COALA NAIONAL DE STUDII POLITICE I ADMINISTRATIVE

FACULTATEA DE COMUNICARE I RELAII PUBLICE LUCRARE DE

ABSOLVIRE

LUCRARE DE ABSOLVIRE

Millennials. Reshaping the future retail

industry.

Coordonator

lector univ. dr. Sorin BLAGA

Autor: Daniela Lixandru

Iulie, 2016

1
Table of Contents
Chapter 1. Getting to know millennials from a millennials point of view....3
1.1. Introduction................................................................................................... 3
1.2. Objectives of the paper..................................................................................5
1.3. Studies and Authors used in the paper..........................................................6
1.4. The Methodology........................................................................................... 8
1.5. Research questions........................................................................................ 8
1.6. Limitation, Delimitation and Assumptions of the Study.................................9
Chapter 2. The retail Waves................................................................................10
2.1 Defining Retail................................................................................................. 10
2.2. The emergence of the retail industry: Wave I, Wave, II, Wave III....................11
Chapter 3. Knowing Millennials and why they matter as shoppers.............20
3.1. General Overview........................................................................................... 20
3.2. Demography................................................................................................... 22
3.3. Identities, Priorities and Outlook....................................................................23
3.4. Technology, Social Media and Millennial Generation......................................25
3.5. Millennials matter for retail industry..............................................................26
3.6. The Millennial shopper................................................................................... 28
Chapter 4. Millennials impact on the transformation of present Wave IV
and future of Retail.............................................................................................. 30
Chapter 5. New rules of approaching Millennials in retail sector.................36
Chapter 6. The Millennials, the shopper and the retail in Romania.............39
Chapter 7. Conclusions of the paper.................................................................43
Bibliography........................................................................................................... 46
I. Primary sources........................................................................................... 46
II. Studies.......................................................................................................... 47
III. Further reading......................................................................................... 47
IV. Online mentions....................................................................................... 48

2
Chapter 1. Getting to know millennials from a
millennials point of view
1.1. Introduction
As a millennial fellow, I started to see more and more brands and retailers that are shifting their
traditional position and tools to reach this generation. The Millennials are the largest generation,
over 80 million individuals that were born between 1980 and early 2000 are representing a
significant segment of consumers.

What I discovered when doing my dissertation research is that, they are not only impressive
regarding the individual number, but also because they represent a dose of power to influence
like no generation before.

They are powerful influencers on culture and brands, and its clearly why the world began to
study this generation on many levels: from consumption habits, behavior in the society, and
digital engagement. They are active and serious consumers, and they call the shots regarding
different trends when comes to shopping. From Accentures research, I discovered that
Millennials are expected to spend in 2020 around $200 billion annually, so
businesses/brand/retailers cant ignore this generation taking in regard their spending power.

The influence that I was talking before was mostly felt in the retail industry where several types
of research, reveals that Millennials are redefining intention purchase trends or changing the rule
of brand marketing, not to mention they are upgrading the shopping experience as we know it.

Having as a benchmark a recent research taken by Pew Research Center (2010), I discovered that
Millennials are making the retailers rethink how they communicate with consumers and how
they attract them. When it comes to retail shopping, they are not traditional at all; instead, they
want retail strategies that make them more participative and engaged in the shopping experience.

Because they are digital savvies, born into an era where they speak a fluent digital language,
Millennials are more attracted for experiences that transform the offline interaction into an online
one, or the other way around. This leads to pressure for the in-store retailers when thinking that

3
brick and mortar store will be less preferable for the Millennials that will be more attracted by
the online purchases in the future.

Thats why retailers have to be aware of how they will create shopping experiences in-store that
can be converted in online too and how to satisfy the unique preferences of this pretentious
generation. The level of personalization the services for the Millennials have to be also taken into
consideration when delivering their services. With Millennials that are dictating the way they
want to shop, retailers need to make sure they will capture their style and personality and will
focus on having an Omni-channel presence to communicate with them and deliver to them a
personalized experience in the in-store phase.

Because the millennials are becoming the dominant retail consumer (Robin Lewis, Michael
Dart, 2014), I will emphasize in this paper how the retail industry changed to engage with these
new consumers.

I will go through all the stages of the retail industry process, the so-called Waves of Retail and
see how retail evolved nowadays together with the emergence of the technology and how it
changed to approach to this important target that Ive mentioned before. By passing through the
III Waves of Retail, I will be able to observe the shifts that took place on upgrading the process
of todays retail and also, I will be capable of forecasting new rules that should be considered by
the today retailers.

I must remind you that we live in a world that passes within a vertiginous speed and the retail
industry is a continual development. Companies have to adapt day by day to the needs and wants
of the consumers. The biggest challenge is for them to keep up with the new technology, but its
also critical to respect some important rules like the precise orientation on the consumer, creating
unique experiences of shopping and creativity on every level of their activities.

The biggest specialists of retail consider that 2016 is all about the hegemony of Omni-channel
retail, a business model that cannot be neglected and more than that it has to be completely
integrated into the sale strategies of the companies.

Like in every other type of business, the retail companies need some anticipation spirit to
facilitate their future mission. Because I am working in the advertising field and I am very

4
interested in the shopper experience and how this will evolve, the focus of my paper was to
gather information about the most dominant segment of consumers and find rules and trends for
the future that will help the businesses of retailers.

1.2. Objectives of the paper

The objectives of this dissertation are:

1. Compiling and classifying various research findings regarding who are the Millennials
generation and what are their shopper behaviors.

Since I started working in the communication field, I began to hear more and more about
millennials and how all the marketing trends are targeting this different generation. I wanted to
know more about them and how they are setting new trends on the market. Retailers also started
to be more alert concerning this consumer that have a shopping behavior pretty different than
previous generations.

2. To find factors that modified the traditional approach of shopping (The III Waves of
Retailing) and what correlation exists between these and the Millennials shopper behavior

3. To analyze the evolution of IV Waves of the retail and how Millennials had an impact on the
future waves of the retail by setting new rules and trends in this field.

This paper is relevant because the subject I want to tackle has shown importance in the retail
industry of nowadays. Retailers want to know more of whom theyre communicating and how
they can target the consumer in a more segmented way. By getting to know this type of
generation that has the most power of spending will be more aware of the evolution of this
industry through a dynamic period. With the vast amount of information, everywhere available,
Millennials are discerning shoppers that know how to compare price, quality, and experience so
thats why retailers should keep pace within the trends context. The purpose of this paper is to
observe the changes and how Millennials created new practices in matters of retail shopping in
the last II Waves of Retail and how the future waves will embrace these changes.

5
The subject Ive approached interest me directly as a communication specialist. To gather a
substantial know-how as a communication specialist for future campaigns of the retail industry
Ive chosen this topic. Also, on the hub of the company Im working in present, I wrote an article
regarding Millennials that you can read it here: http://minio.ro/posts/portfolio-item/cum-pot-
brandurile-sa-marketeze-mai-eficient-milenarii/

1.3. Studies and Authors used in the paper

Strauss and Howe (1991, p. 15) define a social generation as one phase of an individuals life,
and they rationalize as a new generation about every 20 years. Each generation is represented by
persons whose birth dates is this 20-year time span, which Strauss and Howe refer to as an
individual generational cohort.

The current generation, the Millennial Generation, is a hero or civic generation born from 1982
to 2001, which Strauss and Howe argue is unraveling and is asserting itself among culture wars,
postmodernism, and technology. Millennials represent the most researched generation in the
History of United Stated (Strauss & Howe, 2000).

Beyond their affinity for technology which well see later in the further dissertation that
represents an important factor for our key findings, Jeff Fromm and Christie Garton (2013)
identified in the research they conducted some behaviors and attributes that Millennials will
influence the next life stages of the retail. Their research also found that Millennials are leading
indicators (if not the diverse) of media consumption, advocacy, and social media usage among all
generations (Jeff Fromm; Christie Garton, 2013, p.48). Some key takeaways that I was able to
delineate from their research about Millennials were:

1. Millennials are such early adopters of technology:

They will upgrade to whatever it will appear regarding technology, and they are willing more
than any previous generation to try out the latest technology. Brands and retail industry should
seize the moment and implement what is new in technology in order to gain Millennials loyalty.

1. Power of Buying

6
They are influencing the household purchase decision each year within the amount of 500 billion
$. So thats why businesses cannot afford to lose Millennials attention.

3. They want to participate

They are not passive consumer anymore, so they want to be engaged, to be active, to participate
and be included in any interaction within their shopping experience.

4. The digital natives

Born into an era where they speak digital fluently, they are connected all the time and retailers
should be present where these digital savvies are. Or else, they will not even be considered in
terms of choice by this generation.5. Millennials are more into showroom experience while
shopping

These are only some few findings when talking about Millennials behavior and how can these
represent a milestone for the new retail era. The report made by Pew Research Center (2010)
helped me in finding the information that I needed to portrait the Millennial generation was very
broad and full of interesting data on their attitudes, values, behavior and other characteristics.
Accenture made other reports that I've used to gather data for this paper, and also Retail Info
System News and Cotton Inc.

Robin Lewis and Michael Dart (2014) explain the consumer power that is enabled by
globalization and technology. By classifying the retail model into V-Waves, I discovered some
key findings of the transformation of the old retail models into what is happening nowadays
within this industry that reveals a strong connection within the millennial context.

One of the attributes that define this different Generation as unique is their strong relationship to
technology (Allerton, 2001; Tapscott, 1998, Eisner, 2005). Technology is part of their day to day
lives and understands it better than the previous generation, their parents even if they were the
inventors of the current technologies. (Zemke, 2000).

Robin Lewis; Michael Dart (2014, p.36) believe that the expansion of the technologies and
they're trying to connect with the consumer more quickly, easily and experientially only
underlines the way that retailers market the millennial consumer.

7
Regarding benefits, rapid growth at the workplace, life balance and challenges, the millennials
want it all and want it now. (Ng. Schweitzer & Lyons, 2010). They are more and more aware
of their shopping power and are more likely in spending their all new cash immediately,
especially on personal services and on consumer goods. (Der Hovanesian, 1999).

They comprise nearly a third of the population of the United States (Zemke, et al., 2000). They
are also known as the Generation Y, the ones born between 1986 and 2005 (Eastman and Liu,
2012).

1.4. The Methodology

For this paper, Ive chosen to use a descriptive approach in which concerns the retail industry
and then I started to know the subject of the case, the Millennials, with the help of analyzing
some statistical data.

The used data is collected from secondary sources: reports, researches, books. With the means of
information taken from the literature review and by following the studies on the Millennials
behavior and drawing some lines within the changes of the retail, I will connect the dots into
finding the new rules of the today & future retail.

The study has a practical aspect of the methodology by using data already collected from already
done researches to mark a characterization of the generation of Millennials. To understand how
the retail industry was born and then evolved I used different authors that helped me frame all the
concepts.

After explaining the process of retail that mentioned authors from the literature review have
related to Ive correlated the findings with the reports regarding the Millennials and tried to make
a connection between these two, to see exactly what is changes if it had an impact and how one
another influences this.

1.5. Research questions

1. Who are the Millennials and how this new breed of shoppers matters in the retail industry?

8
In order to show how the retail of today has changed, I first have to understand the concept of
Millennials as a generation and then see some key features of who they are as a shopper. I will
base the demonstration of this question on several findings that I will show in depth in the next
chapters that make Millennials matter in the retail industry.

2. How much has the retail experience changed in the last Waves of Retail in order to reach the
millennials?

For this research question, I need to have a clear view of how the retail industry was before
Millennials would exist. Then, I will try to trace some changes that happened in the Wave of
Retail where the Millennial consumer where the principal target

3. What are the new rules that retailers will consider for the future Waves of Retail in order to
keep the millennial shopper engaged?

By answering the two previous questions, I will be able to have some information to work on for
the third question. Seeing how the retail industry had functioned until now and how it started
changing in order to reach the most dominant segment of consumers, The Millennials, with the
help of the literature review and the main findings of this paper I will try to forecast some rules
that will come in hand for the retailers in order to have a long-lasting relationship with this
unique consumer.

1.6. Limitation, Delimitation and Assumptions of the Study

In this paper, I will frequently use the terms Millennials and Retail. The researches and the
reports that I will take into consideration will be on the Millennials in the U.S.A. Also, the
history of the retail industry and how it evolved in the context will be mainly analyzed in
America.

One of the assumptions that I fear for this paper is that the data from the chosen studies is the
most relevant one for this. It is true that Ive tried to manage in getting the most interesting and
reliable reports that were strongly connected with my subject.

9
One of the limitations is that the found reports are from 2010-2011, and it is possible that some
of the findings suffered changes in the time that passes. Also, the studies that were updated were
expensive, and Ive only used the ones that were free on the internet.

Another first delimitation of the study is that I only investigated the American Millennials and
American retail industry. I must point the gap in knowledge in fairly suppose that their
Millennials are different from our Romanian Millennials.

Also to relate to the Romanian retail industry and how Millennials are having an impact on it, I
must say that are some differences, and I couldnt point out from the Romanian literature or
studies relevant information to develop this paper. Not to mention that are other factors which
contribute to the Romanian Millennials practices: different purchasing power, brand awareness,
availability and so on.

In Romania, the term of Millennials it started to be used recently, and there are no relevant
studies that couldve helped me in getting in depth on the chosen subject of the paper. Even so, I
tried to find some information regarding our Millennials shopper and the evolution of the retail
industry not in books and reports but in how media, the online primarily, is related to these
subjects. I have spotted some similarities that are available for our Millennials and American
Millennials also, that I will present in Chapter 6. The Millennials, the shopper and the retail in
Romania

Chapter 2. The retail Waves

2.1 Defining Retail

To understand the concept of retailing Im going to define it and mark some key elements that
made me understand how the process of retailing is done. The basic knowledge of retailing will
help me in covering the main stages of retail (Waves) from the beginning until these days.

Anthony Welfare (2011; p.12) defined retailing as the process of selling goods or merchandise
to the final customer, and usually involves buying a larger volume of items and selling them in

10
smaller quantities. It represents a simple process of acquiring products and then selling them to
the customers at a bigger price to make a profit.

According to Business Dictionary, the market is an actual or nominal place where forces of
demand and supply operate, and where buyers and sellers interact (directly or through
intermediaries) to trade goods, services, or contracts or instruments, for money or barter.

Markets include mechanisms or means for (1) determining price of the traded item, (2)
communicating the price information, (3) facilitating deals and transactions, and (4) effecting
distribution. The market for a particular item is made up of existing and potential customers who
need it and have the ability and willingness to pay for it. (Business Dictionary)

Goods are things that can be touched in a physical way and can be transferred from a seller to a
consumer to fulfill some needs. Management Study Guide wrote that Retail involves the sale of
goods from a single point (malls, markets, department stores, etc.) directly to the consumer in
small quantities for his end use.

The supply chain consists of manufacturers, the ones that manage the production of what we call
goods/products, the wholesaler that is acquiring goods from the manufacturer and sell a large
number at small price to the retailer. The retailers sell the products from the wholesaler at a
bigger price but in small quantities. The process in which a consumer is taking goods from the
retailer is called shopping. Its true that nowadays the concept of shopping went beyond the
actual buying of something. The so-called window shopping became an experience of just going
in shops, to check the options, the prices, and the variety and just have fun by looking at
products.

2.2. The emergence of the retail industry: Wave I, Wave, II, Wave III

Wave I

In the late 1800s the phonograph, the telephone, the typewriter and the electric light were the
major inventions that arisen during that period. In America, other innovations were happening as
well. Dr. John Pemberton invented a mixture beverage called today the Coca-Cola and sold it in
Atlantas pharmacies as a tonic. Also, the young immigrant from Germany, called Levi Strauss

11
opened a dry good store in San Francisco through which he was selling blue jeans or cotton twill
pants to the miners and farmers.

This was the period which was considered for Americans, the rise of global economic
dominance. In that time, two retail distribution models were expected to replace the department
stores, the general store and the mail-order catalog.

In 1886, Richard Sears got a partner, Al vah Roebuck and formed a classic model of a retailer
that were heavily into mail order business. Sears, Roebuck and Co. were targeting small down
residents and farmers, the major population that formed during that period.

The catalogs that were delivered through the mail were such a brilliant idea of distribution
strategy: placing their store and all their products directly in the homes of all those farmers and
people scattered across the country in small town, these were people who needed things and had
no other place to get them. In the truest sense of the old age location-location-location-, these
catalogs were in the consumers face, in his living room, faster and more frequently than people
were leaving the farm to the general store in town. (Robin Lewis, Michael Dart, 2014, p.5)

Nowadays, the new catalog is the Internet, of course, but that doesnt mean that the old version
was fully replaced, in fact, only the distribution strategy developed in addition number: kiosks,
airport stores, door to door selling, in-home selling events, vending machines and mobile
devices. Now we live in an era where the consumer has full accessibility and the retail cant find
no more the success in the phrase its all about location, location.

To turn back at the Sears story, in 1920s, the population was starting to migrate from farms to
small towns. Sears and other examples of selling distributors such as Montgomery Ward were
still following the consumer and tried to adopt new strategies in placing their products near him.
They began to open stores in the towns in which theyve moved, while developing a
multichannel distribution with stores and the well-known catalogs. They were offering the
consumer high-quality essential products for fair prices. Thus they were positioning themselves
as on the go stores for the growing middle class, by functioning as a niche to not compete with
the department stores that were growing into the big cities.

12
In 1856, Marshall Field and Company was launched in Chicago. In 1858, Macys was found in
New York City, followed by B. Altman, Lord & Taylor, McCrearys and Abraham & Straus. John
Wanamaker opened the first Wanamakers in Philadelphia in 1877. Zions Cooperative
Mercantile Institution (ZCMI) was opened in Salt Lake City in 19679 and became the first
incorporated department store in 1870. (Robin Lewis, Michael Dart, 2014, p.6)

The examples above are the first retail models who grew out from small general stores that
opened in small towns; the small towns became cities, and the small stores were becoming the
most dominant segment of retail in the second wave of the retail (1950 -2000). At that time, these
department stores were called palaces of consumption or cathedrals. The palaces were designed
beautifully with good building materials and other innovations and were the daylong destinations
for the families back then.

Because of the competition scarcity and the growing demands, these stores were providing good
pricing power to have also profit margins that made them able to afford all that needed not to be
only just stores, but entertainment destinations.

The period that marked the first Wave, from the early 1900s, it was a one of the positive
economic growth, thanks to industrialization, despite the Great Depression. The modern
infrastructure distribution led by the massive expansion of railroads and highways and it was all
centered on the growing population and also its migration to suburbs and other cities

Meanwhile, the retail industry continued its progress into the Wave II. In 1902, James Cash
Penney launched JCPenney, that was initially offering soft goods without a distribution catalog.
Even so, JCPenney became a ferocious competitor of Montgomery Ward and Sears, by opening
three stores in small towns to chase the growing American Middle Class. He was offering high-
quality products while using the good value model.

To develop and to begin to differentiate one for another, Sears began to develop its private brands
(Craftsmen Tool, DieHard Batteries) and localize distribution long before these notions were put
into practice. Late in Wave I, Sears outcome Montgomery Ward, his primary competitor, which
refused to upgrade his distribution also in malls because it was expensive. Later on, it would
prove to be a huge misstep that will stay at the beginning of his comedown.

13
Sears was very proactive towards the changing world, and this was helping him a lot by allowing
its company to rise in the retail world. By early 1970, Sears was one of the most powerful brands
and one of the eight largest corporations in the world. It was something associated with what
Walmart represent today, but with a greater moment of rising, especially for that period.

After seeing the first examples of how retailing was functioning back in the Wave I of Retail, I
will point out the key features that Robin Lewis and Michael Dart were emphasizing as being the
important key market aspects of the retail back then.

Wave I key characteristics:

- Production/Retail Driven: Pricing power consisted with retailers and manufacturers due to the
scarcity of competitor and a minimum level of services/products and also a fragmented
infrastructure. Thats why the consumers had to accept and buy what was available to them on
the market.

- Production chasing demand: Retailers and producers/distributors were expanding and

growing to capture business from shifting consumer markets. Supply continued to underserve
demands, due to the growth of population, with some exceptions in the major cities.

- Single product Specific Brands vs Cross-Category Brands: Lack of infrastructure in

communication and well-connected marketing, as well as the dearth of producers, were limiting
the availability of brands and their constraint to single product categories.

- Fragmented, isolated markets: The distribution of good and services to retailers was a bit slow
and inefficient because of the geographical dispersion of the rural and small town markets.

- The mail order catalogs and the apparition of the department stores, the so-called palace of
consumption, expanding later into the emerging of the shopping mall.

Wave II

Post World War II, the United States experienced major growth across all industries including
retailing. From innovations in the aerospace industry to radar and FM war invention, many

14
advancements and changes that benefited the post-war industrial economy were accelerating.
Within so, the Americans were aspiring to services and products that would satisfy their dreams
not only their necessities and this is how the term American Dream was coined.

As more the consumers were chasing their dream, they were forming new ways of purchasing
power. Marketers were developing new ways to market the customers and in that booming
period took place the emergence of the two terms: mass marketing & mass communication.

Businesses back then needed a vast distribution infrastructure to serve the growing marketplace.
When referring to this infrastructure, I dont mean only the physical one for the circulation of
products, but also the strategical one based on the distribution of communication, advertising,
and marketing.

Wave II supported explosive growth in rail, air, highway and sea transportation as well as the
creation of many channels of retail distribution. This period represented the golden age of the
advertising for the mass marketers, and the national brand creation helped by the emergence of
the big media: access to television, the print media including niche magazines, direct marketing
mediums, and billboards.

A large combination of highways, malls and shopping centers combined with the rise of
automobiles and cheap gas to get to them lead to the growth of the retail chains. Sears and
JCPenney, the two original national chain department stores that were also the most expensive
were anchored in the malls as consumer traffic builders.

The malls were to become the new specialty chains for the innovative branded retail model that
was launched in 1960, along with the pioneers as Esprit, Gap or Macys. In that period, Sam
Walton, had a great vision that small towns from America needed basis products that have high
value but low prices. So, in a rural context, Walmart was launched that was different from
Kmarts positioning in suburban shopping centers. Kmart initiated in 1962 in Detroit, was
representing the first discounter. Another discounter that was introduced in that period that was a
bit more upscale was Target that was standing for cheap and chic and it was selling products and
brands at a price point level above Kmart and Walmart.

15
Also, later in Wave II, Circuit City, Toys R Us and Home Depot were introduced as the
category killers, the big-box retailers. In that period the massive distribution machines were the
value/discount stores and big box category killers. The category killers, as their name suggests,
wanted to kill all the competitors by having only one product category (toys, home goods,
sporting, electronics).

The branded apparel specialty chains and the category killers, specialized in single category
products and the new discounters that were delivering essential goods as commodities, began in
Wave II to win over a significant share of loyalty that customers were offering to the
departments stores. Their structures with lower pricing that were mixed with specialized
products and services have a significant advantage to this new retail model.

More competitors were emerging in the late of the Wave II and the early 1980 markets already
began to be increasingly saturated. Disequilibrium started to be seen between the supply and the
demand and most important a shift of power from the producers to the consumers, where they
gained an improved selection of different products and better access to them.

The consumers were the ones that were making the competitor to add more value to their
innovation part and to differentiate on the market, and this is how they gave rise to retail brands
such as Bed Bath & Beyond, Ann Taylor, Borders, etc. The main issue for the retailers back then
was how to compel the consumer to want and choose them, how to create demand so to speak.

Power in the marketplace was shifting from the supply side to the demand side as Robin Lewis
and Michael Dart (2014) were stating. They also added that The major paradigm shifts for all
the consumer-facing industries from the production-driven to a marketing driven economy meant
that marketing became the primary strategic driver across the entire marketplace. Known as the
golden age of the advertising, and glorified in the popular television show Mad Men, Wave II
was arguably the most commercially creative era in American History.

The desire of Americans for more, new and better services and products was creating significant
demand that needed marketing, branding and advertising to drive this growth. In Wave II the
promotion of goods was done in the today well-known magazines (Time, Cosmopolitan, Sports
Illustrated) and on the television networks such as NBC and CBS. Also, that period was the

16
emerging time for advertising agencies like DDB, BBDO, Ogilvy & Mather, Leo Burnett,
McCann Erickson, etc., that represented the giants of this and that era.

The consumer experience was already taking into consideration as business models for the
retailers back then. Taking, for example, Ralph Laurens Polo brand that grew because he had a
vision of offering through his products a sort of Gatsby World. This would have made him later
to play a dominant role in the retailer examples, because he was delivering a sophisticated world,
not just some products as he was stating back then: I dont design clothes, I design dreams.

Wave II was not only about single product categories in the world of retail but also the beginning
of using the power of emotional benefits that consumers could perceive through
brands/products/experience. And this is how Ralph Lauren was the first that created a brand that
creates demand through the power of delivering the consumers a dream, an experience.

When talking about retail game-changers, I will also give the example of Marvin Traub, the CEO
of Bloomingdale. In the Wave II, Bloomingdale was the only one that brought lifestyle into the
world of retail by upgrading the shopping experience and positioned itself with an advertising
headline that broke new grounds: Bloomingdales: Like no other store in the world..

They started a strategy of having themed events that were inspired by different cultures in the
world and transformed the stores into the experiential bazaar. That approach is also used now, in
Romania, by Lidl a supermarket discounter that has different experiential themes (Greek week,
Spanish week, etc.) that involve selling exclusive and limited products from that region.

To rewind on the emergence of retail in The Wave II, I will sum up what were the key features of
that period and how the demand creation was making the American brands and retailer used a
unique approach.

Wave II main features:

- The dominant retail models from that period were still the discounters and specialty chains.
Sears and JCPenny emerged the era of centers and malls and with that, the beginning of apparel
specialty retailing was launched to complete the spaces from those centers.

17
- The retailers started to look further than essential needs that consumers had and began to
create reasons that will appeal the consumer to buy from their stores.

- The shift was created in Wave II from the chasing demand phase into promotion and
marketing intending to build particular demand.

- The launch of television and print introduced the mass marketing process in advertising that
was coined in that period.

- Across all industries the competition was growing and in order for retailers to steal the
consumers from the competitors, lifestyle brands and experiences emerged.

This wave that began in 1980 and lasted until 2010 was the so-called period of the consumer
power, as the Professor Rosabeth Moss Kanter from Harvard Business School stated: an
enormous global power shift from producers to consumers, from those who make to those who
buy.

Substantial growth in retail space that emerged in Wave III also lead to the expansion of the
discounters, category killers and big-box stores like the ones that Ive previously mentioned in
Wave II: Walmart, Home Depot, Toys R Us, Best Buy, etc. This development increased the
spread in other categories such as dollar stores (Dollar General or Family Dollar) and fast food
suppliers (Dunkin Donuts, Starbucks, etc.)

Taking Walmart as an example, it was declared the worlds largest retailer and that introduced in
the economy vocabulary, the term Walmart effect because opening a Walmart store in the area
is creating around the local businesses at an economic level.

It also retains the title of the most profitable retailer in the U.S. and the power of the company is
what Robin Lewis and Michael Dart declaring it as the raising bar for the definition of the
operational excellence. Dollars store will steal some of this retailers best practices and model
and will try to differentiate it selves by taking new positioning while also trying to steal from the
Walmarts market share.

One critical moment that marks Wave III of retail consists within the importance of value and the
craving of the Americans for the designer labels, outlet stores found the perfect way to grew

18
along them. They are an attractive retail option when it comes to excellent prices, great findings,
and entertainment features.

With new technologies that emerged in that period, a new distribution platform was taking off for
a better and more rapid trading of goods: the internet retailing. The most famous retail business
model that took advantage of the new technology that was born in that period was Ebay, that was
founded in Pierre Omidyar's San Jose living room back in September 1995. It was from the start
meant to be a marketplace for the sale of goods and services for individuals. (eBay's History)

With the expansion of information and the explosion of the Internet-enabled business to deliver
the consumer demands in a faster way and respond immediately to their needs. All the new
technology enables the consumer to increase his power and let him be more pretentious. The
consumer for Wave III was able to compare prices immediately, to search information and
reviews about the quality of the products and turned them into more intelligent shoppers.

We will see later on in the Wave IV description of retail, how millennials are the ones who are
taking so much advantage of these new features and how they made retailers keep up pace with
them and their needs.

Just because the consumers were getting more and more close to the products and they had
instant access to an enormous range of everything they wanted from anywhere, the retailers also
used technology to find more about their type of consumers to attract them with new features.

They started to collect data from different loyalty products or special activations; the customer
service moved into the cross-selling of other products, and the recommendations are now made
based on what they already bought.

Communication was growing, and technology had a significant effect on facilitating it. The
amount of information started to increase quickly, and the classical promotion of products on TV,
catalogs, billboards was mandatory. In the late Wave III, Brands and retailers began to be present
also in the online sector and by 2010; there were an estimated 200 million websites and counting,
a number that is now closer to a billion. (Internetlivestats)

19
Robin Lewis and Michael Dart marked some main features of the Wave III that will help me in
going further with spotting the changes that future waves of retail already encountered or will
approach within the Millennials consumer context.

Wave III essential characteristics:

- Wave III was more consumer driven, and it represented the critical moment where the power
of the producers shifted to consumers.

- Significant growth was produced in delivering direct mail catalogs. With that, e-commerce
and TV retailing were emerging substantially and were giving the customer the chance to know it
all.

- The number of products and sub-brands were increasing, allowing the consumer to choose
and have different preferences.

- Mass Merchants, Category Killers, Outlet Stores and Dollar Stores gain momentum and were
driven in growing demand.

Chapter 3. Knowing Millennials and why they

matter as shoppers

3.1. General Overview

To respond to the first research question, I wanted to find out more about the millennials from a
general perspective and discover relevant insights of who are they as shoppers. I compiled data
from different studies that helped me in revealing why their behavior matters as a buyer in the
retail industry.

The report made by Pew Research Center (2010) helped me in finding the information that I
needed to portrait the Millennial generation was very extensive and full of interesting data on
their attitudes, values, behavior and other characteristics. The research was conducted in

20
America. Thus, I will characterize the millennial generation from the USA, not Romania because
of the lack of studies and analyses that couldve offered me relevant data to conduct the study
based on our country millennial shopper.

Also, authors that described this different generation and other studies made by Deloitte,
Goldman Sachs and Accenture guided me in approaching insights that are relevant for my paper.

Millennials represent the most researched generation in the History of United Stated (Strauss &
Howe, 2000). With a total population of 72.9 million, Millennials may number as many as the
Baby Boomer. They comprise nearly a third of the population of the United States
(lawstreetmedia). They are also known as the Generation Y, the ones born between 1986 and
2005 (Eastman and Liu, 2012).

This generation is called in other ways besides millennials, Generation Y being the term used
especially by the media even though the millennials were not attracted by this approach because
they considered that is no different from the Generation X who represented the previous
generation.

Strauss and Howe (2000) that represented the most important researchers in findings of
generations, labeled the generation as Millennials just because the individuals from it became
adults of 18 years old in 2000. Other authors (Table 1) are calling them Echo Boomers just
because they are emotionally close with their parents and in many cases, they are leaving the
house very late, or they come back home after graduating college.

Generation Me or Next generation where other terms used in literature for describing the
Millennials. In my opinion, the term Millennials is the one that serves the best the context of this

21
generation and in my paper Ive chosen to address to them only as Millennials.

Figure 1: Terms used by different authors to describe the generation

Source: The Millennials: Assessing the next generation of academic librarians by Emanuel,
Jennifer, Ed.D., University of Missouri - Columbia, 2012, 248
http://pqdtopen.proquest.com/doc/1328137653.html?FMT=ABS&pubnum=3537868 pdf version

3.2. Demography
The life experience, the demographic overview, and living arrangements are quite different from
the other important American generations: Boomers and Silent Generation. Millennials are more
ethnically, racially diverse and more educated than the other generations.

The report found that the Hispanic population grew in a fast way compared with black people
and marked this new generation. In the Baby Boom generation, the black (11%) and Hispanic
(10%) shares of the population are quite similar.
22
Among the millennials, there are more Hispanics (19%) than blacks (13). Regarding nativity,
11% are U.S. born children of at least one immigrant parent. That share is higher than for
Generation Xers (7%) or Boomers (5%). (Pew Research Center Report, 2010, p. 10)

Concerning education, The Millennials are more educated than the generations before. More than
half of Millennials have at least some college education (54%) compared with 49 % of Gen X,
36 & Boomers and 24% the Silent Generations when they were ages 18-28. Social trends and
economic forces are defining patterns in differences regarding the labor force because the
Millennials are less likely to be employed when comparing to the other generation: Gen X
(70%), Boomers (66%) and Millennials (63%). (Pew Research Center Report, 2010, p. 10)

When talking about living arrangements, the millennials are less likely to get married or have
children than earlier generations in age comparison. Just one-in-five Millennials is currently
married (21%) and just one-in-eight (12%) is married with children at home, half the proportions
(42% and 26%, respectively) of Boomers at the same age. Millennials are more likely to be
single parents living with their children (8%) than Boomers (4%). (Pew Research Center Report,
2010, p. 11)

The report also showed that Millennials are more likely to be living with other family members
(47%), such as their parents, than were the immediate two previous generations at the same age
(Gen Xers, 43%; Boomers, 39%). They also are more likely than others had been at the same
stage of life to be cohabiting with a partner or living with a roommate.

3.3. Identities, Priorities and Outlook

23
Looking at themselves in relation to another individual, most Millennials say that their
generation is unique. Six-in-ten (61%) say they think of their age group as unique and distinct
from other generations; 37% do not. When asked to name some ways in which their generation
is unique and distinct, responses differ widely across age groups. Among Millennials who see
their generation as unique, technology use is the single most popular response. Roughly a quarter
of those under age 30 (24%) say technology is what sets their generation apart. Other ways in
which Millennials see themselves as unique include their music, pop culture and style (11%), and
their liberalism and tolerance (7%). (Pew Research Center, Report, 2010, p. 13)

Figure 2: Reasons of what makes generations unique

Source: Pew Research Center Report on Millennials, 2010, p 13

One of the attributes that defines this Generation as unique is their strong connection to
technology (Allerton, 2001; Tapscott, 1998, Eisner, 2005). Technology is part of their day to day
lives and understands it better than previous generation, their parents, even if they were the
inventors of the current technologies. (Zemke, 2000).

24
The use of technology is one important factor that lead through what millennials are now and
how it influenced the subject of my paper: the retail industry. Regarding this aspect, I will
develop it ampler in the further chapter on Technology and Social Media.

Regarding what Millennials want from their life The Pew Research Center Report (2010, p.17)
discovered through their research the following: Family matters most, and fame and fortune are
much less important. When asked to rate how important a series of life goals are to them
personally, being a good parent ranked at the top for all four generations. Overall, 50% of the
public says this is one of the most important things in their lives. An additional 44% say this is
very important but not the most important thing for them personally. Only 5% say this is only
somewhat important or not important at all.

Although only about a third of Millennials (34%) have children, they are just as likely as their
older counterparts to place high value on good parenting. About half (52%) say being a good
parent is one of the most important things to them. This compares with 50% of those ages 30 and
older. Millennial women are even more likely than Millennial men to say being a good parent is
one of the most important things to them (56% vs. 48%).

Figure 3: What matters in life for Millennials

Source: Pew Research Center Report on Millennials, 2010, p 18

3.4. Technology, Social Media and Millennial Generation

Technology enabled this generation to become a curious generation. (Tapscott, 1998, p.86).
They grew up with the computer in their home, not being somehow forced to adapt with them

25
later on when they are older like the previous generations. Technology for them represents an
assimilation as for everyone else it is an accommodation. (Clausing, 2003, p. 374)

They can multi-task, and they are consuming more technologies simultaneously, having the
ability to do more things at once. They can surf the internet while watching TV and even check
their emails in between. More than twice Americans (64%) think that the new technology is
making their lives much easier, compared with the ones (26%) that believe that is making life
more complicated. (Pew Research Center, 2010).

In the Survey made by Pew Research Center, the data shows us that 90 % of Millennials and
87% of Gen X are using the internet, more when compared with the Baby Boomers that only
79% use it. With the emergence of the social network sites, we can spot around 75% Millennials
that already created accounts for this social network platform while Gen X only 50 %.

Mobile is also an increased amount of using technology for Millennials (Clausing, 2003) because
they dont use it only as a tool, but also in their social life. They can seek for different
information on products they wanted, feedback from the peers and in many cases being
followed-up by a mobile shopping experience.

According to the Webby Research Report, 70 percent of 18-34 year-olds use smartphones in the
bathroom and 51 percent use smartphones while eating with family. (Adweek) The same study

26
 reveals that 85% of the Millennials aged between 18-34 use the internet for shopping.

Figure 3: Motives of Millennials in being connected

Source: http://www.goldmansachs.com/our-thinking/pages/millennials/

3.5. Millennials matter for retail industry

After presenting some general aspects of this generation and know what they represent them, I
will now emphasize some of the reasons that Millennials should receive attention from the
retailers. The retailer should understand their potential and how to benefit from knowing more
details about who they are and what behavior have as shoppers.

Two of the main reasons that Millennials should awaken interest for the retailers is the generation
size and their spending power. The Millennial population represents about 30 % from the United
States population and is formed by 93 million individuals. (Census, 2013)

27
Retailers cannot ignore such a huge population that make their money and also have money from
their parents, Baby Boomers. US Chamber Foundation stated in a report about Millennials and
the market potential that Millennial annual purchasing power widely range between $125
billion and $890 billion. A more consistent estimate is $200 billion of direct purchasing power
and $500 billion of indirect spending, largely due to the influence on the spending of their mostly
baby boomer parents. With Millennials peak buying power still decades away, marketers would
do well to establish relationships with this consumer force.

Their age is another important factor to be considered. The recession impacted the potential
careers of the Millennials negatively and affected their entering in the workforce. It is true that
the older cohort of this generation is doing well on the workforce ladder, probably at this
moment they already had their second or third promotion.

Even if the younger cohort of this generation had a harder start, they are very willing of doing
great things in their careers and are very optimistic for the future despite the heavy times. The
rough start made them more ambitious in upgrading in their careers, in winning more and will be
capable of spending more.

Since I already mentioned spending, I will underline that spending habits are another important
characteristic that retailers in their strategies should not avoid. Lets take for example how much
they spend on a shopping trip: Amount spent per shopping trip was 55$, as Boomers only spend
average 45$, seniors 35$ (Nielsen report). Nielsen also projects that U.S. consumer spending will
hit $5.7 billion by 2020 in retail. The future growth of the wallet that Millennials will take for
shopping, it is important for the benefit of the retailers.

This generation was raised in a material way (Kim and Jang, 2014) and they began shopping at
a younger age than previous generations (Grotts and Johnson, 2013), so that is why they are
more exposed to the consumerism. Generation Y is also susceptible to conforming to reference
groups. They want to fit in and have a desire to purchase the status products they believe will
allow them to do so more easily. (Kim and Jang, 2014).

I emphasized in the previous chapter their connection with technology is so natural and
powerful. The elders from the previous generations rely on them in assisting them with all the
new technologies. What retailers should consider in their targeting strategies is that Millennials

28
are always helping the older generation to decide when shopping, and they are influencing them
especially on different reviews regarding products. Thus, they can be important opinion leaders
to influence their families in purchasing terms.

3.6. The Millennial shopper

In terms of benefits, rapid growth at the workplace, life balance and challenges, the millennials
want it all and want it now. (Ng. Schweitzer & Lyons, 2010). They are more and more aware
of their shopping power and are more likely in spending their all new cash immediately,
especially on personal services and on consumer goods. (Der Hovanesian, 1999).

They do not want to be seen by the retailers like someone that spends and buys. They want to be
seen, respected and known and that retailers invest in a relationship through understanding and
empathy to grow a connection and future spending for this type of consumer. Gen Yers demand
an authentic relationship based on deep knowledge of who they are and what makes them busy
(Yarrow & ODonnel, 2009).

The Millennial consumer wants to buy products that represent him and helps him define who he
really is. He searches for latest trends and invests in knowledge information about the image of
the retailers, brands and products. He wants to make the investment for the future and doesnt
look only at a good price and good quality; he wants to offer trust for a long term relationship
when we are talking about his gratification.

Through the next figure, I want to emphasize the fact that millennials have distinctive patterns
from Baby Boomers regarding shopping behavior.

29
 Figure 3: Decisional Patterns for Millennials

Source: Parment (2013, p. 192)

When talking about their shopping behavior and his spending habits, Millennials spend in a
month about 96.5 hours on shopping in-store while in online they gather about 97 hours for
shopping. The range of minimum and maximum hours spent by each cohort will reveal that the
young cohort spends 105 hours in only and by the older ones a smaller time of 89 hours. (Cotton
Inc., 2013).Millennials that earn about $25.000 $49.000 annually were surveyed by Cotton Inc
(2013) in order to make an average to see how much they spent on apparel in one month. The

30
majority spends from a range between $0-$100 as the figure below reveal.

Figure 3: Decisional Patterns for Millennials. Source: Parment (2013, p. 192)

Another important aspect that describes Millennials as shoppers is the high dependence on what
peers are reviewing. A study shows us what are the primary sources through which millennial
take and trust the information. About 71 % of U.S. shoppers look for reviews directly on the
retailers site, and 45 % go to e-commerce sites.

Social media and blogs are two less popular options, at 17 % and 8 %. These reviews are written
by 68 % of online purchasers. A huge percentage of the U.S shoppers, 81 %, claim that products
reviews for clothing are believable. (Cotton Inc., 2013)

Representing the biggest population in America and constantly developing on every stage, the
millennial shopper cannot be ignored by the retailers. To answer the first research question, I first
found the general information about how is living this emerging generation and then I found the
main reasons that represent them as consumers/shoppers to show why retailers should build a
strong relationship with Millennials.

31
The size of the generation cumulated with all the optimism of young and fresh individuals that
embrace new things every day, emotional when choosing products but rational when it comes to
purchasing them, opinion leaders for the previous generations and feedback seekers, the
Millennials generation became the primary target for retailers.

Chapter 4. Millennials impact on the transformation of

present Wave IV and future of Retail

To respond to the second research question, In the next chapter I will focus on the transformation
of the present retail moment that consists by Wave IV as Robin Lewis and Michael Dart (2014)
captured in their book The new Rules of Retail. With the explosion of the technology and with
new dominant retail consumers, The Millennials, I will emphasize on how much the retail
experience has changed today towards the other III Retail Waves that mentioned in Chapter 2.

In Wave IV the internet and the new technology were on the edge and these represent the main
factors that retailers embrace in order to change their way of getting to the new consumer. As I
mentioned before, the Millennial consumer is more educated and elevated and very tech savvy,
characteristics that are creating him a demand for more technological experiences, in retail also.

Millennials are somehow forcing retailers in improving their experiences, to upgrade their
services in online too and to offer more high-tech and high-touch engagement, greater
personalization, and high touch participation, more available quality and more value-driven
luxury. Social networking, community involvement, caused based retailing, and the pursuit of
sustainability is present in everything that this growing and powerful group does. (Robin Lewis,
Michael Dart, 2014, p. 53).

So the retailers started upgrading their services, Amazon was growing substantially and invested
in cloud technologies that allowed supporting its acceleration. Apple was extending it retail
expansion creating stores that deliver a great technological experience. eBay repositioned from
the initial auction model just to keep up the pace with Amazon by also creating eBay Enterprise,
by extending the PayPal services and offer other technologies to connect with the millennials.

32
The phone was becoming so smart that it was no longer a tool of getting in contact with someone
else. Smartphones gave birth to different applications that helped users in doing many daily
activities and not only that. Nowadays, apps are allowing the millennial consumer to be
informed, to be connected, to watch and engage with brands. The power of the consumer will
enable retailers to develop and try lots of experience driven technologies.

Millennials are more conscious consumers and want to know everything about the services and
products they acquire. Thus retailers, brands, and companies will be more transparent within the
emergence of the internet and information-driven processes. Even so, there are advantages for
retailers too, with all this new technology he has the chance to know better his consumer to
segment his target in a proper way and develop marketing strategies that are relevant for the
wanted shopper.

Retailers are already embedding technologies in every process that will benefit both consumer
and retailer. Robin Lewis and Michael Dart (2014, p. 44) gave some examples of technologies
that work this way: There are technologies that will also tell the retailer where and who the
consumer is and how he or she is feeling. There is now a heat mapping technology that retailers
can use to track and analyze traffic patterns in their brick and mortar stores. One retailer said it
was like Google Analytics but for a physical store. Facial recognition technology can be used to
identify high-value consumers when they enter a store. It can also be used to read their shopping
body language to determine whether theyve got time to browse or are in a hurry and need of
immediate help.

Millennials have now a wide range of products and services on every way, on many levels and
contacts and just because they are becoming satiated about all those choices, they are not happier
only with material goods. As how the American psychologist Abraham Maslows broadly
defined the term self-actualization now holds the key to consumers happiness and well-being.

This strongly suggests that once their basic needs are met consumers are increasingly apt to
spend more of their wealth on experiences rather than things (Robin Lewis, Michael Dart, 2014,
p. 54).

The authors (Robin Lewis, Michael Dart, 2014, p. 55) framed six major shifts from the previous
Waves that Millennials have driven in the Wave IV, and I quote:

33
1. From Needing Stuff to demanding experiences The thrill of the hunt offered to brand
savvy bargain hunters at T.J. Maxx and Marshalls, and the apple Store turning electronics
shopping on its head.

2. From conformity to customization specialized, personalized and localized niche brands

like Nike ID and Keurig single serve coffee machines begin to gain share from large
megabrands, the continued growth of limited sizes in apparel and clothing and footwear and the
rapid growth of 3D printing.

3. From plutocracy to democracy accessible luxury for all: Missoni for Target, Vera Wang at
Kohls, Karl Lagerfeld at Macys.

4. From wanting New to Demanding New and Now whats new today is cloned tomorrow,
favoring fast fashion brands like Zara and Forever 21 that create two new lines every week, the
convenience of e-commerce, free delivery and neighborhood stores.

5. From Self to Community proliferation of social media, social shopping, community

interests such as sustainability, global initiatives like human rights and safety; all are trends, no
longer simply commercial promotional gimmicks.

6. From technology for work to technology for life technology enabling the blurring lines
between life and work, people are working during their off hours and playing during their work
hours, getting what they need to get done whenever and however they can, using technology to
save time and money.

Millennials are demanding experience and retailers should not forget that. The differentiation on
the market of nowadays it is not like in the previous Waves when it could have been achieved
only through the distribution and quality vs. value of the products. In the present Wave, the
differentiation its done by elevating the selling experience.

Entertaining events, audio-visual effects, games and engaging promotions that will connect at an
emotional level with the consumer. When creating this type of connection with the customer, hey
will spend much time to live that experience and he will enjoy it so much that he will come back
to buy other products.

34
This is also available for the online retail. The site should be experience driven and should be fun
and engaging to keep the consumer much longer on it and convince him to buy because he liked
his staying. It is true that having an online shop is more about convenience, but ultimately I
believe that retailers such as eBay or Amazon will open a showroom so that consumer will
connect and feel with the products. Emag is a good example for the online shop in Romania, that
also has a brick and mortar showroom where people can experience the products.

Through online, it is harder to give an experience to the customers when you cannot relate to
physical approach. In the future, having a showroom will increase for sure the engagement of the
consumer. Thanks to their huge database gathered from the customers in order to spot their
preferences, online retailers can customize their experiences and offerings into a more
personalized way.

Another thing that retailers are starting to use is the neuroscientific science in order to provide
experiences and new and now value that I previously mentioned. Urban Outfitters which
operates the Anthropologie brand of home, are two retailers that have adjusted their strategy to
their consumers desire for new and now. Both ship new merchandise to their stores every few
weeks, encouraging customers to visit more frequently, seeking the dopamine surge that will
accompany the discovery of fun new products. (Robin Lewis, Michael Dart, 2014, p. 67)

Another example that delivering the now and new experience is happening on all channels
distribution is Amazon Prime. Amazon Prime is the program in which the customers can get free
and fast (2 days) delivery. This caused an example in the industry and made eBay launching a
similar project of eBay now that have Instacart, same day delivery, and other services as well.

The convergence with the consumers must be done by maximizing the ways in which he will
seek for experience in order to realize his true identity. The growth of new technologies and
social network enables the consumer to enter communities that represent commercial targets, so
the retailer can think about also doing some social commerce. One of the most powerful

35
influences on the purchasing decision when talking about Millennials is the word of mouth.

Fig 4 - Millennials have more online connections

Source Barkley, The Boston Consulting Group, and Service Management Group, American
Millennials: Deciphering the Enigma Generation, September 2011.

Being present on Facebook a big amount of the time, he is seeing what others are posting, liking
and sharing in terms of brands, products or services. Retailers can be aware that with Facebook,
they can activate consumers interest, and they can awake a shopping feeling while a Millennials
is hanging with friends at a bar and scrolling through his news feed. This social commerce it is
also called F-Commerce.

Millennials are big CSR supporters, and they are finding satisfaction when doing charity work or
engaging in environmental causes. Retailers should keep in mind that they have to be socially

36
aware and function as a caused related retailer. Walmart is an example of a retailer that delivers
sustainability initiatives. They are selling only economical fluorescent bulbs; they forced the
vendors in reducing the amount of used packaging, and they are reducing a lot of emissions
when using the delivery trucks.

Another aspect that characterizes the Millennials is FOMO (Fear of Missing Out). This was a
result of the explosion of the technology and internet and how Millennials do not want to miss a
social interaction, or an invitation to an event or other experiences that are happening on the web.

The success of a retailer will come in the next phase if they will create a complete experience for
their consumer: starting with a neurological connection in the store, moving forward on an online
interaction and being present also on his mobile. The retailers should be smart in the future and
capitalize on the FOMO idea in order to deliver what a Millennial want in this Omni-channel
world.

All the new technologies and the science of experience that Wave IV is encountering should be
understood by the retailer as essential components of new strategies and new business models
because retailing is facing an incredible and beautiful transformation. The retailers that want to
raise the bars in this industry will use science and art in order to create powerful experiences to
Millennials that will make their shopping behavior a must from their store.

Chapter 5. New rules of approaching Millennials in

retail sector

The transformation regarding retail industry had already begun. Retailers envision new business
models and strategies that will allow them to get closer to this new consumer. As I got further in
this paper by discovering findings of the reports regarding characteristics of the Millennials I can
now point out some important takeaways that will help me in responding to the third research
question regarding new rules that retailers would have in account when targeting millennials.

37
1. Millennials have a lot of social friends that can receive feedback or they can share ideas
with.

2. Millennials want to participate as a consumer; they want to cocreate and be included as

partners in the process of shopping, not as passive consumers.

3. Their peers influence millennials. Before making a purchase decision, they are likely to turn
for a piece of advice from their friends.

4. Millennials speak fluently the digital language being born in an era where the online
connection is part of their lives.

Millennials are more likely to adopt new technologies and are eager to try the latest in this
industry. Retailers should seize this opportunity and start using this insight as an advantage of
gaining Millennials as consumers from the outset.

Fig 4 - Millennials on new technology

38
 Source Barkley, The Boston Consulting Group, and Service Management Group, American
Millennials: Deciphering the Enigma Generation, September 2011.

Millennials have to be engaged in their shopping experience and providing satisfying and
stimulating experiences; retailers will gain a millennial attention. Also, they are more likely to
take the shopping process as a showroom experience and by that, I mean he will use different
price comparison apps while in store to find better deals. Retailers should develop a mobile
strategy for Millennials to spend more time in connecting with the brand that will lead to
fidelization.

As I already mentioned, Millennials demand a higher degree of engagement and retailers should
focus on not creating only messages to market them but also strategies of brand relevance for
their minds. The retailer should set up and develop relevant content that will attract and engage
the millennial consumer, especially when talking about Social Media. In the past, consumers
were involved in just only one-way communication with the brands and were passive
participants regarding the media. Now, social media gave them also a voice and can turn a
millennial consumer into a brand advocate.

Coca-Colas Jonathan Mildenhall, vice president for global advertising strategy and creative
excellence and visionary behind the strategy, explains the philosophy behind Content 2020, a
strategy that Coca Cola developed in order to ensure that for 100 years the brand remains
relevant in the consumer mind: All advertisers need a lot more content so that they can keep the
engagement with consumers fresh and relevant, because of the 24/7 connectivity. If youre going
to be successful around the world, you have to have fat and fertile ideas at the core. (Content
Marketing Institute, January 4, 2012)

Not all young people want to be friends with brands. Recent research on younger Millennials
found that almost half do not believe brands should have a social presence. This calls for a
listening strategya more nuanced approach to engaging with Millennials online. Rather than
bombarding Millennials with brand messages, listen first and then engage after a thorough
understanding of their wants and needs is acquired. stated Jeff Fromm and Christie Garton,
(2013, p.56)

39
So after listening to the Millennials, retailers should start building a relationship for a long
lasting staying along with this consumer. Only by creating an investment in a relationship with a
Millennials he will also invest in your brand.

So based on their characterization, the data from the mentioned reports and all the essential key
findings that Ive managed to spot by answering the two previous research questions, I would
point some so-called rules for retailers to implement their strategies:

Retailers should track the Millennials digital journey and try to implement purchasing
triggers that will create a neurological connectivity. They have to personalize the experience for
the Millennials and recommend (not force) in real-time products and services that are relevant to
them. The delivered services should be consistent and still alternate knowledge with creative
experiences.

Retailers should engage and monitor the interaction in Social Media. Also, the content is very
powerful these days, so it should be constructed in a dynamic and engaging way no matter of the
medium where is posted (The Web, Email, Social Media, etc.)

Retailers should not forget in the future that they have to optimize the prices and to
merchandise constantly to the needs of a Millennial consumer. By anticipating the demands,
through collected information about this new consumer, retailers will be able to upgrade
categories and assortments that will fit the now and new moment of a Millennial.

One of the most important trends that started to grow and will develop consistently in the
future will be the Omni-channel retail. By complementing the online and offline experiences on a
common platform, the Millennial will be easily reached. Facilitating the Omni-channel
commerce will be in focus in the future.

The focus will not be only in gaining new consumers, but retailer should think about how
they will maintain the Millennials loyalty towards he is products/services. The consumer data
should be more analyzed in the future in order for retailers to understand the best insights of this
new breed of shoppers in this way the retailing experience can be optimized to exceed the
customer expectation.

40
Chapter 6. The Millennials, the shopper and the
retail in Romania

The term Millennial is something that has been used by the Romanian media quite late. The
media is still relating to this generation at the Y generation, and most of the articles that I found
in the Romanian online press regarding this subject are using information also gathered from
global reports. Even if the Romanian Millennials are not the main topic of my thesis, I wanted to
investigate some similarities on our retail market that are influenced by this type of consumer.

Some common findings can be seen when describing a millennial. The fact that they are tech
savvy and digital lovers it is available for the Romanian Millennial also. Romanian millennials
are also looking for social responsibility from the companies that interact with. In Romania, a
study showed that prestige of a company and the quality of the products and services offered by a
company are important aspects for the young millennials. Also, they are declared digital natives
and shoppers they need to express their opinions about products and services. (Infocs.ro, 2014)

In Romania the Millennials are characterized as representatives of Y generation, born between

1980-200 that have a superior education up against the previous generation, their parents, thus
they are also earning more, enough to afford luxury categories when it comes to shopping.

When it comes to their experiences, the young Millennials are not loyal to a certain brand, but
they are selecting products that will serve their elitist behavior (capital.ro, 2016). In the article of
Capital, Angela iboc, director of Fashion and Lifestyle division of Sole, was talking about the
fact that most attractive brands for the new generation are the ones that have a high presence on
the social media, the mediums that are spending the most of the time on.

Wall-street Romania (2014) remarked that Y generation has a major impact on the modern retail
of Romania. Retail Metrics, DTZ Echinox has provided to Wall Street Romania some relevant
data in which they discovered that this generation is integrating the mall experience in all their
activities. From their studies results that Millennials are using the commercial centers primarily
as socializing points and way of experiences and secondary the consumption aspects.

41
Cristina Ungureanu (Geometry Global) defined the generation Y in an article provided by
Revista Piata (2013) as the generation interconnected at a global level. They are living in a
digital world and learned to use the technology on their own. They have unlimited access to
information, and this leads to the paradox of choice because they have too many options when
choosing brands, products or services.

Consumer Barometer by Google, presented me some relevant data concerning the Romanian
consumer and this helped me in tracing some connections within the evolvement of modern retail
in our country. The filter that Ive used in searching the trending data that Barometer provided
was segmented for people in Romania aged 25-34 years, considering the relevant cohort of
Millennial generation.

Figure 3: The usage of internet by Romanian Millennials

Source: Consumer Barometer Google, Romania, aged 25-24

From the figures above, I observed that this our millennials are major consumers of internet quite
like the American Millennials. Representatives of Manhattan Associates Inc present on the
Romanian Market, provided information in an article presented by Electro Retail (2014), in
which he states that internet will change fundamentally the way people will buy. Results from

42
their analysis show that it is an increased purchase decision because of the using of smartphones
and social media, and the traditional stores will become showrooms of experiences when it
comes to online shopping.

Figure 3: The usage of internet by Romanian Millennials

Source: Consumer Barometer Google, Romania, aged 25-24

The barometer is showing a significantly increase of the online Romanian searches when it
comes in finding information about shops 54% are researching and purchasing online and they
are making the pre-purchase researched is considerably high, getting close to the 56% that are
still using the traditional shops in looking at information products and services.

Retailers in Romania are starting to know all this information and are making progress in getting
to the consumer acknowledging this relevant data of his behavior. Tatian Diaconu, the general
director of Immochan stated in an article provided by Retail FMCG (2014), that digital is
occupying a much more important place in our retail and for consumers this represents a big
interest. Retailers should see this as an important component for their development and an
extension of the traditional retailing.
43
The expansion of the online and the transformation of the offline shops into showrooms of
experience are the two most discussed issues in the retail specialty media. They are aware of the
fact that consumers in our country are looking for experiences and for their own engagement in
the story of the brand.

Retailers in our country are already developing new changes for getting closer for the new
generation of consumers. Carrefour developed a digital payment with the smartphone, Cora is
developing the online shopping in a better way and extending online driving such as
CoraDrive.ro and Samsung is implementing technologies for the showrooms in order to provide
appealing experiences for their consumers.

To sum up, the retail is trying to keep pace with this consumer and is making changes in order to
offer him the best experiences. Multichannel, relevant content in online, creation of showrooms
that provide experiences, engagement in socials media are some findings that should be rules in
our country also not only abroad

Chapter 7. Conclusions of the paper

By compiling different studies of the Millennials of the America and studying different
researches I was able to extract relevant data that helped me in shaping a profile of the
Millennials generation and how this is transposed in their shopping behavior. The data and the
used information, allowed me to reveal that Millennials are revolutionizing the purchase habits
while also redefining the shopping experience.

All these, lead to forcing retailers in reevaluating their connection with consumers and upgrade
their traditional way of marketing, communicating or engaging the Millennials. Born into an era
where they speak digital fluently, they are connected all the time and retailers should be present
where these digital savvies are.

They are not passive consumer anymore, so they want to be engaged, to be active, to participate
and be included in any interaction within their shopping experience. I have reached the

44
conclusion that they cannot be ignored by the retailers because of their powerful spending power
and because their shopping behavior really matter for the evolvement of this industry.

To see how the present retail experience has changed in order to reach this generation Ive
studied the III past Waves of retail, then Ive tracked the innovations that arisen within the
context of Millennials becoming the most relevant segment of consumers. Is how I got to the
conclusion that the present in retail, Wave IW, was changed and improved in experiences and
force to upgrade these experiences also in the online segment.

It is true that factors like internet and the apparition of the new technologies have influenced
many industries, but in this case, it influences the behavior of millennial shopper, thus leading to
evolvement of the retail companies in keeping up with this kind of consumer. The biggest
challenge is for retailers to keep up with the new technology, but its also very important to
respect some important rules like: the clear orientation on the consumer, creating unique
experiences of shopping and creativity on every level of their activities.

By correlating the shopping behavior, the changes that were produced in the Waves of Retail, I
was able to conclude that retailers should definitely have a digital journey and start using omni
channel as a business model for the future in order to connect with the Millennial consumers.
The data that I gathered from the studies, showed me how much time this type of consumer is
spending on the internet and how retailers should seize this opportunity in constructing a way of
communicating with Millennials.

These changes in Retail that were marked by Millennials and Ive spotted thought this paper,
helped me in forecasting some important rules that retailers should not avoid when comes to
their business model. I must remind you that we live in a world that passes within a vertiginous
speed and the retail industry is a permanent development.

As I mentioned before, the focus of this paper was on researching the American millennials and
retail, not Romania ones because of the lack on the literature review and studies that couldve
helped me with relevant data. Even so, I tried to shortly point out some key findings of how the
Romanian press is relating to this generation, how is the behavior of the Millennial consumer and
how the retail is changing also to keep up with this consumer.

45
My findings lead me to conclusion in which I have to state that our Millennial consumer is quite
similar with the one from abroad and I could trace some similarities in which retail industry in
Romania is changing towards its behavior, behavior that is also influenced by the internet and
new technology as important factors.

This paper is relevant because the subject I want to tackle has showed importance in the retail
industry of nowadays. My opinion is that retailers should know more of whom theyre
communicating and how they can target the consumer in a more segmented way. With vast
amount of information, everywhere available, Millennials are discerning shoppers that know
how to compare price, quality and experience so thats why retailers should keep pace within the
trends context.

I must say that this paper can be very helpful for the retailers in order to facilitate their future
mission and also could be relevant in understanding why the Millennials are the most dominant
segment of consumers. For the Romanian industry I have to say that more research is needed in
order to forecast relevant and more accurate rules for the future of retail, because in the end the
Romanian Millennial will still differ on some aspects by the global millennial due to some
factors like: different purchasing power, brand awareness, availability and so on.

46
Bibliography
I. Primary sources

1. Allerton, H. E. (2001). Generation why: They promise to be the biggest influence since
the Baby Boomers. T&D,
2. Clausing, S. L., Kurtz, D. L., Prendeville, J., & Walt, J. L. (2003). Generational diversity:
The Nexters. AORN Journal;
3. Der Hovanesian, M. (1999). Spending it, investing itcoming on strong: The children of
the baby boomers are affecting spending and investing as significantly as their parents
did; the similarity ends there. Wall Street Journal
4. Eisner, S. P. (2005). Managing Generation Y. SAM Advanced Management Journal,
5. Grotts, A., & Johnson, T. (2013). Millennial consumers status consumption of
handbags.Journal of Fashion Marketing and Management,
6. Jeff Fromm and Christie Garton, 2013, Marketing to Millennials: Reach the Largest and
Most Influential Generation of Consumers. USA, Barkley Inc;
7. Kim, D., Jang, S. (2014). Motivational drivers for status consumption: A study of
GenerationY consumers. International Journal of Hospitality Management
8. Lewis Robin & Dart Michael, (2014) The new rules of retail, (2nd edition), United States,
Palgrave Macmillan;
9. O'Donnel, J., & Yarrow, K. (2009). Generation Y: How tweens, teens, and
twentysomethings are revolutionizing retail. San Francisco: Jossey-Bass.
10. S. W. Ng, E., Schweitzer, L., & Lyons, S. (2010). New generation, great expectations: A
field study of the millennial generation. Bus Psychol
11. Strauss, W. & Howe, (1991) N. Generations: The history of America's future, 1584 to
2069. New York: William Morrow and Company;
12. Strauss, W. & Howe, N. (2000). Millennials rising: The next great generation. New York:
Vintage Books

13. Tapscott, D. (1998). Growing up digital: The rise of the net generation. New York:
McGraw-Hill.

47
 14. Welfare, Anthony (2011) The Retail Handbook: Helping you achieve your Potential in
Retail, New York, Ecademy Press
15. Zemke, R., Raines, C., & Filipczak, B. (2000). Generations at work: Managing the clash
of Veterans, Boomers, Xers, and Nexters in your workplace. New York: Amacom.

II. Studies
1. Who are the Millennial shoppers and what do they really want Accenture, Christopher
Donnelly and Renato Scaff https://www.accenture.com/us-en/insight-outlook-who-are-
millennial-shoppers-what-do-they-really-want-retail
2. Millennials: A Portrait of Generation Next. Pew Research Center. Ed. Paul Taylor and
Scott Keeter, 2013, http://www.pewresearch.org/millennials/
3. Millennials coming of age Infographic, 2016, Goldman Sachs;
http://www.goldmansachs.com/our-thinking/pages/millennials/
4. The Millennial Survey Winning over the next generation of leaders, 2016, Deloitte
http://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

III. Further reading

1. Harris, Erin. Jameson Publishing, "A Look At Omni-Channel Retailing.".
http://www.innovativeretailtechnologies.com/doc/a-look-at-omni-channel-retailing-0001

2. Cianciulli, Scott, and Ray Yeung. PricewaterhouseCoopers, "In-store Shopping Still

Center of Shopping Experience, Says PwC US Last http://www.pwc.com/us/en/press-
releases/2013/pwc-annualsurvey-of-online-shoppers.jhtml.

48
IV. Online mentions
1. eBay's History. (n.d.). Retrieved from
http://www.cs.brandeis.edu/~magnus/ief248a/eBay/history.html
2. ,Generatia Y: Ce asteptari au cei nascuti intre 1981 si 2000 (2014)
http://www.infocs.ro/generatia-y-ce-asteptari-au-cei-nascuti-intre-1981-si-2000/
3. Ilinca pop (2016), Ce cumpr generaia Y? http://www.capital.ro/ce-cumpara-
generatia-y.html
4. Millennials and Personal Finance: A Lost Generation? - Law ...(n.d.). Retrieved from
http://lawstreetmedia.com/issues/business-and-economics/millennials-personal-fin
5. Online shops opening. Retrieved from www.internetlivestats.com maintained by Netcraft
Internet Research and Security Company
6. Professor Rosabeth Moss Kanter In 2016, getting a competitive advantage requires
making ...(n.d.). Retrieved from http://www.newvoicemedia.com/blog/in-2016-getting-a-
competitive-advantage-requir
7. Survey: 90% of Millennials Believe Technology Creates More ... (n.d.). Retrieved from
http://www.adweek.com/socialtimes/survey-90-of-millennials-believe-technology-cr
8. The Millennial generation Research, retrieved from
https://www.uschamberfoundation.org/reports/millennial-generation-research-review
9. What is a market? definition and meaning. (n.d.). Retrieved from
http://www.businessdictionary.com/definition/market.html
10. Consumer marketing Report, Cotton Inc., 2013, Retrieved from
http://www.cottoninc.com/corporate/About-Cotton-Incorporated/Cotton-Incorporated-
annual-report/2013-Annual-Report/2013_CottonAR.pdf
11. Tatian Diaconu, on Concluzii dup evenimentul retailArena (2014) Innovation in Retail
retrieved from http://www.retail-fmcg.ro/evenimente/concluzii-dupa-evenimentul-
retailarena-innovation-in-retail.html
12. Mallurile sub asaltul generatiei Y: cresc vizitele la mall, dar pentru ei consumul este un
scop secundar (2014), retrieved http://www.wall-street.ro/articol/Real-
Estate/160399/mallurile-sub-asaltul-generatiei-y-cresc-vizitele-la-mall-dar-pentru-ei-
consumul-este-un-scop-secundar.html#ixzz4CivGlGl5
13. Tendine n cumprturile din retail la inceputul anului 2014, retrieved from
http://www.electroretail.ro/studii-de-piata/tendinte-in-cumparaturile-din-retail-la-
inceputul-anului-2014.html

49
50