Millennials and brand loyalty: Why they are 'polygamous not promiscuous'

By Lester Wan

- Last updated on GMT

Industry experts including John Ross, CEO of IGA, (right) shared why millenials are the most important segment, at the Consumer Goods Forum Global Summit. ©ConsumerGoodsForum
Industry experts including John Ross, CEO of IGA, (right) shared why millenials are the most important segment, at the Consumer Goods Forum Global Summit. ©ConsumerGoodsForum

Related tags IGA China Millenials Consumer goods forum Metcash

Retailers need to view millennials as their most important consumer segment and shift their approach across everything from customer service to the brands they stock, according to the CEO of Nielsen and the boss of Australian supermarket chain IGA.

Mitch Barns, CEO of Nielsen, said it is past the time to think of millennials as a separate and ‘up and coming’ group. Quoting a Unilever executive, he said they are now “a core of our business”​.

Barns said this meant retailers had to understand that consumption patterns have become highly fragmented.

“Millennials essentially live their lives through their mobile phones, in this intense form of hyper-connectivity. As a result of that, they have access to so much more information than the previous generation,”​ said Barns.

“That increased information leads to fragmentation in terms of how they consume the media, and also their purchasing behaviour.”

Brand choices

Related to that, IGA — which is owned by Metcash, while its individual stores are independently owned — sees millennials spreading their purchases across a wider range of brands for most product categories.

“On the surface, sometimes people interpret that as millennials being less loyal. That’s not necessarily true. They’re just as loyal, but to more brands. They’re not ‘promiscuous’, they’re ‘polygamous’,” ​said Barns.

John Ross, CEO of IGA, the Australian supermarkets chain, said he’d spent much of his career working for large ‘big box’ national and international retailers, but argued the approaches that served them well were now outdated.

“In that model in the last 20 to 30 years, our objective was homogeneity — you build a large ‘box’, it would come in an assortment, you build a supply chain that would then allow you to serve the community, and you build your store in suburbia or wherever the population would grow the fastest, then you replicate it, doing it as fast as you possibly can. So the growth of the population drives sales very successfully,” ​said Ross.

“This new generation now is coming in with a completely different set of expectations, from media consumption to the retail and service levels, and their economic prosperity as well.

“Their expectations of what is going to happen in retail are going to change. So looking at it and thinking of it in the same way we thought of baby boomers or the ‘silent generation’ before would be a mistake as we go forward.”

Understanding preferences

Two key factors for future success will be convenience and personalisation, he added.

A millennial will spend 50% less time than the previous generation in preparing a meal and cleaning up. They are also two to four times more likely to go out to eat than their parents.

“You combine those things and if you’re a terrestrial or bricks and mortar grocer, you have to sit back and think about what that really means,”​ said Ross.

Another major attribute that shoppers look for in retailers is personalisation. Ross said, from their analysis, none of the bricks and mortar retailers in the grocery industry scored well in this regard.

Emerging tech start-ups like Amazon got better scores on understanding and knowing the shopper but the techniques they use are very simple, such as a suggestion of what you might get next or related items to help you make a more complete purchase.

“That’s not complicated, not big AI technology or game-changing stuff we’ve been talking about. Those are very simple,”​ said Ross.

“Ask any millennial and he will say, ‘I’m not a customer, I’m a person.’ If you look at how they consume — talking about the fragmentation of media and diversity of loyalty to brands — what they’re saying is, ‘I’m going to consume what is relevant to me.’,”​ he said.

“What we’ve seen, in the past 10 to 15 years, is that they’re reconstructing what’s relevant to them, through the (online and) social media world.”

These views were shared at the recent Consumer Goods Forum Global Summit.

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