Jenna and Steven have Valentine's Day all mapped out. Jenna has agreed to spend a morning fishing with Steven and on the way home they'll stop at an outlet mall where Steven will accompany Jenna while she browses. There won't be any gifts purchased or exchanged. Instead each is giving the other the gift of their company and participation in an activity they wouldn't otherwise choose for themselves. While Jenna and Steven's version of Valentine's Day isn't the romantic dinner that most would imagine as a tiny bit more ideal, it's an example of how adult Millennials (now 24-35 years old) are changing retail.
According to National Retail Federation's Valentine's Day survey, 44 percent of 24-35 year olds are planning an experience together to celebrate the holiday and more than 51 percent say a shared experience is what they'd most like to receive. That's significantly higher than the average of all adults, of whom only 39% are hoping for for an experience gift. Millennials will also spend more, averaging $104 compared with $87 for all adults.
This fits a pattern of how Millennials shop and buy across other categories. They aren't cheap, from fine wine to home-delivery to high-end electronics, Millennials, on average, are willing to spend more than other generations. But purchases need to include more immediate emotional impact and instant bang for their buck than they did for older generations or, like Jenna and Steven, they just aren't buying. Here are three reasons why:
1. Time costs are more apparent to a generation of entrepreneurs.
Alicia, a 31-year-old newlywed whose husband Dan is an Uber driver and TaskRabbit, explains it this way, "I'd rather be with him for the 5 hours it would take him to make enough money to buy me a necklace." According to Kimberly Palmer, author of "The Economy of You", fully one-third of Millennials make money through entrepreneurial ventures. In an interesting way that I rarely see with older generations, Alicia factored in time away from Dan in deciding where she would get the necessary emotional impact of a Valentine's Day gift. In her time/value equation the necklace lost and an equally expensive night out of town won.
2. Millennials crave vibrancy and excitement.
Ownership is simply not as central to the Millennial mindset as it was to other generations. The long-term commitment that's by nature a part of most big-ticket purchases such as cars, homes or even luxury handbags is less appealing to a generation that gets bored more easily and values immediacy. An adventure, a festival or a Super Bow party (yes, Millennials spent the most on that event too) has immediate and emotional impact. And aside from the obvious - that it's simply fun to be with the one you love and experiences are memorable markers of affection - experiential gifts have a leg up with Millennials because social media chronicling lends permanence to less tangible purchases like dinner and festivals.
3. Social media turns bragging into sharing.
Fawning over each other's Valentine's Day baubles and flowers at the office may be antiquated, but fawning, bragging and "sharing the joy" will never go out of style. It's normal for people, especially young adults, to want to show others that they are loved. But it's far more socially acceptable to post an expensive meal on social media than it is to show off an expensive gift. And that gives experiential gifts an edge over tangible gifts.
Tangible gifts will never go out of style. But the rising preference for experiential gifts -- especially "the gift of me" demonstrates the dynamism and disruption that Millennials are bringing to the marketplace.