Category Archives: Millennials vs. Baby Boomers

segmenting the Millennial market

November 27, 2015 By in Millennials vs. Baby Boomers, Millennials vs. Boomers, Uncategorized Tags: 1 Comment

This is a continuation of my post from Wednesday.

How important is understanding this evolving segmentation between older and younger Millennials?

Overall, I think it’s more important to think about shifting our consumer stock exposure away from Baby Boomers and toward Millennials.  On the other hand, this potential change in portfolio structure is probably already much better understood than the finer point of distinguishing between older and younger Millennials.  So the latter may have equal outperformance-creating power.

In what follows, I’m relying on a recent NPD study that you can send for on the NPD website.

1. Overall spending

Both older and younger Millennials do a larger amount of their spending online than the rest of the population.

Older Millennials tend to belong to loyalty clubs and often use retailer apps on their phones.  Younger Millennials, not so much.

Older Millennials buy more kids’ stuff and have more home-related expenses.  This makes sense, since they are in the household formation stage of their lives .  Younger Millennials are attracted to experiences rather than things–they do more and buy less.

2.  Eating

Older Millennials like to cook;  younger ones don’t.  Both groups want healthy, filling food, but younger Millennials like the convenience of eating out.

Both groups use wholesale clubs more than supermarkets.

3.  Department stores vs. specialty retail

Overall, Millennials spend more of their income in department stores than the rest of the population.

Among specialty apparel retailers, younger Millennials like Hollister and Charlotte Russe the best.  Older Millennials prefer Zara and Old Navy.

4.  Beauty products

Millennials spend more on this category than the overall population.  Both older and younger do about half their spending in this category in a combination of Wal-Mart, Target and Costco–a larger percentage than the population in general.

5.  Younger Millennials are very interested in health in fitness.  Not so their older counterparts.  YMs like REI and Nike.

 

 

segmenting Millennials

November 25, 2015 By in economics, Millennials vs. Baby Boomers, Millennials vs. Boomers, Uncategorized Tags: , , , , , Leave a comment

I got an e-“book” from NPD, the retail data and analysis people, the other day that argues we as investors shouldn’t look at Millennials as a coherent group, but rather segment them by age ( I wrote “book” because it’s ten pages long).  Here’s what it says:

general

Millennials are an important demographic group in one sense because they’re the largest segment in the US by age, having recently passed the Baby Boom in size.  More important, they’re in the ascendant economically, while Boomers are gradually fading into retirement, with attendant lower incomes and weakening propensity to spend.  In addition, 13.8% of those 18 -29 are either unemployed or out of the workforce.  This suggests that this group will show better than average income–and spending–growth as Boomer retirement and economic expansion make more jobs available.

Millennials are projected to account for a third of total US retail spending within the next five years.

segmenting

NPD divides Millennials into younger (18 – 24) and older (25 -34).

Older Millennials:

74% white

40% married (44% have been married at least once)

40% have children

have more money

are less optimistic

favor Donald Trump.

 

Younger Millennials:

68% white

10% married (20% have been at least once)

10% have children

have less money (many are still in school)

are more optimistic

favor Bernie Sanders

 

Differing retail habits on Friday.

 

 

robo investing (ii): new entrants

September 10, 2015 By in Millennials vs. Baby Boomers, Portfolio management, robo investing Tags: , 1 Comment

Yesterday I observed that what much of what we’re now calling robo investing is already being used in traditional brokerage firms, only it’s to make sure individual brokers are adhering to investment policy set by the strategy and compliance staffs and not stuff that will result in lawsuits later on.

 

Discount brokerages differ from their traditional counterparts in that their fees are much lower, you can transact without involving your broker and they dispense only the most generic advice.  Both, however, have several characteristics in common:

–to be used well, they require a considerable amount of financial knowledge and a commitment of time and effort to monitoring investments

–there’s a certain tension between the interests of brokerage houses, which make their money by clients trading and margin borrowing, and the clients themselves, who would probably be better off not doing much of either.  In fact, I find it hard not to think that the paucity of performance attribution/analysis on broker websites is related to this

–neither kind of broker is particularly interested in clients with small amounts of money.

 

Hence the appeal of the new online robo investing firms.  They are targeting people who have little money and no interest in trading but who want a long term-oriented savings vehicle that’s easy to understand and takes little time, but which offers potentially better returns than a bank account.

random thoughts

I think this is a great idea.  Robo investing may well become the Millennial alternative to traditional brokerage houses.  The argument that robo investing also threatens discount brokerage is more complicated.  Still, I think the threat is there.

Looking at a number of new online firms, it’s striking how little practical investment experience the principals have.  That’s not necessarily bad.  More worrying to me is the number of academics on the boards.  Hopefully, they have no operational role and are serving their usual function as spokesmodels.

I’m willing to bet the concept will be highly successful.  There’s very little that’s proprietary in what the robo firms do, however.  I think there’s the continuing risk that large financial institutions, like banks or discount brokers, will simply clone their own robo investing operations.  So for the new firms it’s a race to expand before incumbents react.

 

 

Millennials and shoes

March 27, 2015 By in Millennials vs. Baby Boomers Tags: , , , , 2 Comments

For a while, I’ve been convinced that my search for secular growth consumer stories should shift from Baby Boomers–an amazingly rich lode to mine for my entire career–to Millennials.

Two reasons:

–Millennials are now more numerous than Boomers, and

–Millennials’ incomes, now only about half that of Boomers, are risng, while Boomers’ are falling as more enter retirement.

So I’ve been on the lookout for information about trends in Millennials’ consumption.

The other day I found one from the NPD Group blog.

It’s shoes!!

The average American–man, woman and child–buys 7.5 pairs of shoes a year.  The business has been growing by about 3% a year since the economy’s low point in 2009.  Total annual retail footwear sales in the US are now around $54 billion.

According to NPD, Millennials in the US spent $21 billion on footwear, about 40% of the total, last year.  That’s up by 6% over their outlay in 2013, or triple what the industry growth was.  In addition, Millennials were a bigger factor in the $100+ shoe segment, where they spent 12% more than in 2013.

Now to find a pure play.