Why the digital generation is shopping in stores

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Millennials may have earned the reputation for doing all of their shopping on smartphones and tablets so they can pay from wherever they are, but a growing body of research suggests that most prefer shopping in brick-and-mortar stores.

For the payments industry, all of this comes as a reminder not to neglect efforts to improve the point of sale.

“The key point is making the payment process as easy as possible, no matter where they are,” says Michael Osborne, president and CEO of behavioral marketing platform SmarterHQ.

In a 2018 survey of 6,000 consumers worldwide, consulting firm Accenture found that 82 percent of millennials prefer brick-and-mortar stores. That’s based on respondents from across the U.S., the U.K., Germany, France, Sweden, Japan, China and Brazil and included 1,707 millennials, which the survey defines as individuals born between 1980 and 2000.

The 2018 holiday shopping season is on track to reflect the trend. The International Council of Shopping Centers reports that 71 percent of shoppers intend to visit a shopping center or mall on Thanksgiving and/or Black Friday. On both days, higher shares of millennials (83 percent) will go to one of these destinations, compared to Gen Xers (75 percent) and baby boomers (55 percent).

“Millennials like to shop in-store for the same reasons as older generations — the ability to touch, feel and experience products cannot be duplicated online,” says Stephanie Cegielski, spokeswoman for the council.

Shopping in stores is also a social experience, as malls provide a neutral place that is neither home nor work.

Millennials are expected to be the highest-spending group this holiday season, estimating they’ll spend $775, compared to $658 for all age groups combined, according to Accenture.

Even though they may browse online first, millennial shoppers ultimately want to see the merchandise up close and complete the transaction in person, according to research by SmarterHQ, which found in 2017 that half of millennials prefer shopping in-store.

“This was the first behavioral trend we saw coming out of this research that was surprising,” Osborne says. “It was counter to what we were reading in a lot of other articles — that millennials are not shopping in stores — that stores are dead, malls are dead. And clearly this says otherwise.”

There’s mounting evidence the trend is true in Europe, too. European millennials make an average of 25 in-store purchases each month, which comes out to about 300 a year. By comparison, an average of 160 online purchases are made per person per year, according to a 2017 study on European millennials and their relationship with payment systems, by digital consulting firm Reply.

And a 2016 study by Innofact for Creditreform Boniversum in Germany found that millennial internet users show a clear preference for buying in-store to buying online. It’s worth noting that malls account for twice as much retail space in the U.S. as they do in Europe.

Although the firm has not done any specific research on millennials outside the U.S., SmarterHQ serves customers with European sites, and Osborne has not heard of any of them using different strategies to reach millennial shoppers there. “The overall trend of that age group doesn’t seem to be different across other locales, from our experience,” he says.

Regardless of which payments platform they use, whether it’s offline or in-store at the point of sale, the one thing all millennials seem to want is ease of experience and a painless transaction. “That’s probably the No. 1 thing any brand could do around payments,” Osborne says.

There’s a tendency to see shopping as bifurcated, with the physical world separate from the digital world. Millennials, and even more so Gen Z consumers, don’t see it that way, says Richard Kestenbaum, partner with Triangle Capital LLC, which raises capital for retail companies. No matter where they pay, consumers don’t want a burdensome payments product.

“The simpler and less present payments are, the better it is for the consumers,” Kestenbaum says. “Consumers, including millennials, are not impressed with whiz-bang technology if it doesn’t make their lives easier. So when paying with a smartphone isn’t faster than taking out a credit card and inserting or swiping, it’s not a better system. What’s better is faster.”

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