As the millennial influence on the retail and consumer sphere increases, new opportunities and challenges are emerging for retailers.
Incentives are becoming commonplace, brand loyalty is on the decrease and millennial luxury buying is both fragmented and impulsive, creating a minefield for brands to manoeuvre around in order to succeed.
The millennial generation, born between 1980 and 2000, are more numerous than any generation since the baby Boomers. By 2020, it is envisaged that millennials will form 50% of the global workforce, meaning they will remain dominant spenders and shape the world of retail for years to come.
Millennials are flooded with information, basing their buying decisions on social media, magazines, posters, word of mouth, websites, blogs and videos. Phrases such as YOLO (You only live once) and FOMO (Fear of missing out) are commonplace amongst the younger millennials. At first glance they appear to be irrelevant abbreviations, however, they reflect a clear message consistent with millennial's spending trends: the value is in the experiences millennials can gain from the product, not the object itself.
The millennial influence
Traditionally, luxury purchases have been made in-store; there being a commonplace understanding that online platforms were incompatible with the higher-end purchases. We have seen a transition over the past decade, dictated by millennials, who now choose on occasion to make these luxury purchases online or at least undertake pre-purchase investigations, consulting product reviews, customer satisfaction and potential problems. Luxury purchases are becoming a vital part of the millennial's story, to share on their daily blogs and social media accounts, mediums through which they can discuss and reflect on our experiences.
Brands are reacting to these changes by engaging in social media campaigns, employing influencers to represent their products and recognising that authenticity is essential and acknowledging that no single channel is significant. This means an inevitable increase in marketing costs and trend analysis, with brand companies acquiring and developing new marketing and email-alert platforms. With competition increasing and there being more choice for consumers, retailers are under a greater pressure to ensure their campaigns reach their market, not only at the right time and price, but in a way that convinces them the purchase will bring them a fulfilled experience.
Data sharing and retention
Brands face the challenge of dealing with the inevitable surge in the sharing and retention of personal data over a spectrum of mediums, a topic on the forefront of all our minds in the lead up to the General Data Protection Regulation (GDPR) which will take effect on 25 May 2018. The GDPR will, for the first time, apply to companies outside of the EU who are targeting consumers within the EU, meaning the international reach of this regulation is going to be vast. In addition, each EU member state has certain areas of discretion in the GDPR to fill in areas left to them by the GDPR. This in some cases has led to gold-plating of the GDPR's requirements and also it seems that, at the time of writing, the UK's Data Protection Bill may also do this as it proceeds through Parliament.
In addition, we have seen a growing trend of organisations receiving subject access requests (i.e. a request from an individual for a copy of their personal data) and also being unclear on what data they can legitimately retain and utilise for their service provision, analytics and what data they should be retaining to protect themselves, for example in the event of a complaint or investigation. The two combined can lead to other issues. For example, derogatory comments about a customer having been recorded and then having to be disclosed to them, or having to undertake an extensive search because so much personal data has been retained.
Practical guidance on transparency and data retention
First and foremost, being clear with individuals why their personal data is collected is key, and documenting this. The GDPR prescribes additional information in privacy policies and organisations must set out the legal basis on which they are processing personal data. One of these is consent, and this has been extensively used in the past. This will change, as GDPR tightens up when consent can be used. Consent must be freely given, precise, clear and informed. In short, the consumer must be aware that they are giving their consent, it must be a free choice and they must be given notice of the purposes for which their personal data will be used. Often, one of the other legal bases of processing may well be more appropriate, such as performing a contract with the consumer, or the organisation's legitimate interests. These need to be documented.
Personal data will be retained, no doubt, for different purposes and it is important to distinguish the personal data. For example, personal data that needs to be retained to evidence orders have been fulfilled, for legal and other compliance requirements. Or personal data that demonstrates the customer's specific preferences for future email/marketing alerts and promotional material. It is, therefore, vital for retailers to seek advice on data retention and ensure comprehensive but workable policies are in place to ensure that you are able to analyse data and reach out to your consumers, giving them the experience they require when making a luxury purchase (and being able to analyse how and when to reach them most effectively) but avoiding falling foul of data protection requirements and obligations.