For Millennials, life isn’t as rosy as you’d think
Sorry to shatter the illusion, but unemployment, spiralling debt, careers without prospects, the generational wealth gap, social-media induced stress and general life-anxiety also affect Millennials’ consumer decisions and by extension, their travel behaviour.
When it comes to writing observations about Millennial-aged consumers, there’s a tendency to accompany such writing with a filtered photo of happy, good-looking Millennials. They’re usually of diverse backgrounds and sharing a joke around a picnic table or, of course taking a group selfie. They’re all wearing big smiles, have perfect teeth and simply ooze health and prosperity (spoiler: they’re stock-photo models).
You know the type of images I’m talking about, and maybe like me you’re also guilty of using them in your presentations when trying to capture the essence of ‘Millennials’. It’s an easy trap to fall into, and to be honest these days I try to keep them to a minimum, in favour of illustrating the diversity of this generation and the different stages of life they pass through during this crucial period of their lives.
Which brings me onto the subject of this post: namely, that not everything is perfect for this generation, in fact far from it. Therefore in order to be effective at communicating with Millennials, you have to understand the bad stuff that’s happening to them, as well as the good.
Before I go any further, I want to highlight a point that must be understood properly if we’re going to understand Millennials’ consumer behaviour in a proper, measured way. That is: not all Millennials are the same.
During my presentation ‘Six Trends that Will Change the World’ at WTM London last year I illustrated this point in different ways. Between the ages of 18-35 you can go through the gruelling obstacle course that is school, part-time work, university/college, internships, first major romantic relationships and much else. Think of Millennials who you know, and you can quickly see how diverse they are. There is also a significant difference between the life events and of Millennials from different countries especially between Millennials from mature and emerging outbound markets.
These similarities and differences between Millennials were neatly outlined by Robert Guest in The Economist in January 2016: ‘All generalisations about such a vast group should be taken with a bucket of salt. What is true of young Chinese may not apply to young Americans or Burundians. But the young do have some things in common: they grew up in the age of smartphones and in the shadow of a global financial disaster. They fret that it is hard to get a good education, a steady job, a home and—eventually—a mate with whom to start a family’.
Furthermore, last week Deanna Ting published a very good article in Skift, asking ‘Do Millennials Really View Travel Differently?’ The article was posed as ‘a daring thought’ and suggested that actually Millennials’ attitudes really aren’t that different to those of previous generations that the same stage in their lives, and that other generations are quickly starting to adopt similar patterns of consumer behaviour to Millennials. It also suggested that for this reason it might not be worth the time or effort of catering to Millennials specifically. I would argue that actually Millennials’ worries are some of the key characteristics that define this generation’s consumer habits and, by extension, their travel behaviour.
So where did it all go wrong?
Over the past decade, Millennials growing up in the more mature outbound markets of North America and Europe have, to a greater or lesser extent been affected by the following:
- High levels of unemployment. During the crisis, unemployment among younger people rose faster than it did for older adults.
- Unstable career paths: Careers, especially those traditionally considered ‘safe’ in the public services are becoming characterised by uncertainty, wage cuts and poorer conditions
- Rising cost of higher education: For many young people graduating in the US or the UK it is now normal to be in five or event six-figure debt before starting a first job. Debt repayment is also to be factored in with the higher cost of living
- Unstructured work: Young people are disproportionately subject to short term employment, zero-hours contracts, dependence on internships or the need to raise income through the on-demand economy (short term accommodation, car sharing, food delivery etc). This has the effect of making earnings unreliable, and incomes unpredictable.
- Pensions are in crisis: For many young people, a pension is the last thing on their mind as they struggle to meet rental costs, repay student loans or a rising cost of living. Many companies have also shut generous final salary pension schemes, leaving Millennials to make their own arrangements (which many are not)
- Wage stagnation: Even during the current (apparent) economic recovery, wages have remained stagnant or have not risen in line with inflation
- High cost of borrowing: This has made it much more difficult to purchase the large-ticket assets (such as houses or cars) that their parents were able to obtain at relatively lower cost at the same stage in their life
- Drastically-reduced supply of affordable housing: In the major cities where better jobs are to be found, rising demand and falling supply (as houses are bought and let out on the market by baby-boomers) has had the effect of pushing housing beyond the reach of young professionals, and increasing the cost of renting, which in turn reduces the ability to save for a deposit. Hence the label ‘generation rent’
- A vanishing pot of gold waiting at the end… As baby boomers live longer, governments are expecting them to take on a greater burden of paying for their own care, which reduces the amount or even likelihood of inheritance for Millennials
Against this backdrop, is it any surprise that Millennials are showing deeper levels of stress and anxiety? As I’ve explained in my post on happiness and Millennials, there are lots of theories about quite what is making Gen Y (at least in the Western world) such an anxious and apprehensive generation.
Is it all down to the economic crisis? Perhaps it is social media and #FOMO (fear of missing out) that it creates? Or maybe it’s school exam systems or busy parents who don’t have the time to sit down and talk about it all? Growing up in the era of 24-hour news and social media has also made Millennials more aware of how the global economic crisis could affect them in terms of job prospects and future financial security.
Of course feelings of uncertainty and insecurity about one’s identity and the wider world has always been part of growing up. But then previous generations didn’t face quite the same anxieties over peer job prospects, debts, body image, school grades, and everything in between that young people face today.
While social media is a great connector it often helps to reinforce, rather than reassure young people about those anxieties. Some say that it has, in effect replaced the traditional social settings (such as bars, clubs or associations) where people used to mingle for news, gossip, advice and support.
On that dark note I’m going to bring this post to a close. Next week I’m going to discuss some of the ways in which the economic scenario I’ve described is affecting Millennials’ consumer behaviour, and how travel brands can react to this challenge.