Millennials' Changing Consumption Habits

Millennials are fast becoming society's changing demographic with regards to their spending. 

They are more likely to share a car than own one, rent a home vs buy, and invest in experiences over material goods. Millennials don't like to commit, particularly when it comes to money and investments. Don't forget, the average Millennial is strapped with $30,000 in student debt and witnessed the economy tanking the during the Great Recession of 2018.

But circumstances change and as the 'Y generation' is gets older and matures their spending habits are beginning to change - ergo there are four sectors of the economy that stand to benefit.

1. Housing: in 2016 Millennials were the largest group of U.S. home-buyers, indicating their need to switch from renting to purchasing homes. In fact, affordable housing inventories are falling pushing prices higher throughout the country. Look for  developers, builders, construction,              businesses benefitting greatly from this trend.

2. Household Durable Goods: In 2017, a study found that over 75% of Millennials would rather            spend their money on experiences vs. material goods - this is changing. The home buying                    trend will increase Millennial spending on home furnishings, appliances, and all sorts 
    of home goods from lawnmowers to garage openers.

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3. Retail: Although purchases via the internet have grown exponentically it still only accounts for  about 10% of  all retail sales. The Millennials are going to push retail purchases much higher, and the businesses that will benefit most are those with operations in both the physical and virtual worlds. This is already manifesting itself. Walmart redoubled its online operations. Amazon, on the other hand, is going for brick and mortar with its purchase of 400 Whole Foods stores and building its own 'dash' shopping food stores.

Millennials spending habits are changing

4. Autos: Many Millennials rely of Uber and Lyft for transportation. As they start families, however, owning cars, SUVs, trucks, and minivans becomes a necessity. We are already witnessing the auto industry aligning with Millennials'  by manufacturing energy efficient vehicles that provide lots of safety features.

Despite their penchant for sharing, experience related activities, and online everything Millennials are moving into another stage in their lives which necessitates them changing their purchasing habits. That said, Millennials will continue to drive the on-going revolution in consumer spending. 

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Jim Lavorato