Is the Sharing Economy a Millennial-Driven Phenomenon?

Image Source: www.washingtonpost.com

Image Source: www.washingtonpost.com

According to the 2015 “1099 Economy Workforce Report,” commissioned by venture capitalists and Stanford University alumni, 39 percent of sharing-economy workers are ages 18-34. This is coupled with almost half (49%) of Sharing-Economy consumers, also ages 18-34, or commonly referred to as “Millennials”.

Yet, AC Nielsen also provides evidence that the majority of consumers in the sharing economy tend to own a house, have children and earn above-average wages, suggesting that sharing is much more than a millennial-driven phenomenon.

So what type of impact are Millennials having in the Sharing Economy? This blog post gathers key statistics and data to help answer that question.

Millennials resonate with the idea of the Sharing Economy since it perfectly fits their budgets.  For example, an article by Lexology says, Compared to previous generations, Millennials have less spending power, are less likely to form households in their 20s and early 30s and are choosing to forego suburban neighborhoods in favor of smaller urban apartments. In turn, “They’re taking a more asset-light stance toward consumption, putting off buying a home in favor of renting, forgoing a car payment and taking Uber, or skipping a hotel in favor of booking a room via Airbnb.”

Additionally, Millennials’ affinity for technology has provided a big boost to the sharing economy. A senior staff writer at The Daily Californian writes, Demographic changes, coupled with the rise of sharing economy options, seem to be paving a new path for the way that young people interact with businesses. For instance, “digital technologies like GPS-enabled smartphones allow millennials to quickly make and respond to requests for goods and services and complete the transactions through online payment systems like PayPal.”

And, finally, research indicates that Millennials are having an increasing impact on the retail industry.  According to an article in the April 2016 issue of Harvard Business Review magazine, the largest category of spending in the Sharing-Economy is online marketplaces (e.g. Ebay, Etsy), with 16.3 million consumers each month spending almost $36 billion annually.

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These reports estimate that the generation’s spending will soon account for approximately 30% of all retail sales.

And, HuffPost Business says, “Nowhere is this medium of exchange more timely than among college and university students worldwide.”  Lexology helps explain this claim by providing the following two examples:

  • Startup Rent The Runway urges customers to question why buy when you can borrow by offering short-term rental options for what might otherwise be prohibitively expensive pieces of formal attire.

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  • More traditional retailers such as The Home Depot offer customers the opportunity to rent expensive machinery such as a stump grinder or sod cutter, items that would otherwise often clutter a garage after they are used for a limited project.

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These offerings hit the same trends: why spend hundreds, if not thousands, when you can share and save valuable space in the process? The “digital natives”, also referred to as, “Millennials” are technology savvy and able to take advantage of these services to have their limited capital extend longer.

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Millennials in the Sharing Economy

The social economy is giving rise to a new consumer revolution.  In an era of connected consumerism, social media strategies are going to change your business.

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A friend expressed his disbelief the day he saw his 3-year-old daughter looking through a glossy magazine while “swiping” her finger across the cover photo in an effort to “turn the page”. Instead, nothing happened… of course, because it was a traditional magazine, which requires flipping or turning an actual page over, not swiping aimlessly like you would a digital screen!  Yet, in today’s world, this sort of behavior, or “digital literacy” seen among young people is more and more common.

The term “digital natives”, also referred to, “Millennials,” represents a generation born during the rise of the Information Age. Typically, these people are categorized as being born after the 1980s and who grew up in a world of increasing technology advancements. Although the “Baby Boomer” generation, named after the huge spike in U.S. births from World War II, is thought of as the country’s largest generation; in 2016, Millennials actually outnumber the boomers by 11 million people.  Furthermore, according to Forbes, Millennials represent about a fourth of the entire population, with $200 billion in annual buying power.  Therefore, understanding these generational traits have major implications for organizations around the world.

However, companies have been struggling to connect with this generation because many of the traditional methods of advertising have proven ineffective at capturing their attention. This resistance from traditional businesses is giving way to an understanding of the need to adapt and adjust to this “new normal”.

There is a review of data that shows Millennials have characteristics that set them apart. According to NPR, unlike their parents’ generation, Millennials are ushering in an age when minorities will lead the U.S. population. This is also supported by a shared Millennial trait of being a very ethnically and racially mixed generation.  Another shared characteristic among Millennials is civic-mindedness. Many define doing good with efforts related to protecting the environment. For example, according to a 2011 study by ad agency network TBWA/Worldwide and TakePart, 70% of young adults consider themselves social activists.

One industry offering a multitude of services aligned to these Millennials wants/needs is the Sharing Economy.  Today, many are continuing to discover the benefits of peer-to-peer exchanges of goods and services. For example, in regards to civic-mindedness, Sharing Economy ridesharing services like Uber and Lyft limit climate change by promoting sustainable travel.  Additionally, a sharing economy company such as Pley, a toy subscription  company, eliminates 10.5 pounds of CO2 emission for every toy it rents.  Home sharing companies also encourage sustainable travel. According to a study conducted by the Cleantech Group, trips that rely on home sharing companies, including bed-and-breakfasts, emit 66 percent less CO2 than trips using hotels, including hotels that have earned five-star efficiency ratings. This is because fewer resources are used to care for travelers.

In terms of being a very ethnically and racially mixed generation, corporations that hold contradictory views on political and social issues are at risk when it comes to reputation rankings amongst Millennials.  A prime example of this can be seen from the recent Chick-fil-A same-sex marriage controversy where the company CEO made public comments opposing same-sex marriage and resulted in protests and boycotts of the chain.  Regardless of the size of an organization, when it comes to using social and mobile technologies, one must work hard to build strong relationships with constituents, and to reach them wherever they are and at a moment’s notice.  To truly cultivate these relationships and to mobilize a base, organizations need to expand their outreach to include multiple online channels and tools such as social media, email, and mobile.  All of these platforms are experiencing explosive growth and will continue to gain momentum.

As the world becomes more networked, inclusive and diversified, more companies will need to  reevaluate their communication strategies and behaviors to reinvigorate their understanding of, and relationships with these critical stakeholders.

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