Centennial spending habits indicate consumption patterns of tomorrow
By Kiran Kaur Sidhu December 11, 2018
- 50% spend over US$30 per month online, 9% over US$100; fashion, electronics most popular
- A lot of time spent on researching products via product reviews, specs, price comparison
THE millennial generation has been the focus of businesses for a while now – whether as a target audience for products, or as the new workforce that rates job satisfaction over monetary compensation. In some cases, it is not a stretch to say that young startup founders pose a competition to traditional businesses as they disrupt markets with more efficient tech solutions.
Beyond millennials, there is another demographic that Dentsu Aegis Network believes will define the retail landscape later – the centennials as future consumers. The group has carried out research entitled “Here Comes the Centennial: Southeast Asia’s New Generation of Shoppers” based on 3,000 respondents from six countries in the region namely, Singapore, Malaysia, Vietnam, Thailand, Indonesia and Philippines.
The chief strategy and innovation officer for DAN Asia Pacific, Arvind Sethumadhavan says: “While the millennials are early adopters of technology, the centennials are digital natives. They were born into technology – that is the only life they know.”
Admittedly, there are varied descriptions of the exact age group of millennials, but Dentsu has distinctly defined centennials and millennials, the latter born between 1978 and 1995 while the former belon to the cohort born after 1995.
While it may seem a little premature to study the consumer patterns of this age group, the oldest of which are only 23-years-old and most likely freshly entering the workforce, Arvind believes this demographic is able to provide companies with insights into future purchase behaviour. “We feel that some of their patterns could be a prototype for what the future holds in terms of digital behaviour.”
“We decided to focus on Southeast Asia (SEA) because there is a lot happening nearby in markets like China and India. While countries like Singapore, Japan and China are considered to have an aging population, the SEA demographic is a very young audience,” he added.
The study was centred upon e-commerce and online buying behaviour. The estimated e-commerce sales for 2017 in SEA totalled US$10.9 billion in gross merchandise value (GMV), almost double the US$5.5 billion GMV in 2015, the DAN report reveals referencing a Google-Temasek report. “By 2025, Google predicts the SEA internet economy will hit US$200 billion,” Arvind explains.
The report also reveals that 50% of centennials are already spending over US$30 per month online while 9% of them spend over US$100 per month: “Fifty-eight percent of those spending over US$100 a month are born in 1995 or 1996,” the report shows, indicating that the spending habits of the younger centennials are expected to increase as they reach their early 20s.
“The top category of spending is fashion followed by electronics. Everything else comes after that,” Arvind says, with 72% and 51% on fashion and electronic spending respectively. Other popular categories include beauty products and entertainment.
Beyond these statistics, Arvind highlights that centennials uniquely spend a phenomenal amount of time researching products: “This audience is heavily invested in ‘showrooming’ and ‘webrooming’. They do a lot of research online and buy the product offline, or the reverse.” Reasons for this include searching for the best price, checking out product details and looking at product reviews.
He also elaborates on an area of distinction between millennials and centennials, “Traditionally, word of mouth and social media influencers were big drivers of purchases.” However, the centennials are more sceptical of influencers with brands paying them.
On the flipside, they value authentic and honest feedback via product reviews. “To them, it doesn’t matter if it is written by a stranger with an internet handle nobody can recognise. They believe it because the person has experienced the product and has taken the time to write about it.”
In terms of products, Arvind shares a fact that came as a surprise to him: “Centennials look out for brands that are ethical and have sustainable practices.” An astounding 82% prefer to buy products from ethical brands.
Social media influencers
With centennials investing time on research and perceiving social media influencers with uncertainty, should brands still market their products this way? Arvind believes in tactical implementation, “It is about using influencers in a manner that is a lot more than just a campaign.”
“Instead of a brand paying for 30 influencers, I would recommend perhaps searching for five influencers that are really supporters of your brand,” he advises. “Bring them to your factories where your products are made, have them experience your product in a different way so they become advocates beyond just a campaign.”
After all, celebrities have always endorsed products – it’s the classic influencer strategy, he says. Rather than just appear with the products, a more effective strategy would be to document the experience of using it. “It’s about how influencers carry the brand. Consumers seek credibility, trust, originality and purpose.”