By Suzann D. Silverman, Editorial Director, Commercial Property Executive
San Diego—As retail strives to recreate itself for the post-recessionary market, investors and developers are targeting one group in particular, and they are an opinionated and fickle bunch. The good news is that Gen Y loves to shop, the Urban Land Institute found in its most recent study of the generation’s retail preferences. The study, released at the Spring Meeting in San Diego on Thursday, followed last year’s report on Gen Y housing preferences.
Gen Y, those 18 to 35 years old, constitutes a strong segment for retailers. Beyond being a huge group, they bring financial strength to the market. Sixty-five percent of the 1,251 respondents to the survey do not receive financial help from their parents, with 41 percent working full time and fully 46 percent achieving household income of $50,000 or more per year. Thirty-two percent own their own home (predominantly those in their 30s).
And they are a financially responsible group, noted study author Leanne Lachman. Although they carry an average of $22,000 in student debt, four of five don’t use credit cards and 27 percent pay their credit card bills in full every month.
And they do shop. Eighty-five percent of respondents said they enjoy shopping, and not just women. In fact, eight of 10 men admitted to favoring this pastime. Overall, blacks and Hispanics turned in higher numbers than whites, with 89 percent of each group claiming a liking for shopping versus 83 percent of whites. Only 4 percent of the overall group said they hate shopping.
Shopping for them is very much a social pastime. Sixty-five percent said they typically shop with friends or family members. And 28 percent said shopping centers are their favorite place to get together with friends. Seventy-five percent go out to the movies, And 46 percent eat out with family or friends at least once a week.
Online shopping figures heavily in Gen Y activities, but bricks-and-mortar stores are still important. While 45 percent spend at least an hour online each day exploring retail-oriented sites, they often use Web sites for research, making their actual purchase in the store (conversely, of the 38 percent who purchase electronics online, one-quarter first go to the store for research).
With Gen Yers sporting short attention spans and a low boredom threshold, Lachman advised shopping center owners to think about fresh stimuli to keep this group interested. Certainly they are fickle restaurant goers, but the overall mix in a mall or shopping center needs to appeal to a range of interests that include entertainment, value, style and social gathering. Pop-up shops can be a critical part of this mix, according to Team I-Sight president Linda Berman, who noted they are not just for temporary offerings but are being used for experimentation by well-known chefs as well as established retailers seeking to try new ideas before they implement them in their stores. In fact, she said, they are turning to fashion schools for inspiration, setting up competitions between groups of seniors to get new, inexpensive inspiration from the Gen Y group itself.
Shopping center owners also need to think about other lifestyle preferences, Berman cautioned. For instance, while they have a strong preference for including their pets in many aspects of their lives, “everyone should have great pet concepts in their mall,” she declared, pointing to the hospitality sector, where brands like the Ritz Carlton have figured out how to incorporate pet attendance successfully. Yet among retail center owners, nobody has. With the pet segment highly fragmented, with many mom-and-pop owners, “developers are still looking for retailers.”
The popular stores targeting the generation continue to thrive, according to Steve Morris, president & co-founder of Asset Strategies Group—the likes of Forever 21 or H&M. But don’t be too quick to dismiss longer-standing brands, he cautioned. This group also likes thrift and discount stores. Department stores, too, continue to attract them, although they are using these stores differently, Lachman noted, doing their research online and then heading directly to their target item in the store for purchase. The end result, though, is that Macy’s, despite many dire predictions through the years, keeps performing again and again, noted session moderator Alan Billingsley, principal of Billingsley Investments, and Lachman added that JC Penney ranked high on survey respondents’ preference list despite recent criticism of its experiment with incorporating discounts rather than offering sales.