Millennial consumption patterns and preferences are unique from other generations across categories. What they value, why they do what they do, and how they do it is all changing relative to the traditional status quo.
This reality seems to be common knowledge, but most stop there. Specifically, I believe the following preference distinguishes millennial behavior from those of their parents.
Of course not every millennial's preferences are identical, but I would argue that as a group, they prioritize value and convenience above all else.
As consumers, millennials can make a purchasing decision that focuses on value or convenience. However, the intersection of the two is the most interesting because usually these two attributes are at odds with each other - consumers can either get convenience or value, but not both. Millennials today, however, are demanding both and successful companies are delivering on this dual promise.
Millennials believe in value. Value is not simply a determination on price; it is a more holistic view of value given multiple considerations such as quality, convenience, price, company mission, etc. Consumers perceive a good or service to be a good value if the perceived benefit seems high relative to its price.
Unlike their parents, for millennials value is based less on the brand of the products or services, and more about other factors such as its quality. According to a Bridge.over survey, 70% of millennials think their generation is less brand-loyal than previous generations. This is exemplified in the decline of traditional consumer packaged goods (CPG) — among the top 100 CPG brands, 90 experienced share declines, according to a 2015 study by Catalina.
Alternative selection criteria include deciding purely on brand, price or quality. Instead, millennials are optimizing across various criteria for what they perceive to be the optimal combination to create value.
Convenience is key. Long gone are the days of coupon clippers that will drive across town to the supermarket with the cheapest toilet paper. Millennials prioritize convenience daily in how they allocate their dollars - Instacart vs. going to the store, Amazon Prime vs. Costco, Postmates vs. takeout, and the list goes on.
Convenience is not just about time savings, but also about the quality of the experience. Casper's success illustrates how millennials prefer to order a fixed price mattress that arrives at their door over going to Sleepy's, testing dozens of options, negotiating a price, and carving out time to have it delivered.
Within Redpoint's portfolio, ThredUp & Brandless are great examples of companies that are capitalizing on this trend of offering both value and convenience.
Female millennials love ThredUp’s Clean Out Kit. They gush about how they earn extra cash to clean out their closets by simply putting their old clothes into a bag and mailing it in. For these women, the alternative to ThredUp is not higher effort options like Goodwill or eBay. Rather, these clothes would otherwise just sit in their closets or they would simply throw them away. This act of taking slightly more effort for some compensation shows that these millennial women do care about value, but in convenient way.
Similarly, millennials have fallen in love with Brandless, in part for their ability to provide real value and convenience. With quality ingredients in their products (organic, non-GMO, etc.), Brandless’s $3 price point across its 100+ SKUs is a no-brainer value purchase for their millennial consumers. In addition, because Brandless has curated products and rationalized categories, it’s convenient to purchase on their website quickly and effortlessly — consumers trust that Brandless has spent the hours on their behalf to find the perfect chef’s knife, and they appreciate not having to spend 2 hours searching through Amazon results and reviews to optimize for the best one.
I’m excited to see how companies continue to innovate to deliver both value and convenience to cater to millennials’ preferences. Have other examples of companies that have done so? Would love to hear about them in the comments.
By: Medha Agarwal | Investor at Redpoint Ventures
Courtesy: https://www.linkedin.com/pulse - Medha Agarwal