As they came of age in the past few years, the millennials (a.k.a., Generation Y) became known for some distinctive traits: relentlessly connected via social media and smartphones; stressed for time; inclined to be socially progressive; and generally positive in outlook—despite hefty loads of college debt and a hobbled labour market that has forced many to live with their parents until well into their 20s.
The front end of the cohort—whose members were born between 1980 and 2000—has now reached nesting age, and their consumer choices are rewiring the vast market for products and services geared to new parents. “There’s going to be more spending on kids than ever before,” because this group cares about quality and will pay more for it, predicts David Coletto, CEO of Abacus Research, an Ottawa firm focused on millennials.
A growing number of entrepreneurs is positioning to seize this demographic moment. One is Shaindy Alexander, who launched a line of teethers made from organic cotton and untreated maple in 2007, just after widespread reports about lead in toys produced in China. Her Toronto firm, Ringley Natural Teething Products, now sells in 13 countries and saw sales double last year. Millennials, she says, “will invest in quality and in products that are healthier for their children.”
Market research confirms the point. A 2010 survey by Abacus showed that 51% favoured “ethical” products and were willing to pay up to 16% more for them. “It’s a back-to-basics mentality,” notes Coletto, a Gen Yer himself who notes that his contemporaries favour simple, wooden toys for their kids.
Environics Research analyst Jillian Barber adds that millennials value being creative and want to stand out from the masses. “As parents, they will seek ways to differentiate their kids, and to allow them to get in touch with their creative sides through toys and experiences.
At the same time, she says, they are “avid” consumers whose spending habits will persist during parenthood. “When they find products they like, they will be much more likely to champion them than previous generations,” Barber observes. “This is particularly the case if they have a cool design and are a bit unique.” This mind- set presents opportunities for private-label and lesser-known brands, as these parents care much less about label cachet than previous generations.
For Gen Y entrepreneurs like Alexander, it’s millennials’ communication habits that matter most. Because these consumers are so attached to their mobile devices, they tend to investigate products thoroughly online, and are very willing both to take and give cues about their finds in the social- media universe. According to a 2010 study by global public relations firm Edelman, millennials are much more likely than older consumers to endorse products and brands to their friends via Facebook, Twitter or other platforms. And they’re happy to participate in brand-sponsored online “communities,” such as Facebook groups.
That’s a tendency familiar to Eryn Green, co-founder of Sweetpea Baby Food, a seven- year-old maker of organic and frozen meals for babies. “If they find a product they like, they’re very apt to tell their friends and endorse it,” she says. But Green warns that Gen Y connectedness can be a double-edged sword: “If you have an unhappy customer, they have a lot of outlets to talk about their unhappiness.”