Industry Transformers

2015 will be a very exciting year for CSG’s prestigious content writers and industry experts

This year, our editors have unanimously agreed on a select collection of topics. Industry Transformers will highlight companies & executives who have managed to stay relevant in this ever changing environment. They will outline how businesses and people must evolve, adapt, and transform in order to become top leaders in the marketplace.

Enjoy our fourth topic: Millennial Marketing

Millennials, sometimes known as Generation Y, are the cohort of Americans born between 1980 and the mid-2000s according to The Council of Economic Advisers.

Apparel & Department Store Retailers

Department, apparel, and shoe retailers now use technology more than ever to engage millennials. This is truly the first generation to grow up completely online and as a result, the marketing mix used to target them has evolved. Top companies have personnel dedicated to social media, e-commerce and omni-channel efforts. Top retailers are creating apps for customers to browse products, read reviews and make purchases, along with other features.

Millennials are driving the growth of the private label, or store brand products. In this new economic world, strong brands will win even bigger and weaker brands will be replaced by private label. Millennials want to interact with brands by co-creating products and participating in the brand experience. Leading footwear brand, Nike, allows customers to create custom shoes in-store and online.

Additionally, millennials tend to crowd-source information before purchasing. They trust online reviews and would rather look up reviews online than ask their next-door neighbor. We also know that millennials are more willing to make a purchase from a company if their purchase supports a cause or if its brand stands for something. For example, TOMS Shoes has stuck with its “buy one, give one” business concept from day one.

Retailers are focusing on tailor-made experiences for each user by using a blend of digital campaigns and social media to gage interest and adjust their brand experience based upon this data. Stores like Urban Outfitters and H&M were quick to adapt to this new trend, where Abercrombie & Fitch and Aeropostale have been slower to react. Retailers that adapt to millennial needs will continue to yield increases in sales whereas those who are more cautious will struggle.

Discount, Dollar, & Hardware Retailers

Perhaps there is no retailer on the planet that has captured the imagination of millennials more than the Apple store (not to be confused with the App Store, another invention of Apple Inc.). Certainly the enormous impact of the preponderance of game/world changing inventions, concepts and devices emanating from this corporate brain trust have laid a foundation for the strong attraction Apple stores have impacted on consumers. The unique design and ever-growing concept of store functionality have made these stores the envy of retailers around the globe. Their breathtaking profits have helped Apple stock to soar to heights previously only dreamed of.

Let’s not forget that just over two decades ago many Wall Street analysts were bracing for the very possible demise of the company which was then called Apple Computer, Inc. The return to the company of cofounder Steve Jobs and some key strategic partnerships established a foundation to save the company. Finally, a Microsoft investment of $150 million in non-voting Apple stock seems to have saved corporate Apple. It is believed this investment came about to avoid the dissolution of a rare competitor for Microsoft and possible antitrust complications.

In 2001 Apple opened its first stores. The company had tested design and functionality of its planned store rollout, honing every detail to Steve Job’s stringent specifications at a test location, hidden within Apple’s facilities. Expecting that customer service would be a key attraction for the new stores concept, Jobs studied the hospitality industry and modeled much of his scheme after the ideas of the representatives of a prominent hotel chain whom he personally invited to seminars to explore ideas on which to base service at his new retail enterprise.

Apple’s life changing inventions are the foundation for the company’s incredible success over the past two decades. Steve Job’s simple negotiations brought the company a wealth of new income as he pretty much cornered sales from a dysfunctional music industry through the creation of his newly created online iTunes store.

Podcasts offered online, became a ubiquitous consumer staple. The instant popularity of the iPod, followed by several incarnations and generations of successors, seemed incredible but was eclipsed by the instant clamor for introduction the iPhone and its succeeding generations, followed by the similarly game-changing success of the iPad.

Through their versatility, these latter devices quickly were seen as necessities rather than comfortable luxuries. Now virtually everyone could access the Internet, while carrying a camera, from their pocket. Recent nationwide videos reveling questionable police tactics and the murder of Vladimir Putin’s chief rival show just how essential this technology has become. In retailing, the phenomenon of showrooming is the result of the incredible versatility of these devices. Retailers across the spectrum of retailing are now ramping up efforts through the frontier which is social media. The number of apps offered, most free or costing little money is staggering.

As usual new technologies are first embraced by the young. Most of the above are enjoyed by consumers of all ages but primarily now by millennials. It is essentially the millennial generation which created the demand for new generations to be introduced and accepted as rapidly as they have been.

Apple stores continue to evolve in ways that appeal to millennials. The genius bar, payment without a formal a checkout counter, child friendly customer service and even placing new stores designed to unobtrusively blend into historical locations are among the most significant examples. Construction of the store at historic landmark Grand Central Station disturbed virtually nothing of its space within the world famous structure. It is almost as if a library had been quietly inserted into a historic landmark institution.

Recently a colleague in our CSG IT department upgraded his iPhone to the latest, larger model. When asked why he chose an iPhone over the competition, he replied that he asked a cousin for advice. He felt that as his cousin is a millennial he would likely know best.

Drug Store & HBC Chains

One of the top reasons drugstores are favorable to millennial consumers is not anything new or revolutionary, but the evolution of a traditional industry characteristic: convenience. Drugstores have always been keen on finding the best ‘corner’ lots or intersections with high traffic, especially those with easy entry/exit. Locations are usually close to home – many even walkable in some urban areas – and offer a fair assortment of packaged goods. Now, drugstores have gone a step further over the past five years and added larger selections of fresh foods, beverages, and ‘grab-and-go’ items.

Of course, any retailer looking to engage millennials successfully better have a smart mobile marketing plan. Walgreens offers mobile prescription refills, is experimenting with virtual office visits through its app, and is using a Duane Reade (the New York chain it acquired) mobile promotion as a roadmap for possible integration throughout its entire store network. Millennials also seem to be warming up to in-store retail clinics, where CVS Health and Walgreens are industry leaders in store counts.

CVS’ and Walgreens’ commitment to health and the environment is also an indirect benefit related to millennial marketing, a very conscious generation on these topics. CVS dropped all tobacco products from its shelves and added ‘Health’ to its name, while adding new programs to help smokers quit. Walgreens has committed to making its store network ‘green’ and energy conserving, while opening the nation’s first ‘net zero energy’ retail store, which produces energy equal to or greater than it consumes.


Grocery & C-Store Chains

Think back to the year 2000, grocery stores were just places to buy food and maybe rent a movie. There weren’t many frills, self-checkouts weren’t in most stores, the ‘in-store’ restaurant was a salad bar, and it was a place to find moms and their children. Fast forward fifteen years to today and these stores couldn’t be more different. Many stores have been renovated with in-store restaurants, have some sort of social media account, offer a large variety of private label products, cater to both men and women, have downsized and are opening in urban cities, and are offering more organic and healthy products. Why the changes? One of the reasons is that, “Millennials, the cohort of Americans born between 1980 and the mid-2000s, are the largest generation in the U.S., representing one-third of the total U.S. population in 2013” (The Council of Economic Advisers).

In 2000, today’s millennials were often the kids at the supermarkets with their moms getting the free cookie and being dragged around for what felt like an eternity. Today they are the ones doing the shopping and they want very different things from the supermarket industry compared to the generations before them. Here are five ways they have affected the supermarket industry.

1. Social Media. “Three-quarters of millennials have an account on a social networking site, compared with only half of Generation Xers and less than a third of Baby Boomers” (The Council of Economic Advisers). Whether it is Facebook, Twitter, Instagram, Google+, or an app, grocery stores have an easy and free way to reach all of their current and potential customers.

2. Smaller Formats. Companies such as Walmart and Target are beginning to scale down their stores in order to get into more competitive markets. The reason for this? More and more millennials are moving back to the city and are staying away from suburban areas.

3. Private Label. A large portion of millennial’s lives have been during a recession and many now have thousands of dollars in college loans. Many of them grew up eating and using store brand products because it was cheaper. This has carried on with many of them into adulthood meaning many don’t care about purchasing Tide over a less expensive store brand. In a study that analyzed millennials social media comments, “Of the conversations we studied, only 3 percent mentioned a brand name” (Insights & Planning at 360i).

4. Healthy Options. While they may not care about name brands, many do care about healthy options and information on where the food came from. Many stores have added a health section, expanded their produce options, and have integrated organic options for many products. Health food stores such as Earth Fare and Natural Grocers by Vitamin Cottage have exploded into the market and are taking up increasingly more market share. “Nontraditional retail’s gain from 29% of the market today to 38% in 10 years will be driven mostly by the online and fresh-format channels, each expected to increase their share of the market from slightly more than 2% of retail sales to close to 6% within the decade” (Technomic).

5. Groceraunts. The salad bars transformed into prepared food sections, which have transformed into entire dining areas. Not only can customers get all of their groceries from the store, now they can also get dinner. Many stores are even adding wine and beer bars, sushi stations, pizza ovens, etc. I recently spoke with a millennial about restaurants and he brought up how he loves the bar at Whole Foods and that “it isn’t a place to grocery shop, it’s more of a place to hang out.” This is the main reason groceraunts work, and why more are being added to stores: it creates a unique experience and brand loyalty.



Restaurant Chains

The restaurant industry has always been above the curve when it comes to new demands and generational shifts. According to National Restaurant News (NRN), restaurants now “create a culture of inclusion, transparency, and creativity.” Basically, everything a millennial could want.


For millennials, going out to eat isn’t just about the food; it’s about the experience and being with their family and friends. Restaurants are now focusing on cultivating an atmosphere that is inviting, creative, and a definite conversation starter. Among the sometimes unusual décor, intimate small tables have been replaced with communal-style tabletops and/or movable tables that encourage group socialization. For example, Modmarket has increased the number of communal tables in its locations since its start in 2009. After receiving positive feedback from its customers, it now equips its restaurants with tables that sit up to 10 people.


Not only is it important to update and maintain the atmosphere of a restaurant, but modernizing technology is highly important, too. Most companies have installed USB ports, more electrical outlets, and even provide free Wi-Fi to accommodate to all the technological gadgets millennials now possess. Additionally, restaurants are being equipped with tabletop tablets, kiosks, mobile-friendly websites, apps, and customer loyalty programs.


The next step to keeping up with millennial demands is to fill their stomachs with food that the millennial will actually eat. Millennials tend to throw around words like “healthy,” “organic,” and “farm-to-table” all while wanting to pay about the same price as a combo meal at a fast food joint. Millennials are more health-conscious and want to pick out and eat their food that not only looks and tastes better, but makes them feel better about eating it. Allowing the consumer to pick from a menu created with them in mind is what keeps companies like LYFE KitchenChipotle, and Panera alive.


Along with the customization of food, the millennial generation has pressured companies to be more transparent in where the food comes from and how it (animal or vegetable) is being treated, who is preparing the food, and how is it being prepared. A way to appeal to millennials is to build restaurant locations with “open kitchens.” For example, LYFE Kitchen has an open and completely visible kitchen while at restaurants like ChipotleSubway, and Pie Five Pizza build the meal right in front of the consumer.


Last but not least, millennials care about sustainability and environmental transparency. Millennials may have a few more demands and expectations than the generations before them, but they have a reason – because they care. Millennials are “socially conscious” and will stand behind a company that continuously strives to improve food quality, give back to its community, and decrease the company’s overall food waste, water consumption, and carbon footprint. Companies like Dunkin’ Donuts and Starbucks continue to build restaurants to LEED standards while IKEA and Target locations are being equipped with solar energy panels.

Goldman Sachs once stated that millennials are “forcing companies to examine how they do business for decades to come.” Whether it’s with technology, décor, or environmental sustainability, restaurants will continue to cater to the needs of its consumers, and millennials will continue to change the world one bite at a time.