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Why We Matter MAY 2018 MILLENNIALS ON MILLENNIALS WHY WE MATTER At Nielsen, data drives everything we do—even art. That’s why we used real data to create this image. CopyrightCopyright © © 2018 2018 The The Nielsen Nielsen Company Company (US), (US), LLC. LLC. Confidential Confidential and and proprietary. proprietary. Do Do not not distribute. distribute. 1 WELCOME As we enter 2018, the Canadian fast-moving consumer goods (FMCG) landscape continues to face challenges. Dollar sales growth in the FMCG industry slowed to just 2% by the end of 2017, signalling the need for Lauren Fernandes retailers and manufacturers to remain adaptive and agile in navigating the Sr. Communications path forward. Specialist Nielsen Consumers are making fewer trips, and we’re seeing a fundamental change in what we’ve traditionally considered to be the consumer’s path- to-purchase. What was once linear is now a convoluted and complex journey that crosses many places, platforms and processes. With this added complexity comes ample challenges to how brands compete for share of consumers’ minds and wallets. Planning ahead requires careful thought into understanding the new paths-to-purchase. Digital disruption and seismic population shifts Haley McCausland are upon us, and Millennials are at the helm of these changes. These Executive Analyst consumers are in their early adulthood, approaching key milestones while Nielsen still intertwined and influenced by the generations before them. This generation is quite literally the future, but understanding and harnessing their purchasing power can be a daunting task. It’s imperative that manufacturers and retailers alike remain at the forefront of consumer decisions, and more importantly, Millennials’ decisions—despite this forefront existing in more ways than ever before. The traditional in-store purchase opportunities are fewer, and possibly harder to convert, but the upside in successful conversion and retention Andréa McDougall becomes larger and more imperative. Millennials have a reputation for Sr. Analyst their spontaneity, which makes them harder to predict. But, it’s all a Nielsen matter of perspective. We like to think that Millennials exhibit loyalty and plan their purchases, however, they simply manifest themselves uniquely from other generations. As Millennials ourselves, we know that our behaviours as a cohort stand in stark contrast to previous generations. But in thinking introspectively and honestly about our own lives, we were able to draw some useful conclusions on how to more thoughtfully analyze our generation. We represent young professionals, new parents and in many ways, epitomize the “Boomerang” generation—those who return to their childhood homes after previously living on their own. We’re not one in the same, and therefore, one strategy won’t suffice in capturing our interests at the point of purchase. We hope you’ll be invested in our analysis of, ourselves, our collective future and how “we” can win together. Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 2 CONTENTS WHY MILLENNIALS? ......................................................4 THE MILLENNIAL OPPORTUNITY ................................ 10 RETAILER PREFERENCES ..............................................14 SHOPPER INFLUENCERS ..............................................21 CAPITALIZING ON THE MILLENNIAL BASKET .............24 TIME TO TAKE ACTION .................................................30 Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 3 WHY MILLENNIALS? In this report, the Canadian Millennial generation is defined as those individuals born between 1980 and 2000, or those who are currently between the ages of 18 and 38 years old (except where otherwise denoted). Further, the scope of the analysis used to prepare this report includes those who have self-identified as the “primary shopper”, or the individual making more than 50% of the purchases within their home. But, thinking about the age range and the breadth of life events that occur in between, there’s an array of factors that truly differentiate Millennials from other generations. Some worth noting include: • Relationship status • Living arrangements • Presence of children • Financial position SIZING THE PRIZE Understanding the top line opportunity with Millennials MILLENNIAL POPULATION (THOUSANDS) of Canadian 10,111 27.5% population Million 10.1 people 5,094 5,017 Average monthly spend on FMCG $509 products, per household Total Canada Male Female Source: Statistics Canada, Population by sex and age group, Aged 20-39, 2017 and Nielsen Homescan, Total Trips, 52 weeks ended Mar. 4, 2018, Millennial primary shoppers. Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 4 According to Statistics Canada, those aged 20 - 39 years old represent roughly 27.5% of the Canadian population, with males at 13.9% and females at 13.7%. This equates to just over 10.1 million people. As a cohort, Millennials spend an average of about $509 per household per month across FMCG categories, compared to $685 for the Boomer generation.1 Accounting for just 12% of overall FMCG dollars,2 Millennials are currently spending less than what we’d expect given the size of the overall cohort. UNDER-REPRESENTED IN PURCHASING POWER Millennials’ Importance 16% 12% % Household % of FMCG $’s Heads 13.2 B 2.3 M Source: Nielsen Homescan, Account Shopper Profiler, 52 weeks ended Dec. 30, 2017. Definition of Millennials: Canadian adults identified as head of households who are under 35 Millennials are a dominant force, but the bulk of the cohort are not yet the key decision-makers within their households. This dynamic is rapidly shifting, and that means Millennials’ purchasing power will continue to grow in the years to come. Today, Millennials represent just 16% of those who consider themselves the head of their households in Canada. But given the variety of living arrangements within this generation, the head of the household and primary shopper may not be one in the same. A Millennial living with an older relative, for example, would not be the head of the house, but could be responsible for most of the shopping. Considering those who make over 50% of their household purchase decisions, we reach a larger proportion of the cohort. Twenty-three percent of all Canadian primary shoppers identify as Millennials, and we expect this number to continue to grow.3 We’ve already seen great shifts in growing Millennial purchasing power, and the time to understand and act on present and future opportunities, is now. 1Nielsen Homescan, Total Trips, 52 weeks ended Mar. 4, 2018 Primary shoppers 2Nielsen Homescan, Account Shopper Profiler, 52 weeks ended Dec. 30, 2017 3Based upon a sample of 7,462 primary shoppers, Nielsen Homescan, 52 weeks ended Mar. 4, 2018 Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 5 Millennials with children and those without have completely different household needs, and therefore present unique opportunities to be reached in different aisles of the store. Tapping into trip types and needs that represent the highest potential for your business will not only require knowledge of Millennials as a whole, but also insights into the unique behaviours of each sub-group. With current market conditions, going beyond understanding consumers, to embracing and engaging with them is essential to grow and capitalize on opportunities with the highest return. LIVING ARRANGEMENTS The lifestyles of the Millennial generation are changing. As marriages and relationships are delayed, and in many cases forgone completely, the proportion of those aged 20-34 living separately from their parents has declined. In fact, back in 2001, about half of young adults (49%) lived with a partner, spouse or child, independently from their parents. Today, that number is down to just 42%. With that said, the overall number of young adults living on their own has still shown growth. Compared with 2001, about 3% more young adults now live alone (or with roommates/relatives that aren’t their parents). In 2016, nearly 35% of young adults aged 20-34 lived with their parents. Up from 30.6% in 2001, we’re seeing growth in the breadth and length of interdependence and time spent between younger and older generations. YOUNG AND INDEPENDENT, OR STILL DEPENDENT? More young adults live with their parents today than in 2001 % OF YOUNG ADULTS (AGED 20-34) 49.1 41.9 2001 34.7 2016 30.6 23.4 20.3 Living With Living with spouse, Living alone (or with Parents partner or child roommates or other (not parents) relatives besides parents) Source: Statistics Canada, Census of Population, 2001-2016 Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 6 REGIONAL IMPACTS Millennials often seek out city centres, with roughly 32% residing in high density urban areas.4 Attracted by the hustle and bustle, Millennials tend to migrate to downtown cores as they branch off from their parents’ homes, and as a result drive down the average age of household heads in these areas. Most notably, Calgary was deemed one of the youngest cities in Canada based on the 2016 Statistics Canada Census of Population, where senior citizens represented only 11% of the local population. With that said, relocating to city centres can come with challenges such as high costs of living. Therefore, it’s important to understand and distinguish where we’re
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