Generation Y: Shopping and Entertainment in the Digital Age Looks at Where and How Gen Y Shops  

For more information, contact Trish Riggs, 202-624-7086; [email protected]

SAN DIEGO (May 16, 2013) – Despite being far more tech-savvy than previous generations, Generation Y, the 80-million strong cohort of Americans between the ages of 18 and 35, has not forsaken shopping in stores for online purchasing – as long as retailers keep their offerings “fresh” and interesting, says a new report from the Urban Land Institute (ULI).

Generation Y: Shopping and Entertainment in the Digital Age, authored by ULI Trustee M. Leanne Lachman, president of real estate consulting firm Lachman Associates LLC; and Deborah L. Brett, founder of Deborah L. Brett & Associates, was released during ULI’s Spring Meeting this week in San Diego.  It is based on an online survey of 1,251 Gen Yers conducted by ULI and Lachman Associates, a focus group conducted at Columbia University’s Graduate School of Business, and a literature search.

The report explores the shopping preferences of Gen Yers, who associate shopping with socializing, and who place a high value on living close to retail (another ULI report released this week found that 62 percent of Gen Yers prefer developments offering a mix of shopping, dining and office space). It notes that while Gen Yers enjoy shopping and dining out, they tend to bore easily, compelling retailers to constantly update their merchandise and find new ways to engage these consumers.

The study found that 37 percent of Gen Yers love shopping and 48 percent enjoy it. Half of the men surveyed and 70 percent of the women consider shopping a form of entertainment and something to share with friends and family. The appeal of shopping is particularly strong among Gen Yers who are Hispanic and African American.

Gen Yers tend to spread their dollars around generously, the study found, with more than half visiting a variety of retail centers at least once a month, including discount department stores (the retail type most frequently visited by Gen Y), community shopping centers, enclosed malls, department stores, big-box power centers, chain apparel stores, and neighborhood business districts. At the same time, 91 percent of respondents said that they had made online purchases over the previous six months, with 45 percent spending more than an hour a day looking at retail-oriented websites.

“Contrary to what some retailers have feared, we found that Gen Y still does most of its purchasing in stores,” said Lachman, president of real estate consulting firm Lachman Associates LLC and executive-in-residence at Columbia University’s Graduate Business School. “Gen Yers use the Internet to research products, compare prices, envision how clothing or accessories might look on them, or respond to flash sales or coupon offers, as well as to purchase items; they are definitely multi-channel shoppers.”

“Gen Yers have grown up with information technology, and they are accustomed to stimulation in the form of music, light, color, and action,” commented ULI Chief Executive Officer Patrick L. Phillips. “Retailers need to continually change their looks, services, and merchandise offerings in order to keep up with this trend-oriented generation.”

One activity that keeps Gen Y on the move, according to the new ULI report, is dining out: 46 percent of the survey respondents said they dine out at least once a week with friends or family; one quarter do so several times each week. Many consider themselves to be serious “foodies.” When they do eat at home, 65 percent shop at least once a week for groceries.

Gen Y is strong not only in numbers but also in purchasing power. Survey respondents’ median income is over $47,000, even though many are in school and are working only part-time. Over a third of Gen Yers receive financial assistance from their parents. Many grew up relatively wealthy, and less than nine percent have ongoing credit card debt exceeding $6,000.

The findings from the survey have numerous implications for today’s retail property owners, developers and managers, including the following:

• Restaurants at all price points are popular with Gen Y, but owners should be careful of providing tenants with generous improvement allowances to attract them. Young consumers tend to move from one “hot spot” to another; vacancies can result when a hot trend turns cold.
• Enclosed malls remain popular, but can face challenges to retain their appeal among fickle consumers. To keep shoppers visiting, mall owners should refresh interiors frequently, encourage social gatherings, incorporate movie theaters and renovate obsolete ones, add specialty food purveyors and grocery stores, serve as pick-up points for merchandise ordered online, and encourage pop-up stores.
• Malls are big contributors to the chronic inventory of excess retail space in the U.S.; many are ripe for redevelopment. Smaller formats are more suitable for time-conscious shoppers, many of whom may just be looking at goods that they will ultimately buy online.
• Gen Y strongly supports discount department stores and warehouse clubs – a format that could supplant aging malls and be suitable for infill sites. In contrast, power centers with single-focus “big box” stores are losing out to both warehouse clubs and online aggregators such as Amazon.
• Most lifestyle centers target older, affluent shoppers; to attract Gen Y, owners should  focus on apparel brands favored by Gen Y, offer more choice in eateries and include specialties such as a gym, salon, “green” grocer, bike shop, pet store and/or dog run, and uniquely local offerings.

The big winners in Gen Y’s multi-channel purchasing patterns, the report concludes, are warehousing and logistics. E-commerce needs both distribution warehousing and “pick-and-pack” operations. Retailers will continue to experiment with different methods of online and in-store fulfillment in search of cost efficiencies and faster deliveries.

The Generation Y report is now available for download.

NOTE TO EDITORS AND REPORTERS: To speak with a ULI expert about the report and the survey findings, contact Trish Riggs at 202-624-7086 (work); 202-679-4557 (cell); [email protected].

About the Urban Land Institute
The Urban Land Institute (uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members worldwide representing all aspects of land use and development disciplines.