The top millennial buying habits and insights for 2023

After overtaking baby boomers as the largest adult population in America in 2019, millennials — and millennial spending habits in particular — had the attention of marketers everywhere. Their buying power is still undeniable: The collective annual income of the roughly 1.8 billion millennials worldwide is roughly 2.5 trillion dollars and is expected to exceed 4 trillion dollars by 2030.

While Gen Z’s spending habits and power continue to expand, millennials will hold the title of the most powerful spending generation for a while yet.

How this oft-maligned generation spends its money differs from previous generations in several key ways that have held relatively steady. At the same time, some millennial spending habits and buying behavior have changed over time, especially as unexpected upsets like the pandemic occurred.

This guide to millennial shopping habits and consumer behavior provides insights into how to draw, hold, and cultivate the interest of this tech-savvy and value-driven group. 

When you picture millennials (also called Generation Y), who and what comes to mind?

For many, the idea of millennials is caught up in clichés; they’re perpetually thought of as being young, can’t afford houses because they’re obsessed with avocado toast, spend more money on coffee than retirement, and lots of other clickbait nonsense that’s not based on empirical evidence.

Here’s what the data tells us instead.

They are now considered middle-aged

Millennials are defined as anyone born between 1981 and 1996, although they are often lumped together with Gen Z (1997-2012).

For example, that means the youngest millennials turned 27 in 2023, while the oldest millennials turned 42.

There are approximately 72.1 million millennials in the U.S.

Millennials recently surpassed baby boomers as the largest living adult generation in 2019. This means that millennials make up a considerable percentage of current consumers and have immense buying power.

They’re highly-educated

About four in ten (39%) millennials have a bachelor’s degree or higher, compared to GenX (29%) and Baby Boomers (25%). The flip side is that many millennials carry substantial student debt; tuition has increased 310% since most baby boomers were in school in the 70s, while wages have only increased 80%.

They’ve faced a steep uphill financial battle

On top of student loan debt, rising housing prices in many urban areas have outpaced wage growth, making it difficult for millennials to enter the housing market; it is estimated that millennials are paying nearly 100% more on average for their homes compared to baby boomers.

Lastly, the burden of high living costs, such as healthcare and childcare, has also become less affordable due to stagnant income levels.

All of these factors and many more come together to shape millennial buying behavior and spending habits.

According to a survey by Eventbrite, roughly three-quarters (78%) of millennials would choose to spend money on an experience or event over buying something desirable.

Part of this is driven by the culture of the homes that millennials grew up in, where the purchase of material possessions was used as a way of showing off wealth and status. But many millennials also graduated into the workforce during The Great Recession, making it more difficult to achieve ownership milestones like buying a home or new vehicle and forever changing their perception of what is and isn’t a must-have.

Takeaway: The millennial preference for experiences has driven industries such as travel, dining, and live events to cater to this group with curated events, immersive environments, and social media-worthy moments. Brands have also had to learn how to cater to this preference, from creative packaging (e.g., unboxing videos) to unique digital experiences and beyond.

Example: LootCrate has made a particular name for itself in the unboxing scene, with month-long teases and exclusive items, and there are whole channels dedicated to unboxing, like that of Marques Brownlee (known as MKBHD), who focuses on tech releases.

A 2022 survey by ESW found that 73% of millennials plan to spend “the same or more” online in 2023. The use of e-commerce websites isn’t just convenient to millennials — as digital natives, they are extremely comfortable navigating these platforms and rely heavily on the reviews and recommendations included therein.

Takeaway: Most big brands these days have an online presence, but managing where and how customers can interact with your brand across social media platforms, company websites, blogs, online marketplaces, and online communities and forums is now more critical than ever.

While we wouldn’t go so far as to say that millennials prefer renting over owning, the economic factors mentioned above have certainly made them more familiar with renting. Plus, renting does come with perks — flexibility, fewer maintenance costs, and lower credit requirements.

While the pandemic shifted this trend somewhat when it comes to homeownership (52% of households with at least one millennial member now own a home), millennials are still more inclined to rent than previous generations. This goes for everything from homes to cars to clothes and even kids’ toys. When renting makes sense from a sustainability perspective, this can also tip millennial customers’ inclination in favor of renting.

Takeaway: Brands should offer business models that cater to the rental economy. As we’ll see in a moment, this frequently takes shape in the form of subscription services — but quality, convenience, and customer service are key when it comes to actually retaining subscription customers.

From Netflix to subscription boxes, millennials are the first generation to fully get on board with subscription services — particularly digital subscription services. Subscription services can offer seamless and personalized experiences, all while providing cost predictability.

Takeaway: By offering customized, value-added experiences and ensuring convenience, brands can build lasting relationships with millennials, fostering brand loyalty and recurring revenue streams.

Furthermore, by aligning subscription offerings with sustainability and ethical practices in mind, brands can resonate with millennials' values, enhancing their appeal and positioning in the market.

Example: Spotify allows users to stream unlimited music for free — with ads. Upgrade to a subscription plan of your choosing (e.g., Individual, Duo, Family, Student), and you can listen to tunes ad-free all day as you work. Plans like these get customers in the door but add value with their subscription service offerings. 

Concerns about climate change and social responsibility drive millennials' commitment to sustainability. They actively seek out eco-friendly and ethically produced products, supporting companies that align with their values. For example, according to a McKinsey & Co. Report, 75% of millennial respondents stated they consider sustainability when purchasing clothing.

Takeaway: Adopting sustainable practices can not only enhance a brand's reputation and trustworthiness in the eyes of millennials, but it will inevitably impact the long-term viability of your business as well.

The sheer size of the millennial generation, combined with their substantial collective buying power, presents an unprecedented opportunity for marketers. However, to captivate this discerning and socially conscious generation, brands must go beyond surface-level marketing efforts and invest in authentic, purpose-driven experiences that resonate with millennial values, priorities, and aspirations, forging a meaningful connection that transcends transactions.

Of course, this is easier said than done.

Khoros, an award-winning digital customer engagement platform, can help. Khoros provides marketing and customer service solutions that enterprise businesses can use to identify consumer insights and build customer relationships.

If you’d like to get a first-hand look at our award-winning solutions, schedule a demo today. For more consumer insights, see our Forrester Report: Getting to Know Your Customers.