Sharing economy influences purchasing decisions of millennials, Hammerson research reveals

Hammerson, the UK’s leading retail property specialist, reveals findings of its latest consumer research into millennials’ shopping habits, identifying how attitudes towards home ownership and the sharing economy are influencing purchasing decisions, and how social media and the latest technologies are informing the ways  in which young people research and select products.

Undertaken in conjunction with retail consultant, Verdict, the research looks in greater depth at the well-documented millennial generation, those born between 1982-2004.  For the research we surveyed the segment of millennials aged 18-34, comparing their shopping habits with consumers in the 35+ age category.  In 2015, millennials accounted for nearly a quarter (22.6%) of the UK population.

The findings show clear distinctions in terms of aspirations for the future, typical shopping habits and adoption of social media.

Your home is your castle? 

Hammerson’s research revealed that home ownership is no longer a realistic aspiration for the majority of millennials.  Less than half of those born in 1990 (47.0%) are expected to be homeowners by the age of forty, significantly below the rate of home ownership for the previous two generations (71.0%).  This is primarily a reflection of the rising disconnect between house prices and earnings growth.  Unsurprisingly,nearly a third (31.1%)* of millennials still live at home with their parents and, of those surveyed who do not already own their own home, more than half (54.0%) doubt that they will ever be able to afford to buy a property of their own without help from a relative.

Despite this trend, nearly a quarter of those millennials (23.8%)  who have not yet made it on to the housing ladder said that they were not concerned about owning a home of their own and would be content to rent for the rest of their life.

This shift in attitude is expected to have an impact on shopping patterns, with millennials less likely to invest in big-ticket items. Over a quarter of those surveyed (26.5%) either do not own a large piece of furniture or are not confident of being able to afford one in the next 5-10 years, potentially devoting a greater proportion of their income to discretionary and impulse spending.  However, a move towards longer lease terms – of 5 years or more – would encourage millennials to treat their rented property more like a home, with nearly half of those surveyed (47.2%) agreeing that they would be more likely to spend money on products to make their home look nice.

Emergence of the sharing economy:

With the prospect of home ownership moving further away from young people, the growing sophistication of the sharing economy has particularly influenced millennials’ attitudes to ownership in general.  Over half (53.0%) of millennials have used a sharing economy business in the last year compared to just 16.2% of the 35+ age category, with accommodation (26.8%) and taxi services (17.2%) proving particularly popular for the younger generation.  Whilst the sharing economy is widely seen as an innovative approach to democratising ownership, the fundamentals of what drives usage of these businesses is consistent with general demand drivers, with over half of millennials surveyed citing affordability and convenience as the two key drivers (55.2% and 50.8%, respectively).

Looking to the future, double the number of millennials agree that there are some products they don’t need to own and would prefer to rent when compared to the 35+ category (36.0% vs 18.1%), with  an astonishing 63.6% of millennials agreeing that they would consider using the sharing economy to rent products in the future (35+: 30.0%).

From a retail perspective, it is clear that some categories lend themselves better to the sharing economy than others.  A fifth of millennials would consider renting DIY products (19.7%), clothing (19.0%) or sporting equipment (20.6%), whereas less than one in ten would consider sharing jewellery (9.7%).  This has played out across Hammerson’s portfolio with jewellery sales growing 2.9%** in the past year, a top performing category across all shopping centres.

The thrill of the experience:

Hammerson’s research reveals that millennials shop more frequently than older generations, with close to two fifths (37.8%) shopping at least once a week in a shopping centre (35+: 18.5%).  When choosing a shopping destination, however, millennials are most likely to prioritise venues with a good selection of coffee shops and cafes (36.3%) with retail mix (33.8%), fast food restaurants (29.6%) and entertainment outlets (23.9%) also proving important in the decision-making process.

Experimenting with new technologies: 

When it comes to the fulfilment of products, online delivery is still the overwhelming choice for all age categories, with over two thirds of millennials (69.1%) and four fifths of the 35+ category (82.6%) having used this method in the past year.  Click & Collect continues to grow in popularity, with a third of millennials (33.1%) and 34.6% of the 35+ category collecting from stores over the past twelve months.

But when it comes to emerging and potential future fulfilment options, millennials are notably more positive about the use of such technologies. Nearly two thirds (61.7%) would use 3D printing technology compared to less than a third of the over 35 age category (32.7%) and half of millennials (50.4%) would welcome delivery drones, against less than a quarter of the older generation (23.0%).

Millennials are also more likely to embrace technology as part of the shopping experience, with nearly half (47.7%) responding positively to location-based marketing (35+: 23.0%) and 55.8% welcoming personalised promotions against a third (33.4%) of the over 35 age category.

Social shoppers:

Social media continues to influence buying decisions, with 80.2% of millennials who belong to a social media site confirming that they use social media when shopping (35+ 51.8%).

Given its large user base, it is unsurprising that Facebook is the social media platform that most influences shopping behaviour across the generations (millennials: 70.2%; 35+ 45.3%).  With the growing prominence of vloggers, Youtube is also a firm favourite (millennials: 46.2%; 35+ 23.2%), but millennials are fast adopting newer platforms in search of inspiration, such as Instagram (millennials: 33.7%; 35+: 6.3%)and Snapchat (millennials: 11.7%; 35+: 2.8%).

To maintain relevance in a crowded retail environment, brands need to be nimble in their approach to social media, harnessing the new technologies that influence consumers and engaging in innovative ways to build loyalty.

David Atkins, CEO of Hammerson, commented: “Through this research, we’ve clearly identified how shopping habits have been shaped by the wider socio-economic environment.  Attitudes towards home-ownership and the simultaneous emergence of the sharing economy will clearly have an impact on purchasing decisions for future generations.  Likewise, the rapid adoption of technology, both in terms of how millennials shop and socialise, will continue to influence spending patterns.

“In an increasingly competitive market, shopping destinations that offer the best retail, dining and leisure experiences will continue to outperform.  And those retailers that are quick to adopt these platforms and technologies, and demonstrate flexibility in their approach, are likely to prove successful in attracting the next generation of consumers.