By 2020 the majority (60%) of the world’s ‘millennials’ (18-29) will live in Asia. With an expected US$200 billion in disposable income, these millennials will have more spending power than any generation that has come before.
Much has been written about the consumption habits of millennials, how brands and businesses should leverage upon distinctly millennial characteristics to drive and harness that spending power. Yet, as millennials in Asia age, how will their consumer behavior change? Will their purchasing priorities evolve?
Millennials are cautious spenders
Millennials have been born into the most prosperous and wealthy period in human history, hence the predominant perception that millennials are free and easy with their money.
However, MasterCard’s Consumer Purchasing Priorities Index has shown that millennials are actually relatively frugal and conservative in their spending. According to the research, millennials actually perceive themselves to have less disposable income than any other age group. This may be why they are more anxious to save, and are more careful in what they buy; searching out bargains and seeking value for money. Of all generations they are the most likely to do their research by looking for recommendations and reviews online before purchasing an item.
Prioritizing technology and experiences
Unlike older generations millennials are generally much more cautious when it comes to spending on big ticket items, such as property and vehicles. This is true for most goods except electronics, where millennials are most likely to make big purchases.
While prior generations may have focused on the idea of owning property, millennials are less likely to be saving for a white picket fence of their own. In fact, according to MasterCard research, they are more likely to prioritize spending on experiences, such as travel.
Perhaps the perception of having less disposable income, and increasing property prices in many markets in Asia, has led many millennials to believe that, even if they saved for many years, owning property would be out of their reach, so they put it out of their mind and prioritize other purchases.
‘Word of mouth’ influence on purchasing decisions
But even as they move towards thinking about having children or building a home, the purchasing decisions of millennials will continue to be influenced by the recommendations and input of their peers.
Millennials will continue to actively seek feedback and reviews of products or experiences whether through social media, review sites or the face-to-face feedback of friends. They will also continue to be vocal about their own experiences of particular products as well, actively seeking opportunities to provide reviews online.
As Asian millennials move towards their version of a white picket fence, as optimistic yet careful consumers, brands and businesses will do well to take note of the influence of word of mouth, their purchasing priorities and behavior patterns in order to leverage and harness their immense spending power.
This byline first appeared on Inside Retail Asia on 22 October 2015.