Gen Y shoppers, raised on e-commerce, still prefer in-store experience

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Liz DeRubertis, 26 of Ellicott City, strolls through the Arundel Mills Mall.

Liz Derubertis browsed stores at Arundel Mills mall Wednesday in search of a dress to wear to a wedding. The 26-year-old bartender and University of Maryland, Baltimore County student never shops for clothes online.

"I'm too particular about the fit, and I don't want to take the time to send it back," said Derubertis of Ellicott City. "I like being out, being in the crowds and perusing and seeing what's being offered — and people-watching."


Just as video did not kill the radio star, the Internet won't kill the shopping mall any time soon. The shopping habits of Generation Y show why.

Buying almost anything online may be as much second nature as texting for many in the first generation to have grown up with e-commerce, but the millennials still do most of their shopping in stores, especially those that keep their offerings fresh and make the experience social, according to research from the Urban Land Institute.


There are 80 million consumers between 18 and 35 nationwide. Collectively they spend $200 billion a year across all categories. It's little wonder Generation Y has become a key segment for retailers and shopping center developers alike.

"They're hugely important, the largest demographic in American history … bigger than the baby boomers," said Maureen McAvey, senior resident fellow for retail for ULI. "The fact that there's simply so many of them makes them important. Beyond that, they're in the household formation part of their lives. Baby boomers are starting to downsize. They've acquired so much stuff, and they don't buy as much. Gen Yers are just starting to get out of their parents' houses and forming their own households."

ULI's report, based on an online survey of 1,251 Gen Yer members and a focus group at Columbia University's Graduate School of Business, found that nearly half of Gen Yers enjoy going out shopping, while 37 percent said they love to shop. Only 4 percent said they hate shopping. The research showed millennials are multi-channel shoppers, visiting retailers online and in person, with no real preference for one type of store or shopping center over another.

Melissa Johnson, 30, who was shopping at Arundel Mills in Hanover with her husband, said she often comparison shops online, then goes to a store such as Best Buy that promises to beat competitors' prices, and shows the cashier the online retail price on her smartphone. Beyond that though, going out to a mall or shopping center just appeals to the couple.

"We spend so much time on the computers, we like to get out to the stores," said Johnson, who works as an intelligence analyst for a government contractor.

ULI's research showed more than half of millennials go at least once a month to discount department stores (91 percent), neighborhood shopping centers (74 percent), malls and department stores (64 percent) and chain apparel stores (58 percent), though 45 percent spend more than an hour a day looking at retail websites. Pedestrian-oriented developments appeal to Gen Y, and 70 percent of the women — and half the men — consider shopping a form of entertainment. Almost two-thirds of the survey respondents visit enclosed malls at least once a month.

"They shop online, in stores, they shop in every kind of store you can imagine, whether free-standing or in a mall or a discount big box or specialty," McAvey said. "And young men shop as much as young women. Shopping is seen as part of their social life.

"One of the things retailers are finding is they have to change their storefronts and their offerings much more frequently," she said. "This is a stimulus-oriented generation, and they're used to change."


Some millennial shoppers say nothing beats being able to pick up a product off a shelf or compare it to other merchandise nearby.

"You have to pick it up and touch it, to have something to compare it to, to read the labels," said Danielle Andrefsky, 35, a video coordinator at Aberdeen Proving Ground who was buying hair products at Target in Aberdeen during a lunch break. "That's hard to do online."

"I always think there's more selection in a store. It takes a lot of your time to hunt for something [online] compared to when there are 10 things on shelves."

Caila Ochs, 18, of Pasadena, who works as a receptionist at a health club, said she goes to malls to window shop.

"I shop online more for technology and come out for the rest of it, clothes, jewelry, whatever catches my eye," said Ochs as she wandered around Arundel Mills with friend Sean Blum, 19, also of Pasadena.

"I like to look at what I'm buying before I buy it," added Blum, a student at Anne Arundel Community College.


Retailers are beginning to see that Gen Y shoppers differ from their older counterparts in a few key ways, says Jamie Gutfreund, chief strategy officer for Los Angeles-based The Intelligence Group, a consumer insight and strategy consultant with a focus on consumers ages 10 to 40.

Gutfreund describes them as vocal consumers who were raised to believe their thoughts are valuable and who frequently voice those opinions through social media. They are more likely to buy a product because they believe in what the company stands for and stop buying it if the company does something that offends them, she said. (There's an app "Buycott" that lets users look at a company's track record on measures such as how environmentally friendly it is.)

"They expect to have a relationship with the brands they support because their lives are so visible," Gutfreund said. "Everyone knows what everyone else is doing. They also believe that shopping is a new activism. If they're going to buy something, it's a vote. They believe they are investing in a brand and expect the same level of recognition and acknowledgment a company would give to a shareholders."

Often, young consumers want to customize and personalize their products, prompting some retailers to revamp logos to play down the brand, a step taken by Aeorpostale, and others to dream up new concepts, such as Nike's new store concept Salvation, where consumers can design their own image for their Nike and Converse footwear.

Gen Y's desire for instant gratification hasn't been lost on retailers, as online behemoth builds more warehouses to increase same-day shipping, retailers encourage shoppers to place online orders on in-store computers to prevent them from feeling they've left empty-handed and online sellers allow in-store pickup and returns.

"This is a generation that has been, I don't want to say coddled, but had great attention paid to it by parents and doting aunts and uncles," McAvey said "The thought that they would order something and not be sure that they really like it and wait a week for it to come is not as appealing to them."


Katie Furtado, 28, who was shopping with her 2-year-old-daughter, Sophie, at Target in Aberdeen, described herself as just that type of consumer. The desire to get the stuff she wants and needs fast keeps her mostly offline.

"I never shop online. I have no patience," said Furtado, Besides, added the stay-at-home mom and business administration student, "I can't stand having to pay for shipping when I can drive a few miles. I'd rather get out of my house."

Her husband once ordered diapers online, but she got tired of waiting for delivery and went to the store herself.

Gutfreund expects retailers to cater more and more to Gen Y. Many will integrate their online and physical channels to give consumers a more seamless experience, such as Nordstrom, which highlights items in stores that are featured on photo-sharing website Pinterest, and Lululemon, which offers an app that directs customers to an area's yoga classes.

She also expects retailers will make greater use of data to customize consumer marketing and place greater emphasis on service as consumers rely more heavily on online reviews.

Retailers are keeping a close eye on the millennials' buying habits because it's becoming clear that they are not just a younger version of their elders, but a different shopper altogether, McAvey said.


"Many people speculate this is going to be the sharing generation," more apt to rent a zip car or ride a bicycle than buy a car or use a tie-sharing service rather than having a closet full of the accessory, she said. "It's not clear that they wish to acquire as much stuff as their parents did, and retailers are very interested in what they're going to do."