Strapped Millennial Generation May Require Special Incentives to Buy
One key market segment that is likely struggling in the current economy is students, who make up a whopping 25 percent of the outdoor participants, according to the 2011 Outdoor Recreation Participation Report released earlier this month.
While below its level of a year ago, the unemployment rate for 16 to 19 year olds reached 24.6 percent in September, or more than 50 percent higher than four years earlier. Teen spending has picked up in recent months, but remains at about $50 per month, or half its level prior to the recession, according to Michael Wood, a senior vice president with TRU, a market research firm specializing in 12-29 year olds. Growing credit card and student loan debts, meanwhile, are causing college students and recent college graduates to re-evaluate their spending habits. One need look no further than the placards at the Occupy Wall Street protests to see evidence of this group’s growing economic anxieties.
“They are not only cutting back, but they are proud that they are cutting back,” said Wood in a presentation he delivered earlier this month at the OIA Rendezvous executive conference. “If you are on the premium side of the aisle in this environment you have to help them to justify their purchase and do it now.”
One way to accomplish that is to create a sense of urgency and scarcity. Wood recommended three tactics for achieving this goal.
- Limited editions. Athletic brands like Nike, adidas and Puma have been using this tactic for years to sell everything from $170 limited edition basketball shoes endorsed by NBA stars to apparel used to raise money for breast cancer research. Last week, adidas announced a promotion that revolves around the upcoming release of Electronic Arts Inc.’s Need for Speed The Run video game. Adidas launched the promotion Wednesday by putting on sale 50 of its special edition Need for Speed The Run shoes, which appear in the video. Similar events will follow at adidas stores in San Francisco and New York, which are all prominently featured in the video game’s race scenes.
- Special collections. Target, department stores and other retailers have teamed with designers to offer these for years. Woolrich released a special collection of 17 of its classic styles in 2010 to celebrate its 180th anniversary. Each style was produced in a run of 180 and each used a special label and hangtag. In an article last year, OIA reported on how outdoor brands were using special collections to respond to growing demand for authentic American brands.
- Online coupons. Thanks to Groupon, Living Social and other social shopping sites, consumers are redeeming online coupons in record numbers. However, retailers must prepare and plan carefully when launching such promotions.
In the meantime, marketers must anticipate and plan for more resistance from financially strapped teens and 20-somethings.
“You have to ask yourself what motivates young people to spend money in this environment,” said Wood.