Much has been written about how millennials are killing this or that industry; how they can’t afford to buy homes because they spend all their money on avocado toast (as if that’s a legitimate correlation). In the midst of all the breathless editorializing, a picture of millennial consumers has emerged showing that their generation, more than any other to date, values representation and diversity, and their spending habits reflect those values.
For those of us beating the supplier diversity drum, this is incredibly valuable information.
Market researchers have only begun looking at the connection between supplier diversity (often phrased as “diversity and inclusion” for the layperson) and millennial consumers in earnest in the past couple of years, but already the data supports the anecdotal evidence. The ROI on supplier diversity has transformed from “the right thing to do” to a competitive advantage with a massive consumer base.
Millennial consumers prefer inclusive brands
In a survey conducted during the run-up to the 2018 holiday shopping season, Accenture found that millennials were not only expecting to spend more during the holidays than other generational demographics, but they also prioritized inclusion and diversity so much that they were likely to take their money to a brand that is inclusive over a competitor that was not. Here are some key statistics from Accenture’s research:
- Fifty-four percent of younger millennials surveyed believe that retailers have a responsibility and duty to address wider social and political issues with regard to diversity.
- Fifty-one percent of younger millennials are more likely to shop at a retailer that demonstrates awareness of such issues.
- Millennials are more likely to choose one brand over another if that brand demonstrates inclusion and diversity in terms of its promotions and offers (cited by 70 percent of younger millennial respondents and 69 percent of older millennials), its in-store experience (66 percent of younger and 72 percent of older millennials), its product range (68 percent of younger and 70 percent of older millennials), and its level of environmental awareness (61 percent of younger and 57 percent of older millennials).
- Thirty-one percent of younger millennials see diversity in the workplace, with regard to staffing, as an important attribute when it comes to deciding where to shop.
This data shows a direct connection between inclusion, or supplier diversity, and where and how this massive consumer demographic chooses to spend its money. For us, the supplier diversity professionals, the consumer-facing benefits of supplier diversity (social responsibility, economic impact) are now emerging as tools to attract and cultivate millennial consumers. Not only is partnering with diverse suppliers a competitive advantage in terms of innovation and cost savings, but supplier diversity is also a competitive advantage with a consumer base that is disrupting the traditional brand loyalty model.
“Our research suggests that the millennial generation has high expectations when it comes to retailers’ commitment to inclusion and diversity, and those values are influencing their decision-making in choosing one brand over another,” said Jill Standish, senior managing director and head of Accenture’s Retail practice, in a news release. “National and multinational retailers serve diverse customer bases, so they need to position the brand accordingly—its messaging as well as its product selection. That will require not just more local decision-making, but also assistance from analytics tools that enable retailers to build a granular picture of their customers.”
Millennials are our diverse suppliers
Small and diverse businesses have been driving our economic growth since the Great Recession. Studies suggest that upward of 40 percent of new businesses are now started by women. Latino-owned businesses now account for 20 percent of all new entrepreneurs. And let’s not forget that as social barriers come down, more and more LGBT business owners are coming out and becoming certified as diverse businesses.
Meanwhile, report after report shows that millennials are less likely to stay at a single job for the duration of their career, and more likely to step out on their own and become entrepreneurs—either by creating a business, or joining the gig economy—than their elders. As a diverse generation, it stands to reason then that millennial entrepreneurs are an emerging group of diverse suppliers, eager to partner with companies who value their innovative, disruptive, competitive spirit.
The trend doesn’t end with millennials
Look again at the numbers above. Seventy percent of millennials are looking for evidence of inclusion and diversity across retail experiences. Wow. When the majority of shoppers say diversity matters, companies need to pay attention.
And here’s the good news: diversity is not a passing trend.
The oldest members of Generation Z, the most ethnically and racially diverse generation in U.S. history, are just now graduating high school, entering college/trade school, and preparing to enter the workforce. In another five years, we’ll be talking about Gen Z’s buying power, and it doesn’t take a crystal ball to predict that it will also prioritize diversity and inclusion when making purchasing decisions.
Supplier diversity is no longer an afterthought; it’s a crucial component of any company’s procurement strategy to attract the largest, most diverse group of consumers in our nation’s history. The potential ROI on supplier diversity has never been higher.