to consumers’ changing habits.

Millennials have already shown a wariness towards traditional advertising, now they are less willing to accumulate debt. Retailers should lead the way in showing value for the products they sell and demonstrating ways that consumers on budgets can afford them.

Retailers should only worry about the reluctance of Millennials to use credit cards if they (the retailers) are going to lose money off the carrying charges, but retailers will probably gain in the long run because they won’t have to chase collections, which is very expensive and doesn’t really “pay off” in the long run anyway. The only drawback is if Millennials (or those using these new payment systems) are less prone to impulse shopping, and only concentrate on well-thought out and planned buys with their debit cards or PayPal.

It will have wonderful effects. I can tell you from experience that being debt-free gives an individual a lot more freedom. The same with businesses. Working in the grocery industry, some of our best run supermarket companies are debt-free, other than perhaps some small token debt. In my opinion, student loans are totally unnecessary and play upon people’s ignorance, as do many other types of debt. Being in debt is no different than being addicted to drugs. It takes determination to break the habit and guts to just say no. But the debt dealers are everywhere, tempting people with cheap credit to get them hooked. At the end of the day, anything bought with credit is usually something useless and of no value. I might make the exception to a house, but only if purchased at a deep discount.

Millennials clearly have a different perspective on consumption. They are less prone to purchases and looking for experiences. They spend money on different things, but that won’t keep them from purchasing things they need. They will do it on their terms vs. a store credit card. A generation of consumers that doesn’t want to take on excessive debt will likely help the economy in the long run.

We really need to be aware that not all Millennials are alike. The reasons for them having fewer credit cards are varied. Some are positive signs that they are learning from us Boomers that credit debt is tough to live with. The more strict financial institution lending criteria (developed primarily by us Boomers spending more than we could afford) is a challenge that is preventing Millennials from taking on more credit debt.

Bottom line, I don’t believe this is slowing down the growth of retail overall, especially in the U.S., where credit cards were really born. Millennials are shopping more than ever. Their shopping habits are driving significant shifts in retail evolution. However, those retailers that adapt to this evolution will secure their growth potential for the future. Easier said than done, of course!

Aversion to, or at least caution concerning, debt may seem to be the problem for retailers, but more often it is a symptom. When the purchase is not inspired, it is easier to use debt avoidance as a good reason not to buy (and sometimes it is, and should be), but when a product is the fulfillment of a lifestyle need or want, the credit card will come out and that beautiful cha-ching will sound at check-out, as the store-branded bag is carried as a badge of honor.

Retailers should align with responsible spending and part of that proposition should be educating consumers about building on what they have (from that or similar stores) and refreshing what they have based on all the factors that fuel a buying decision.

Smart consumption serves brands well, with immediate and lifetime customer revenues.

Where the use of credit is not suitable, a wish list can be. And the purchase should always be inspired by the retailers based on the brand promise.

Americans between the ages of 20 and 35 were raised at a time of austerity AKA the great recession, 2007-now. Economists claim the recession ended in 2008, but as retailers we know better. These folks are more like their grandparents, who endured the Great Depression, than their parents who struggled with a subprime mortgage and credit card debt. On top of that, this is the first generation who attended college when the cost doubled in 20 years which led to crushing student debt. So most of these folks are money wise; smarter than their parents and hopefully as wise as their frugal grandparents. Membership has its privileges … That was the long term positioning of Amex. Perhaps that is the promise that will resonate with these parsimonious shoppers. The value to the card holder must be greater than an incremental “open to spend.” The value should come from an array of benefits that are relevant to this new and different mind set, these should aid and abet the outlet brand experience. Proprietary credit cards are… Read more »

Lower use of credit can crimp spending in the short-term. After all, credit is really just time-shifting your income. If Millennials are unwilling or unable to spend ahead of income, retail purchases get spread out over time. But lower formation of households is a bigger driver of Millennial spending than credit. The need to buy is a bigger driver than is the way to buy. And nothing increases the need to buy as much as children. Millennials are waiting longer to get married and have children. The fertility rate of Millennials is the lowest of any U.S. generation ever recorded. Some of the same influences that create aversion to credit also create aversion to starting families. These include paying off existing student loans, lower income in relation to rising home prices and experience watching older generations struggle with spending and the loss of real estate wealth. Further, putting off the use of credit makes it harder to qualify for mortgages, which in turn suppresses home buying and related household purchases. The leading edge of Millennials… Read more »

I’m going to take this a step further and say it’s not so much about whether they use credit cards or not. The bottom line is they are spending less and yes that will have, and is having, an impact on retail.

Retail needs to re-think services and experiences.

And that’s my 2 cents

No, retailers shouldn’t be worried about “reluctance of Millennials to use credit cards.” Ultimately who cares how you pay for a purchase? They should be worried that the Millennials don’t have the incomes to support the purchase in the first place … talk about fixating on the symptoms and ignoring the disease!