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12 Industries That Will Thrive Thanks To Millennials

Millennials are one of the largest generations in history, and they’re on the cusp of their prime spending years. These are the industries that stand to benefit the most.

Popular media coverage of millennials often fixates on the industries the generation is allegedly killing and their supposed fiscal irresponsibility.

But over the next few decades, Generation Y will enter its prime spending years — and it’s set to receive $30T in wealth from baby boomers and Gen X.

This transfer of wealth has already begun transforming a range of industries. Some industries benefiting from millennials’ increased spending power, such as travel, reflect well-worn Gen Y tropes like the general preference for “experiences” over things. Others, like car ownership and camping, show that many of the claims about millennials’ different spending habits are overblown, and that significant continuities exist between Gen Y and their parents and grandparents.

However, these industries won’t thrive unchanged.

The companies that will come out on top are those that are reorganizing and reprioritizing around Generation Y. This means they’re embracing changing preferences to offer more sustainability, affordability, and flexibility in their products and services. They’re also embracing new technology and the unprecedented discoverability and customer connections it allows.

In this report, we dive into some of the industries — from frozen foods and fast casual dining to micromobility and personal finance apps — that could massively benefit from the rise of Generation Y.

1. Camping

AS MORE MILLENNIALS HAVE CHILDREN, THEY’RE EMBARKING ON CAMPING ADVENTURES IN THE GREAT OUTDOORS AS FAMILIES

Camping has enjoyed significant revenue growth over the last several years, largely thanks to millennials.

Total wholesale camping equipment sales rose above $2.5B in 2018, up from less than $2B in 2013 . Also in 2018, nearly 80M American households went camping — a new high.

Kampgrounds of America, an association of almost 500 North American private campgrounds, says the industry’s “aggressive growth” is largely attributable to an influx of younger campers, who are camping in larger numbers and camping more often. Last year, 56% of all new campers were millennials (up from 51% in 2017), and 41% of total reported campers were millennials, according to KOA’s North American Camping Report.

Part of millennials’ enthusiasm for camping springs from the fact that many of them are entering their prime spending years and starting families of their own. Over 1M millennial women are becoming mothers every year, meaning Gen Y now makes up the majority of annual births in the United States, according to the National Center for Health Statistics.

These shifts are creating a need for budget-friendly family recreational activities. Fifty percent of existing millennial campers say that having children and increased spending power has made them want to camp more often. Couples with kids surveyed were more likely than any other demographic to take 3+ camping trips per year, and significantly more likely to report intending to spend more nights camping in 2019, according to KOA.

Source: Kampgrounds of America

Another force driving the growth of camping among millennials is the popularization of new accompanying experiences that offer greater comfort and amenities. These can help mitigate challenges like finding a campsite, dealing with bugs, and safety. They can also make a campsite more family friendly, with additions like basketball courts, themed weekends, satellite TV, and full-featured bathrooms.

Of the 1.4M households that began camping for the first time in 2018, almost 60% preferred cabins, recreational vehicles, and other “glamping” amenities to sleeping in tents.

Finally, technology is helping millennials learn more about camping and find camping experiences.

Virtually all campers reported bringing their some kind of tech device with them camping, primarily in case of emergencies or to research safety issues. Online platforms like Hipcamp and Campsy have emerged to help campers book unique lodging experiences like  yurts, treehouses, and caves.

Social media is also helping campers discover new places to visit, then share their experiences with others: 30% of millennials said that they picked a camping spot after seeing someone else go there.

New technology, the rise of high-end camping, and millennials’ emerging roles as parents and full-fledged earners are changing camping. Once a niche form of relatively inaccessible outdoor recreation, camping now more closely resembles an alternative travel industry, with a range of lodging and experience options. Most importantly, it is an even more kid- and family-friendly activity than it once was — essential for the generation that now makes up the majority of new parents in the US.


2. Fitness

BOUTIQUE GYMS & CLASSES ARE SPREADING AS MILLENNIALS SEEK CHOICE AND COMMUNITY

Few industries will benefit as directly from the rise of millennials’ economic power as the fitness industry.

Generation Y is already more motivated to stay in shape than previous generations: over three-quarters of millennials (76%) exercise at least once a week , compared to 70% of Gen Xers and 64% of baby boomers.

Millennials are also much bigger spenders when it comes to gym memberships, dropping almost $7B annually — double the amount spent by Gen Xers and boomers.

Source: Bruce Mars/Pexels

Millennials also differ in terms of how they spend on fitness, tending to steer clear of traditional full-service gyms like Gold’s Gym or LA Fitness. In fact, despite Generation Y’s enthusiasm for exercise, mid-market fitness clubs have actually seen their memberships stagnate over the years.

Instead, the fitness industry is seeing growth at the ends of the spectrum: budget gyms and boutique studios.

The number of people who joined a budget gym — fitness clubs that charge members $20 per month or less, such as Planet Fitness — increased by almost 70% in 2015 alone, according to IHRSA. The gyms offer a wide variety of amenities, often including classes, at a fraction of the cost of a traditional mid-market gym membership.

At the same time, boutique studio memberships grew by 70% between 2012 and 2015, with memberships hitting an all-time high in 2016. The customers at these boutique studios — including places like SoulCycle, Rumble, and Pure Barre — are firmly in the millennial camp, averaging 18 to 25 years old, according to IHRSA. Expenses at these boutiques can run high, with a single class at boxing gym Rumble costing more than $30.

Millennials’ willingness to pay up, despite their unique financial pressures, may be partially driven by their tendency to view exercise as a social group activity rather than an individual one. One 2014 survey found that 63% of people who attended boutique studio gyms did so because of the “community aspect formed by other people attending,” with another 47% attributing their attendance to the atmosphere.

This community aspect could help studio gyms earn the loyalty of millennials customers. Gym-goers who feel connected to a particular club or class are more likely to stick around as members.

To attract millennial clients, some old-school gyms are adapting their models to capitalize on the increasing popularity of the boutique studios. In 2017, Gold’s Gym debuted a series of “coach-led, community-driven and individually adapted boutique-style classes” under the Gold’s Studio moniker, which went live in 40 of its 700+ locations.

While millennials are more eager to exercise — and more willing to pay for it — than any generation that came before them, it’s unclear what fitness industry players will come out on top as Gen Y enters its spending prime.

US health clubs have already rushed to capitalize on millennials’ devotion to self-improvement, with the volume of US health clubs increasing by 20% between 2011 and 2015. But it remains to be seen whether this expansion will ultimately look like a bubble, as the trendy nature of many health clubs may make them just as susceptible to turnover as traditional gyms, if not more.

What does seem certain, given millennials’ proclivity for health and working out, is that the fitness industry’s growth shows no compelling signs of slowing down.


3. Travel

MILLENNIALS ARE SEEKING OUT MORE AFFORDABLE, BESPOKE TRAVEL ARRANGEMENTS

With an appetite for meaningful travel experiences and access to new online platforms that make customized travel easy, millennial travelers are looking to cut out middlemen and invest in their own bespoke travel experiences — without paying a higher cost.

This has triggered a reorganization of priorities for an industry that has long focused primarily on appealing to baby boomers, a retired and relatively deep-pocketed demographic with plenty of free time. However, millennial consumers have proven just as keen to see the world as their parents and grandparents.

Source: Gratisography/Pexels

An Airbnb study from 2016 showed that many millennials prioritize saving for their next trip over paying off debts or saving to purchase their first home. Another found that 21% of millennials would accept a lower salary if it meant they could travel more frequently. The majority of Generation Y would even be willing to sacrifice their Netflix subscription, coffee, alcohol, carbs, and even sex in favor of traveling, according to Forbes.

But while millennials are just as eager to see the world as older travelers, their tastes are markedly different, and traditional vacation packages are unlikely to meet their high expectations. Many are turning their backs on traditional guided sightseeing tours and bus excursions in favor of more authentic travel experiences.

“Destinations need to improve their experiential offering. Traditional attractions and old buildings and churches do not suffice anymore. Music festivals, cultural and culinary events, multi-day dance parties and artistic happenings all must be on the menu of destinations looking to attract more millennials.“

— Michel Karam, founder and CEO, müvTravel

Traveling millennials want to find hidden gems and local favorites that capture the true essence of a destination. Services like Airbnb and VRBO directly appeal to this, eschewing traditional hotels to allow tourists to live like locals.

At the same time, millennials are also demanding when it comes to price. The ubiquity of price-comparison apps and the convenience of e-commerce are making it easier than ever for frugal millennial travelers to find great deals, and 85% of millennial travelers check multiple sites before making a commitment.

As with many industries in today’s information economy, millennial travel trends are strongly influenced by social media. Research finds that 87% of millennials on Facebook use the site for travel inspiration, making it the most influential social media platform for Generation Y travelers thinking about their next trip. In addition, 82% of millennial travelers said they considered user reviews an important factor when planning a trip, and 76% decided upon a destination based on the recommendation of a family member or friend.

While the combination of millennials’ high expectations, budget-conscious mindset, and desire for authentic experiences poses unique challenges to traditional travel businesses, it also means greater opportunities for companies ready to cater to Generation Y’s discerning tastes.

As fastidious planners and price-conscious consumers, Gen Y travelers are likely to prefer third-party platforms and marketplaces where they can more precisely customize their experience. Chain hotels looking to regain market share lost to emerging accommodation marketplaces will need to either embrace this millennial preference or find another way to attract millennials back to their businesses.

In 2018, Marriott International opened a hotel designed specifically for young travelers in Tampa, while Hilton began building a new iteration of its millennial concept hotel, Tru, in Baltimore. The relatively small, stylized rooms at Tru cost less than $100 a night and feature a smartphone-powered check-in system, designed for affordability and efficiency.

At Hyatt Centric — a Hyatt concept designed for millennials — staffers are encouraged to share recommendations with guests, and guides to local breweries and restaurants are placed in rooms. Meanwhile, Residence Inn Marriott locations host weekly mixers designed to give millennial travelers social get-togethers that bring them closer to the local flavor of their destination.

For the old guard of the travel industry, attracting millennials by building out better technology, service, and affordability is an existential requirement. As Smashotels President and CEO Scott Greenberg put it:

“If we attract young people, old people will show up. But if you build a hotel for old people, young people never show up.”


Consumer goods

4. Fast casual dining

MILLENNIALS OPT FOR SPEED, SELECTION, AND VARIETY WHEN THEY EAT OUT

Problems in the casual dining industry came to a head in 2017, as popular chains like TGI Fridays and Applebee’s were forced to shutter dozens of locations amid slumping sales and lower traffic. The primary culprit, according to analysts, was millennials — a generation that allegedly no longer goes out to eat, preferring to cook or order take-out.

The reality is that casual dining chain sales are down among all demographics, not just millennials. Millennials are not avoiding restaurants — in fact, no generation has a higher percentage of frequent restaurant visits. And their restaurant usage is growing, with millennials with children making 5% more visits to restaurants in 2018 than they did in 2017, according to The NPD Group.

What’s changing is that millennials are turning away from old-school chain restaurants and embracing new fast casual dining concepts.

Millennials are price-sensitive and eager for healthy, fresh food options, and they crave choice in their restaurant experiences. Almost 40% of millennials eat meals on the go, compared to 26% of Gen Xers and 19% of Baby Boomers, according to a Technomic research study, and more than 50% want a “good deal for their money.”

Fast casual restaurants from Chipotle and Subway to Shake Shack and Five Guys are largely designed with these preferences in mind, with fast ordering and app-powered pickup and delivery as basic pillars of their model. Fast casual dining also has an average check size around $9-$14, compared to less than $9 for fast food and as much as $20-$50 for higher-end casual dining. This gives millennials a dining option that doesn’t sacrifice too much quality for affordability.

The fast casual industry has also seen a wide proliferation of varied cuisines and tastes. From the successful vegan outlet By Chloe to the plant-based sandwiches at Next Level Burger to the sushi kiosks of Miso Ko, there’s a fast casual option for virtually any set of dietary restrictions and ethical choices.

Traditional dining and fast food chains looking to update their offerings for Generation Y need to consider not just their prices and menus, but also how they can integrate with technology, the degree of personalization they offer in their meals, and their approach to health.

Chipotle pioneered the trend towards the fully customized fast casual meal with its made-to-order burritos and bowls. Chains like Blaze Pizza are following behind: at Blaze, customers can fully customize their pizza and have it cooked in front of them in just 3 minutes.

As consumer food preferences evlove, Fatburger experimented with offering a plant-based burger in 2018 and found millennial customers were willing to pay more for the higher quality product. Other chains have also been quick to respond to heightened interest in plant-based meat alternatives. Burger King, Cheesecake Factory, Red Robin, and Qdoba are just some of the nationwide chains that have introduced plant-based meat products from Impossible Foods. Similarly, chains including Carl’s Jr., Dunkin, and TGI Fridays have all begun serving meat-free alternatives from Beyond Meat.

Technology also plays an important role in the fast-casual industry. Twenty-five percent of fast casual diners say that technology options are an important factor in their choice of restaurant, according to the National Restaurant Association.

From Starbucks to Panera, chains are embracing mobile ordering and in-store pickup to attract a busier, millennial audience. Self-service kiosks, like those at Subway and McDonald’s, are beginning to emerge at fast casual locations as well, and CEO of Capriotti’s Sandwich Shop Ashely Morris predicts widescale adoption of such technology in the front- and back-of-house in the long term.

However, more traditional casual dining may get a boost as more millennials have children. Designed for longer, sit-down meals rather than grab-and-go cuisine, these kinds of restaurants serve the need for a “third space” restaurant — a place where parents can go with kids to unwind without being hurried out the door.

A challenge for the fast casual dining restaurants of tomorrow will be building establishments that can be equally family and kid-friendly without sacrificing the key factors that make them appealing to millennials today.


5. Coffee

MILLENNIALS LOVE COFFEE — AND THEY’RE WILLING TO PAY MORE FOR GOURMET PRODUCTS

Like Generation X and the baby boomers before them, millennials drink a lot of coffee. They also started drinking coffee much younger — on average, around 15 years old. After several years of declining sales among most age groups, millennial consumers are the vanguard of a resurgence in the coffee industry. Today they account for approximately 44% of the demand for coffee in the US.

But while millennials’ coffee consumption isn’t slowing, it is changing.

Instead of store-bought and pre-packaged coffee, millennials are seeking out cold brew and other specially prepared beverages, as well as ethically sourced, sustainable, and gourmet products.

Source: Burst/Pexels

Many millennial consumers are looking beyond older, legacy coffee brands to blends from boutique “third-wave” coffee roasters. Recent data shows that 70% of past-day coffee consumed by millennials is considered “gourmet.”

Millennials are also gravitating away from hot coffee toward canned cold brew and nitrogen-infused beverages. The can form is convenient for an on-the-go consumer, while different flavors and styles offer a range of options for choosy customers.

Environmentally conscious millennials are also taking a much more active interest in how and where their coffee is grown, and that’s influencing their buying decisions. Many Gen Y consumers are at least somewhat knowledgeable about their coffee, favoring brands committed to fair trade and environmentally sustainable growing practices.

Millennials’ love of coffee is a positive sign for coffee growers and brewers. Demand for premium coffee is unlikely to diminish in the near future, creating favorable market conditions for incumbents and new entrants alike. However, millennial preferences won’t put up with generic products.

With the ever-increasing amount of choice in the coffee space, manufacturers need to look to differentiate their offerings if they want to attract millennial attention — and they have a wide range of strategies to do so, from adding additional caffeine, promoting ethical or sustainable sourcing, or even experimenting with new ingredients like protein powder, nootropics, or CBD.


6. Frozen foods

CONVENIENCE-SEEKING MILLENNIALS ARE DRIVING A RENAISSANCE IN THE FROZEN AISLE

The frozen food sector, which could be worth as much as $290B globally by 2021, has long had something of an image problem. Frozen foods might be convenient, but until recently, they were not typically associated with healthy eating or seen as a desirable alternative to freshly prepared meals.

Gen Y may be changing that.

Millennials’ changing preferences around food and health are resulting in a renaissance of frozen foods, a resurgence in sales, and the emergence of new startups creating and delivering bespoke frozen meals. In 2017, millennials spent an average of 9% more on frozen foods per trip to the grocery store than households of other demographics. In 2018, the total volume of frozen foods sold in the US increased for the first time in 5 years, driven largely by millennials and consumers with children.

Several factors are driving millennials’ interest in frozen foods. Gen Y has a professed appreciation for convenience and eating on the go, and frozen foods can be a convenient, fast, and affordable alternative to ordering delivery or going out to eat.

Economic factors may also be contributing to this shift. For millennials burdened with stagnating wages and significant student loan debt, affordable frozen foods are becoming increasingly appealing.

“Something as simple as buying frozen food is really just symptomatic of the trends we’re seeing at large. When you’re seeing $400 dollars come out of each paycheck to pay a student loan, that’s certainly going to impact your ability to go grocery shopping in a way that people more traditionally used to.”

— Allie Aguilera, Policy and Government Affairs Manager, Young Invincibles

Another factor at play is the surge in the availability of healthy frozen foods. Traditional frozen food options haven’t been highly diverse or healthy in their offerings. There has, however, been a 600% increase in the number of Americans identifying as vegan in the past 3 years alone — and frozen food manufacturers are racing to capitalize on the popularity of plant-based diets among millennials. Fifty-two percent of millennials prefer organic food, and a massive 40% are eating a plant-based diet.

Source: Wikimedia Commons

Plant-based brands such as Gardein (owned by Pinnacle Foods, which also owns the popular Birds Eye frozen food brand), Daiya (acquired by Japanese pharmaceutical concern Otsuka Pharmaceutical in 2017), and Sweet Earth (owned by Nestle) have all made significant gains in the frozen food market in recent years — and the trend shows no sign of stopping.

Sales of plant-based meat substitutes alone increased by 23% from 2017 to 2018, with frozen plant-based convenience foods proving especially popular in the West South Central region of the US, according to the Good Food Institute.

Millennial consumers also expect frozen foods to be higher quality than they were in the past. Conagra Brands, which owns the Banquet brand of frozen ready meals, doubled down on product quality following a management shake-up in 2015 to meet heightened consumer expectations.

Other brands have emerged to capitalize on the gourmet frozen food trend, including Frozen Foodies, which offers cryogenically frozen meals prepared by professional chefs using gourmet ingredients. Daily Harvest offers a frozen smoothie and frozen bowl subscription delivery service and advertises heavily to millennials on Instagram, while Buttermilk focuses solely on pre-made Indian meals that can be reheated in the microwave at home and served immediately.

Wider selection, higher quality, and competitive pricing are all likely to drive frozen food sales in the near future. However, as consumers’ expectations increase, so too will manufacturing costs. The biggest challenge legacy frozen food companies face isn’t convincing a new generation of consumers of the benefits of frozen food; it’s how to manufacture and price higher-quality products competitively without cutting too deeply into profit margins.

Original source here

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