Move over baby boomers, a new generation is taking over. Born 1982 to 2000, Generation Y is estimated to have purchasing power of more than $200 billion a year, influencing as much as half of all spending in the economy, according to a new study.
Research from Resources Interactive, a marketing firm, said these young Americans, ages 6 to 24, are a persuasive lot with more than 82 million voices. They are making purchasing decisions on practically everything for the family, including food, clothing, homes, cars, vacations and entertainment. They're expected to top 100 million over time, due in part to immigration patterns.
"Their influence on family spending is that they essentially are the co-purchasers," said Kelly Mooney, president of Resources Interactive, in a Marketwatch article. Mooney spoke at Shop.org's annual summit in New York recently. Shop.org is a network for online retailers and a division of the National Retail Federation.
Because Gen Y's parents carry the credit cards, it is difficult for retailers to track their buying habits. But after spending more than four months interviewing, watching, text messaging and collecting video diaries of a sample group, Mooney thinks that these children and young adults are responsible for roughly half of all spending in the economy. And, they represent 15 percent to 17 percent of spending online.
There's even a subset within Generation Y -- the so-called digital millennials. The 14- to 24-year-old group was "born at the keyboard" and is perpetually connected. Mooney, co-author of the book, "The Ten Demandments: Rules to Live By in the Age of the Demanding Customer," said they have the most money and a strong need for "instant gratification and immediacy."
Resources Interactive research showed they'll wait just three seconds for a page to download before they click away. They also process website information five times faster than older generations.
Additionally, most teens are Internet-savvy and have a wide-reaching social network that influences their buying decisions. Through sites such as myspace.com or facebook.com, teens have dozens, maybe even hundreds, of people they regularly communicate with and then have another potential thousand who they may never meet but with whom they have interactive communication of some sort.
"These vast networks of who they tap into are fundamentally changing how they shop," Mooney said in a Marketwatch article. Their word-of-mouth sway doesn't come at a party or family gathering but from a wide swath of members of their greater online network. "The power of their network -- and how much influence they can have so quickly -- is just enormous."
She added that brand marketers and retailers must more narrowly target the consumer, support the engagement of the social network and then re-engage them with the brand after a purchase.