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Why DTC Brands Should Pay Attention to Millennials & Gen Zs This Holiday Season

DTC brands, millennials, gen z, holiday season.

As we speak, millions of searches are happening online around keywords like “best holiday gifts 2019,” “top holiday gifts,” and “Christmas gifts for men” or “for women.” The users behind those searches? Most likely, millennials and Gen Zs.

Because they make up such a large percentage of shoppers, these generations will be the most important segment for many DTC brands to capture this holiday season. Millennials have already surpassed Baby Boomers in number, and it’s only a matter of time until Gen Zs outnumber their predecessors as well.

This year, these two digitally savvy generations of consumers will be researching and buying online with budgets as high as $2,000 per customer. So how can DTC brands satisfy and delight those segments of the population?

After sharing our best tips on how merchants can create a holistic holiday plan in our Holidays in 20/20 content series to increase conversion rate, revenue, average order value, lifetime value, and deepen relationships with customers, this week we take a magnifying glass to millennials and Gen Z. More specifically:

  1. Understand Millennials and Gen Z Shopping Behaviors
  2. Their Fears & Motivators
  3. How to Appeal to These Generations as a DTC Brand

Understand Millennials and Gen Z Shopping Behaviors

Understanding your customers is the first step in creating a holistic eCommerce strategy. So before diving into how to get millennials and Gen Z’s attention, let’s do a quick overview of what makes those generations so unique.

Who are Millennials and Gen Z?

Born between 1981 and 1997, millennials make up 25% of the U.S. population and account for 21% of all consumer discretionary purchases – which is estimated to be over a trillion dollars in direct buying power. Described as optimistic, collative, and digital pioneers, this generation distinguishes itself by its level of education, technology-savvy users, and content creators. Millennials are also heavily influenced by their peers and the fear of missing out (FOMO) culture.

In comparison, Gen Z (born after 1997), the true digital natives, are described as realistic, independent, and more private than their millennial predecessors. Despite spending a lot of time on social media (44% check their social media profiles on an hourly basis) they have learned from oversharing mistakes of the past and opt for social platforms that are more private and time-sensitive. Thus, this generation favors Instagram and Snapchat to Facebook, and will also spend a lot of time on Youtube. 95% of Gen Z watch Youtube videos and over half say they cannot live without it. Sound familiar?

Researching and Buying Patterns

To understand millennials and Gen Zs better, we conducted our own survey of BVA’s 150 employees. Despite some outliers, more than half of our workforce is made up of millennials and Gen Zs, which as noted above, are 38 years old and younger.

According to our survey, when it comes to researching gift ideas, 2019 shoppers will turn to Amazon (33.3%) and Google Search (24.4%) this holiday season. A small minority (8.9%) will also leverage big box stores (Walmart, Target), local shops, as well as farmers’ markets in view of their upcoming holiday shopping.

Furthermore, millennials and Gen Zs specifically will use a combination of mobile and desktop to research gift ideas, and a majority (66.6%) will use a desktop computer to do most of their shopping. Only 6.6% plan to buy in-store.

This confirms that online purchases will outpace in-store for the first time in retail history.

2019 Holiday Outlook Online and In-store

PwC Study Holiday Outlook 2019

When it comes to their wallets, millennials are more price-conscious than Gen Z and thus will have a more limited budget this holiday season. According to our survey of BVA employees, 60% will spend less than $200 on themselves, and a majority (51.1%) will spend between $200-500 on gifts for other people.

However, 11% of our surveyed employees are planning to spend more than a $1,000 in gifts (not including personal purchases). This shows us that even though a majority of digital shoppers will be price-conscious, the high-earners in the millennial category will spend as much as $2,000 with the right motivators (convenience, quality, speed, we will get to those next!).

Their Fears & Motivators

The number one concern of today’s shoppers? For 47%, it’s not knowing what gift to buy. For this reason, gift cards and certificates are consistently one of the most popular options. Last year, shoppers bought on average $139 worth of gift cards, making it the most sought after holiday gift in 2018 (at least it’s better than the classic pair of socks, no?).

And the pressure on shoppers doesn’t stop there. According to a study from Think with Google, mobile searches related to “best” products have grown by more than 50% in the last year. Meaning, shoppers are so overwhelmed by the number of options that they will look to their peers in order to make a decision.

When looking at what motivates shoppers, specifically millennials and Gen Z, we found that price was the most important consideration. Rated on average a 3.23 out of 5 (5 being the most important) employees at BVA confirm millennials’ price-consciousness.

Next, they rated convenience with a 3.07, speed and social/environmental impact as being almost equally important (3.00), and lastly buying something on-trend as the least important factor (2.68).

BVAccel Study Purchase Decision Motivators Millennials and Gen Zs

Question: Rank what motivates your purchase decision from 5 being the most important to 1 being the least important. – Source, BVA Employees

Influencers & Top Verticals

Purchase decisions will also be shaped by influencers’ and peers’ recommendations with 77.78% of our employee participants considering peer reviews and ratings as being very important to extremely important in their decision process.

Additionally, a Google study found that 68% of smartphone shoppers turn to YouTube for ideas about what to buy. Youtube gift guide videos are a popular and growing trend during the holidays. Influencers will recommend their favorite products to buy, sometimes endorsing brands at the same time. 70% of those videos are watched on mobile.

Lastly, when asked what category of product they were the most excited about this holiday season, our employees chose first and foremost electronics (33.33%), with fashion apparel and accessories close behind (31.11%), health, beauty, and home goods arriving in third position (15.56%), and travel being last (4.44%). Did we mention millennials and Gen Z were digitally savvy?

BVAccel Study Purchase Intention Holiday 2019

Question: What type of product/service are you most excited to buy for yourself? Source – BVA employees

How to Appeal to these Generations as a DTC Brand

By now you should be well acquainted with the pet-peeves of millennials and Gen Z, as well as what they value most as consumers (aside from their smartphone). So let’s explore how you can get on their good side this holiday season.

The Research Phase

Appealing to millennials and Gen Z starts with reaching them during the research phase. As discussed in the previous section, the fear of not knowing what to buy is the number one concern of this segment of shoppers and therefore the first thing merchants should address.

Since your customers will be scrolling the web to find the ‘best’ gift ideas, leveraging holiday guides and peer reviews are a great place to start. By highlighting your best-sellers, you help shoppers focus their attention on your best pieces and the ones that (hopefully) comes with glowing reviews and recommendations. For Gen Z specifically, Youtube gift guide videos have become increasingly popular as video continues to be this segment’s favorite medium.

The end of the year is also a great time to leverage user-generated content. With our partners at Yotpo, for example, you can seamlessly link and display customer photos and videos from social media directly on your site. With 18% of millennials shoppers planning to use social media for their gift shopping, merchants should leverage each platform (but Instagram specifically for millennials and Gen Z) to showcase how the fans of their brand have already bought into their brand promise and incorporated the products into their life.

The Decision Phase

We understand from our research how price-conscious millennials and Gen Z can be, but this is not necessarily bad; younger generations need to see the value that comes with a higher price tag. Here, you need to convey what your product provides and justify its cost. Because younger generations are heavily influenced by their peers, customer reviews, and influencers, endorsement will be your best friend.

Another way to help increase perceived value is through bundling. We talked in great length about using bundling as a tactic to increase conversion, average order value, and revenue in The Holidays in 20/20. Bundling allows you, among other things, to sell at a higher price point and for customers to leave your storefront with gifts for themselves and for others… a win-win for everyone involved.

Finally, adopting a socially responsible mindset is never a bad idea when targeting younger generations. Rated as the third most important consideration by our employees when making a purchase, the social and environmental trend is not going away any time soon. Whether it’s through reducing waste, supporting a more sustainable supply chain, or donating dividends to a cause in line with your brand’s message, any of those actions can help your brand adapt to the expectation of millennials and Gen Z.

Warby Parker Buy a Pair Give a Pair Program

Warby Parker Buy a Pair, Give a Pair Program

If you are afraid that this will get in the way of your profit margin, understand that almost 50% of all millennials would be more willing to make a purchase from a company if their purchase supports a cause and 62% of millennials are willing to pay a premium for socially responsible brands, according to the Roth Capital Millennial Survey.

Conclusion

Understanding customers’ concerns and reducing friction is no small feat, but it’s becoming increasingly important for DTC brands to act on them, especially around the most stressful (wait, we mean wonderful) time of the year. With millennials earning higher paychecks and Gen Z entering the workforce, thus increasing their discretionary incomes, it’s more important than ever for DTC brands to get a deeper understanding of what motivates these two segments of the population and how to adapt to their growing needs.

At BVA we pride ourselves on our holistic approach to eCommerce, coupled with our ability to empathize with the needs of our customers and our customer’s customers. We create, pursue, and optimize innovative solutions, leveraging our strategic partners and knowledge of the industry. Get in touch for more information on our approach!


Cecile Nicholson is the Agency Marketing Coordinator at BVAccel. She writes about the latest eCommerce trends, marketing strategies, and tactics to advise direct-to-consumer (DTC) brands.

This article was originally published by our friends at BVAccel.

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