Millennials will control our world (Four in a five-part series)
Friday, June 26, 2020 from Floor Covering Weekly Prime Edition
And, “A fundamental shift in the spending habits of U.S. millennials will have an incredible impact on the world’s largest economy,” according to the CEO of Smead Capital Management.
“U.S. adults aged between 21 and 38 years old will prioritize ‘necessity spending’ over the next decade, Bill Smead told CNBC’s “Squawk Box Europe.” It comes after a 10-year period in which the same age group has “lived off discretionary spending.”
He said this will mean young adults will soon start to move away from buying “Apple devices, craft beer and Chipotle burritos” and instead spend their savings on big-ticket items such as houses and cars.” And floor covering, we assume.
“That will be a whole different ball game” for the U.S. economy, Smead said.
It seems that all businesses are super nervous about what Millennials will do or buy. Millennial buying power is not in dispute but what will happen sure is. It’s somewhat comical that when a business writer writes about a finding that Millennials are not buying as much of product “X,” they all start with, “Millennials are killing….” Yes, killing. Nothing subtle about that. We have read, Millennials are killing alcohol, napkins, breakfast cereal, motorcycles, bars of soap, financial institutions, men’s suits, aspirational brands, cable TV service and more and more.
(Here is an awful thought: Folks making liquor drinks have or are going to turn to everything infused. Apple infused bourbon, banana infused gin, raspberry or peach or strawberry infused beer. I say, eat the fruits the way they were grown and drink pure booze.)
Renting is big. Renting not buying houses is so big that there is a shortage of rentals of any type of houses and or apartments. For the first time ever, new home builders are building homes just to be rented. Taylor Morrison just announced a partnership with Christopher Todd Communities to build single-family, rent-only communities. It’s part of a trend of builders stepping into the single-family rental space, either on their own or partnering with established rental companies. Both Lennar and Toll Brothers have recently started building homes for rent.
And renting clothes is also big. Huh? Yes, there are all sorts of rental programs for women’s clothes. Millennials are the driver. To understand the power, understand this: Lord & Taylor, a 190 year old luxury retailer with 40 stores, was sold to La Tote a subscription clothing rental service, which is seven years old.
Clothing rental is big and equal is the reseller market. We called them “next to new stores,” now it is the “repurposed market.” And it is all the rage online. The re-seller store used to be someone else’s store that you didn’t go to because it suggested you couldn’t afford new clothes; now, led by Millennials, it is everybody’s store, for mass marketed and also luxury products. Some estimate that this will be a $51 billion industry and that doesn’t include all the stuff sold at garage sales.
Nothing is sacrosanct. Order groceries online and they will be ready for you to pick up. No, I’m sorry you can’t smell the melon for ripeness, someone else will who you don’t trust, but…. Or, order groceries and they will be delivered to you in two hours.
Indeed, Millennials will be the ultimate disrupter. Yes, they will kill certain products and methods of doing business. But they will also help explode the sales of products or services they like.
What about our industry?