MILLENNIALS 18-34The Generation Reshaping Travel and Shopping Habits
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MILLENNIALS 18-34The generation reshaping travel and shopping habits June 2018 Photo AdobeStock / Ekaterina Pokrovsky Global Blue Roland Berger Group communication & Editorial Alexis Gardy Senior Partner, Tourism & Leisure Domitille Pinta Gaëlle de la Fosse Head of Group Communication Partner, Retail & Luxury Ella Collier Sébastien Manceau AVP - Editorial Principal, Retail & Tourism Alison Cerles Carolyn Breitenstein Editorial and External Communication Officer Senior Expert, Consumer Goods & Retail Pauline de Clermont Tonnerre Mame Sambou Corporate Communication Coordinator Marketing & Communication Advisor Gwyneth Holland Contributing Editor Roland Berger 62-64 rue de Lisbonne Data 75008 Paris, France Mathieu Grac rolandberger.com/fr VP Intelligence Strategy @BergerParis Studio & Publishing Fabio Gervasoni Art Director Yuese Shi Senior Designer Global Blue SA Route de Crassier 7, CH-1262 Eysins, Suisse globalblue.com @globalbluegroup 2 CONTENTSCONTENTS THE NEW GLOBE SHOPPER 4-5 15-17 Who is the Millennial? Millennials lead the way 6-7 18 Interview with Sébastien Manceau City focus and Laurent Delmas 19-21 THE NEW GLOBE TRAVELLER New retail 9-10 A new traveller 22-23 New connections 11-13 THE NEW GLOBE EXPERIENCER A new offer 25-27 Going glocal 28-29 Make Paris cool again 30-31 About us & aknowledgements WHOWHO ISIS THE THE MILLENNIAL? MILLENNIAL Who is the Millennial traveller in 2018? What are they looking for when they travel abroad? How do they differ from other generations? 4 WHO IS THE MILLENNIAL IN BRIEF born between Digitally minded generation Global community 1984 - 2000 Security is top of mind Tech savvy 18/34 Achievement Optimism source: WMFC years old Avid consumers Street smart High morals Looking for experience WHAT DO THEY REPRESENT? 1.8bn Millennials 300m-330m 2 long trips travellers per year on average 1/3 4 long trips Millennials per year source: Nielsen, 2017 - UNWTO, 2016 $ 50% $350bn $ shoppers in the travel retail market value of market $ SHARE OF WALLET WHEN TRAVELLING CHINESE AMERICAN FRENCH 18% Shopping 8% Shopping 10% Shopping 19% Other 18% Other 21% Other 11% Attractions 11% Attractions 14% Flights 16% Attractions 16% Food 15% Food 20% Flights 20% Flights source: Expedia Media Solutions, 2017 17% Hotel 16% Food 27% Hotel 23% Hotel 5 JOINT INTERVIEW WITH SÉBASTIEN MANCEAU AND LAURENT DELMAS Sébastien Manceau Laurent Delmas Principal At Roland Berger, Global Blue Chief Operating Retail and Tourism Officer, South Europe Laurent Delmas: What are some key characteristics defining the Millennial globe traveller and shopper These differences between a younger set of consumers and older generations do not stop at the travel industry. In terms of compared to other generations? shopping aspirations also, Millennial Globe Shoppers display distinctive characteristics. Regarding luxury shopping products Sébastien Manceau: first of all, our data show that Millennials prioritise leather goods and accessories over fashion garments. If anything, it In few sectors have Millennials had more impact than in travel suggests that they first access to luxury through the purchase and tourism. Their expectations and behavior are significantly of a staple designer bag, probably because these items are different from their parents’ and older generations’. more heavily branded and identifiable than clothes. In terms of Their whole travel journey has changed, from the initial shopping location also, their search for convenience, smooth inspiration phase to the actual travel and holiday experience. shopping experience and additional services drives them The importance of social media as influencer on the choice of towards department stores more frequently than other any holiday for example, the quest for authentic holiday experiences other generation. and off-beaten track adventures, the demand for personalized services, their awareness of security threats…. Changes are Budget wise, at 3,000€, if Millennials’ spending is below happening along the entire value chain. average (3,300€), it is still in line with their parents’ and highly promising for the luxury industry when the entire group will Millennials are changing the way industries used to function, have reached its earning peak. mainly because they are the first generation to handle everything digitally. The travel and tourism industry has Even better is Millennials’ use of Tax Free Shopping (TFS). In already undergone a massive digital transformation with offers 2017, they represented almost a third of all TFS transactions like Booking.com and Airbnb being the new normal and the emitted in the world, an impressive +14% growth compared expectations of Millennials are fueling further changes. to the year before. They have become the leading users of TFS, far before baby boomers and the gen X. Jumping in on But if Millennials have set a new (digital) standard, their Sébastien’s remark about their use of the digital, again, it is requirements have spread to other generations and today, it is their absolute need for convenience which attracts them to difficult to tell who is driving change in consumer behavior. digital TFS solutions. For brands, this new attitude towards What is sure is that Millennials are bringing a huge momentum TFS has the potential to generate additional sales in store. to the travel industry. 6 Other generations are permeable to the Millennial effect; they What is the impact of the Millennial traveller have started to imitate their offsprings’ demands and likings. on the tourism and retail industries? For the retail industry, this phenomenon is a great opportunity to review its product design and retail model to address a wider SM: scope of consumers. Firstly, Millennials impacted the overall destination mix. They have helped revive city trips as most of their expectations How can companies and organisations from the towards holidays find an answer in a city environment. Some cities have cleverly adapted their marketing and offers to this travel industry best adapt themselves to these target group. On top of that, international companies such new consumers? as WeWork or Regus offer global travellers solution to mix leisure and business. This increasing “bleisure” trend helped SM: cities take the lion’s share of tourism growth. (Millennial) travellers are looking for new experiences, Secondly, Millennials have forced historical travel players combining a new destination with unusual activities, where to adapt their communication. While in many industries they authentically explore a city or a country and combine Millennials are “only” seen as a communication target, travel getting to know locals and local customs with enjoying typical and tourism players have deeply re-invented their model activities on site. to correspond to Millennial expectations. For example, Serving these needs for new destinations, personalized trips and AccorHotels is accelerating the digital transformation of the local activities will help appeal to the new consumers. entire company, enriching its offering with the acquisition And it does not have to be stiff or in a formal way. In contrast, of lifestyle hotels (e.g. Mamma Shelter), developing a new Millennial travellers feel at ease with a relaxed and informal accommodation format (Jo&Joe) or setting up a Millennial hospitality style as long as the service is excellent, and they get shadow cabinet to impact senior management decision making what they want. process. Last but not least, Millennials have set the ground for new business models in previously non-existing markets. How can retail brands benefit from Millennial Companies, such as Airbnb (with their accommodation and “Trips” offer), have been founded to serve needs initially travellers’ expenditure when they shop abroad? expressed by Millennials. Now these needs are becoming LD: universal and Millennials do not necessarily represent a direct business target anymore. For brands and retailers across the world, offering Globe Shoppers innovative TFS solutions, digital especially, and LD: services is a great incentive to stimulate Millennial tourists’ spending when they shop abroad. Global Blue’s portfolio Millennials’ impact on the retail industry is unprecedented. includes digital solutions where Chinese tourists can receive Their behavior has forced retailers to review their products, their VAT back instantly onto their Alipay or WeChat digital pricings, services and the way they engage with them. wallet. For brands, one of the greatest challenge is to provide a differentiating retail offer to a volatile generation, accustomed In parallel, back in 2017, we launched Mobile Customer Care to cross-border and offline/online shopping. (MCC), to bring real-time support to travellers. MCC relies on a notification service where a series of personalized transaction- The value they attribute to “experience” when shopping triggered emails and SMS are sent to Globe Shoppers’ phones represents a great opportunity for retailers to win them over. to guide them from the initial TFS transaction all the way In stores, these one-shot experiences take the shape of cultural through to confirmation of the refund payment. From July to events, art installations, exclusive concerts at Selfridges in December 2017, we estimate that Millennials represented 40% London or sports classes at Saks 5th Avenue, New York. of all MCC transactions. Outside the stores, iconic brands have at heart to promote their strong heritage by way of opening their own fashion We have also developed a suite of services