Spending Spree: Where Millennials (and Gen Z) Spend Their Money, and Why

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Note: This article was originally published on August 2, 2017. The original article can be found here. We have updated it to reflect current trends and data

The much-maligned Millennial generation has been talked about endlessly, and accused of killing everything from napkins to golf. So when Millennials, along with their younger siblings, Gen Z, aren’t busy destroying industries, where is their money going? We decided to take a look at TraQline’s data to see how Millennials compare to the generations who’ve gone before. While it’s hard to generalize what millions of Millennials spend their money on, we can examine which categories they’re outspending other generations, what brands they’re spending on, and how they’re buying those products. These first waves of digital native shoppers are spending in categories that reflect their current lifestyles and needs and are drawn to brands who echo their ease with technology and willingness to go beyond brick and mortar to find what they want.

Where Millennials Spend Their Money

The top 3 categories purchased by Millennials account for 61% of all the dollars that the generation spent across the 9 broad TraQline categories:

  • Major Appliances (26% of Millennial dollars spent)
  • Consumer Electronics (22%)
  • Computer/Communication/Home Office (13%)

On the other hand, Millennials spend significantly less in the following categories:

  • Home Improvement (9% of Millennial dollars spent)
  • Building or Plumbing supplies (1%)
  • Kitchen & Bath Improvement (1%)

The Generation That Grew Up With Tech Comes of Age

Millennials tend to be digital natives, and their spending reflects that. Just over one fifth of Millennials’ spending mix goes to consumer electronics and 13% on computing and home office products. Not only do Millennials place a high value on their tech, but an increasing number of workers choose to telecommute, and/or continue to do work from home during evenings and weekends. We previously hypothesized that spending on home offices could increase due to telecommuting trends, however, this spending on home office setups is starting to shrink somewhat.

recent survey indicates that 36% of younger American Millennials are homeowners, and 61% of the older members of their cohort (along with the youngest members of Gen X) have purchased homes. With more Millennials starting up their own households, spending mix is significantly higher in categories such as Major Appliances (these expensive purchases make up 26% of Millennials’ dollars spent).  These products designed for upkeep and upgrades are naturally purchased more often by people who own rather than rent their homes, and require regular maintenance. On the other hand, Gen Z’s spending on home improvement type products is similar to what we saw amongst Millennials at this time in 2017.

 

Brands that Millennials Prefer

With tech and appliances being the top purchases for Millennials; and given that tech companies such as Samsung and LG also make successful “tech-y” major appliance products, the top three brands might be obvious.  Accounting for about 28% of their dollar mix – these three companies historically are perhaps best known for their consumer electronics. Samsung, which wins the largest percentage of Millennial dollars, has married technology and design to help attract Millennials, as have #2 and #3 – Apple and LG.

These same three brands account for 32% of Gen Z’s dollar mix, though Apple edges out Samsung for number one. Gen Z’s top two are much closer in dollar mix than the top two Millennial brands.

When breaking out major appliance purchases, it’s not all high-tech gadgets and consumer electronics for the younger generations though. In terms of dollars spent, General Electric and Whirlpool both rank highly with Millennials and Gen Z.

 

Do Millennials Shop More Online Than Other Generations?

As noted earlier, Millennials and Gen Z are digital natives. Most Millennials grew up with the rise of the internet, and were in high school or college for the ascendency of smartphones. All but the oldest members of Gen Z may not remember a time before the ubiquity of the internet and smartphones. As a result, they are more likely to shop online than any other generation. Additionally, almost 24% of all dollars spent by Millennials on consumer durables is spent online. Gen Z– just now growing into adulthood – spends almost as much money online as Millennials.

That isn’t to say that other generations aren’t shopping online.  In fact, Baby Boomers (approximately age 55 or older) are more likely to shop for power tools online than the more e-commerce savvy Millennials. Additionally, members of Gen X are significantly more likely to seek out exercise equipment and automotive products like batteries or tires online.

Retail for consumer durables is shifting and reconfiguring as new generations come of age. Millennials are still participating in the economy, despite the doom and gloom of some news reports. Where they concentrate their spending may be new or different, and reflects their lifestyles, but there’s still plenty that is familiar to older generations. We may even see a shift in how Millennials spend as they begin to establish households, though the brands themselves may vary from what previous generations have preferred. What have you noticed about the Millennial and Gen Z consumers coming to your stores or buying your products? We’d love to have your insights to add to our data! Leave us a message on LinkedIn, or tweet us @TraQline!