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Millennial Influence Has Retailers Delivering Quick, Convenient, Custom, Innovative Products And Services

Millennials play a dominant role in driving changes in retail, according to Telsey Advisory Group CEO Dana Telsey, who spoke at ICSC’s 2016 Western Conference in San Diego last week. She said the sheer size of this group, 88 million, represents $1 trillion in spending power.


Consumers have money to spend, but retailers have to give them a reason to spend it, Dana said. She said the leading indicator for a 2.7% increase in spending for Q2 2016 was growth in disposable income.

Winning retailers understand Millennials and have efficient supply chains, she said. “Being fast is essential, as well as localizing, regionalizing, customizing and personalizing.” Retailers need to accelerate checkout lines, as people no longer want to wait in long lines to pay. Walmart realized a 1.2% increase in foot traffic after implementing strategies to speed up the checkout line, Dana said.

She said all retailers could take lessons from the playbook of Spain’s Inditex. This apparel retailer has created a supply chain that responds to trends—what works, where—instantly in real time, she said. Inditex has eight apparel and home goods brands, including its flagship brand Zara, and operates 7,000 stores in 91 countries.


Millennials have popularized food trucks, such as the one above, which are among expanding concepts.

There’s also a convergence of online retail and brick-and-mortar stores, with retailers investing in technology to create multiple channels for driving consumer spending and learning more about their customers’ spending behaviors. Both Millennials and Baby Boomers, who number 79 million, are important consumer groups, but retailers must employ different strategies to reach these demographically diverse groups. Dana said because Millennials grew up with technology, they respond to social media, while Baby Boomers still require TV and newspaper advertising.

She said specialty retailers are figuring out new and different ways to attract consumer spending with innovative products, promotions that provide discounts and seamless storefronts—buy online, pick up in the store purchases are up 20% to 40%. Shoppers are also more value-oriented than ever. As a result, off-price stores—Ross, T.J.Maxx, Marshalls—are experiencing a tremendous increase in traffic, causing discounters to expand their product categories and offer higher-quality brands.

Meanwhile, some retailers are downsizing and donating space for new concepts, specialty grocers and others, while increasing their omnichannel marketing strategy, such as Sears, Macy’s, Big K, Stage Stores (Bealls, Peebles, Palais Royal and Goody's), Aeropostale and Abercrombie & Fitch.


Shopping center owners are updating their assets and changing the tenant mix to provide experiential and service-oriented retail, such as restaurants; hair and nail salons; fitness concepts; and entertainment venues, including full-service movie theaters with fine dining and bars. Dana cited growing experiential concepts like SoulCycle, which offers spinning classes; Sephora, which offers makeup classes; and the increasingly popular blow-dry bars. “Consumers want places they can meet and socialize—it’s no wonder Starbucks is popular.”

Consumers are also demanding a fun shopping experience, which is one reason why retailers are investing in loyalty programs, Dana said. Retailers are redesigning their stores, finding ways to integrate the shopping experience with activities, and investing in leading-edge technologies to enhance the shopping experience, including“magic mirrors” that allow people to try clothes on electronically without undressing. Pictured above is Cisco's Virtual StyleMe Fashion Mirror.


Dana provided a rundown on recent trends. Wearable technology is driving consumer electronics. There’s also a convergence of apparel. “What we wear to work, we wear to play,” she said, pointing out activewear is the highest traffic generator in the apparel sector, sparking the proliferation of stores like Lululemon Athletica (above is a store in Westport, CT). The athleisure market is bringing entrants and innovation from overseas, Dana said, noting international retailers, particularly European, are infiltrating the specialty apparel space.

The focus of Millennials on health and fitness is also impacting food retailers, most notably making organic products more affordable and driving the emergence of healthy-food concepts, from restaurants to food trucks. The biggest area for emerging concepts is eateries and concepts that allow consumers to customize their food, like Blaze Pizza and Chipotle, which are popular with Millennials.

She said convenient healthcare facilities, including facilities like Minute Clinics, are increasingly going into shopping centers and discount stores like Walmart, as well as pharmacies.


Dana also talked about the growth of new fitness concepts, like Peloton, a high-tech stationary bike experience with 15 locations; Equinox fitness centers with 77 locations nationally; and Exhale Mind & Body Spa, with 29 locations that offer Barre Fitness + Spa Healing. Pictured is SoulCycle, opening primarily in affluent suburban markets. This facility is in Brentwood, CA.

She also said US department stores are struggling, primarily because they have traditionally relied primarily on apparel sales. Some innovative department stores are taking a lesson from their European counterparts, which offer diverse product categories, adding unique product selections to attract foot traffic. Nordstom, for instance, is putting in in-store Tesla shops.


Considered the Chipotle of Pizza, Blaze Pizza is growing in popularity among Millennials because it allows you to customize your own pizza.

Luxury goods are growing at a much slower rate than value retail, but new footwear concepts are emerging, such as embellishments on shoes to match handbags. Travel retail continues to represent an important growth driver in the global luxury sector.

Currency trends and Brexit are having a negative impact of tourism, she said, and with fewer visitors, retailers that rely on tourist business are now focused on attracting locals and capturing more dollars from fewer tourists.

E-commerce continues to be disruptive. But Dana said this “invisible threat" is beginning to bring foot traffic to shopping centers. She said online retailers are placing “happy returns” kiosks in shopping malls, causing people to take their returns to shopping centers, rather than to the post office. “As more kiosks open, the invisible threat is combining with bricks-and-mortar,” she said.