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True millennials may be retail’s biggest disruption yet

Retail real estate is facing one of its greatest disruptions in decades



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​​​​True millenials-min.jpgRetail real estate is facing one of its greatest disruptions in decades in 2016 as a generation of true millennials – those born in the year 2000 – turn 16 and begin to harness their own spending power.

JLL New Zealand’s Director of Retail Sales and Leasing Chris Beasleigh says it’s something New Zealand retailers need to think seriously about. 

“How will the purchasing behaviour of this generation affect your business? How do these young shoppers want to interact with you? And do you have the facilities to give them what they want?”

The retail industry must keep a keen eye on these young consumers and the way they behave as adults because it’s expected to have a huge impact on what they’ll need from their retail environment – both here and abroad. 

“If real estate wants to be ready for them, we’ve got to think about the attitudes and spending patterns they’re likely to adopt, given the changing economies and technologies that will dominate their lives,” JLL UK’s Head of Retail and Leisure Tim Vallance says. 

​“They’ll be very different from any generation that’s gone before. Their retail behaviour, which I think could be best summed up as ‘promiscuous’, could be the greatest disruption to real estate yet – far greater than the technological revolution we’ve seen over the last 10 years.”

Free to spend

Imagine someone who is unlikely to save for or buy a home, who talks to their closest friends daily but never meets them, and whose work is carried out whenever and wherever they want. 

Traditional attitudes to money become less relevant – and this carries abundant knock-on effects, Vallance says.

With less reason to save, these teenagers are set to be more consumerist with greater disposable incomes than previous generations.

Vallance believes that this makes them highly unpredictable: “That’s going to be very challenging for anyone trying to meet their needs,” he says. 

“I don’t think we can underestimate their indifference to retail tradition and their tendency for retail promiscuity.”

Young people will have more choice over what they spend their money on, splashing out on experiences, which will foster a new kind of consumerism that is no longer based on mere materialism. Instead, they crave visceral experiences and unique entertainment.

Anyone who’s grown up with digital has grown up with control and choice at their fingertips. Consequently they’re less likely to have any loyalty to brands or places. Anything that doesn’t meet their needs in terms of convenience and price simply won’t be relevant.

And with 24/7 access to technology, true ‘free’ time becomes limited, so physical experiences must beat what can be achieved online. Stores must work harder to entice these customers and other real estate will be forced to evolve, too.

A new kind of consumer

As movement of people becomes more common, spurred on by a lack of designated workplaces and the technology to connect instantly with people all over the globe, offices will have to integrate leisure to meet the needs of younger workers.

Vallance adds: “If I had to make any predictions of what they’ll want, I’d say a variety of smaller niche shops in authentic places where they can eat a variety of foods, drink coffee, and hang out with their gadgets, as well as their friends and colleagues. And if they need to use any workspaces, they want them to be nearby so that their leisure and working lives are seamless.”

Dual society

However, while true millennials may want flexible places for their experience-driven lifestyles, the more predictable, slightly older, richer generations X and Y will remain hugely important, especially to retailers.

“It may be that we have a dual society – one group that’s mobile and driven by great experiences, and another that’s more fixed and asset-holding – now that really would be very disruptive,” Vallance says.

In New Zealand there were 56,605 births in 2000, of a total population of 3.8 million. Another 55,799 people were born in 2001 and 54,021 in 2002.* 

“The number of true millenials should not be ignored. They are about to become serious shoppers in the next few years. New Zealand retailers have the opportunity to be at the forefront of some exciting changes in the industry if they do some do some serious thinking about their long-term real estate needs,” Beasleigh says. 

*Source – Statistics New Zealand ​​