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'Psychologically scarred' millennials are killing countless industries from napkins to Applebee's — here are the businesses they like the least
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Millennials' preferences are
killing dozens of industries.
There are many complex reasons millennials' preferences differ
from prior generations', including less financial stability and
memories of growing up during the recession.
"I think we have got a very significant psychological scar from
this great recession," Morgan Stanley analyst Kimberly
Greenberger
told Business Insider.
Casual dining chains like Buffalo Wild Wings and Applebee's
Brands such as Buffalo Wild Wings, Ruby Tuesday, and Applebee's
have faced sales slumps and dozens of restaurant closings as
casual-dining chains have struggled to attract customers and
increase sales.
In August, Applebee's announced it would close up to 135
restaurants, in part because it focused too much on winning over
millennials and forgot its "Middle America roots."
"Millennial consumers are more attracted than their elders to
cooking at home, ordering delivery from restaurants, and eating
quickly, in fast-casual or quick-serve restaurants," Buffalo Wild
Wings CEO Sally Smith
wrote in a letter to shareholders earlier this year.
The concept of "starter homes" — they're renting longer and buying expensive houses later
Contrary to popular belief, millennials are interested in
purchasing homes. They're just waiting longer to buy.
A September
report from the real-estate website and
app Zillow
found that millennials - i.e., people between the ages of
18 and 34 - are the largest group of homebuyers in the US. (The
median age of a homebuyer is 36.)
"As a result of limited starter-home inventory, they're renting
longer. And when they buy their first home, they're buying a much
nicer home than a prior generation," he said.
"I mean, many people are basically skipping starter homes;
they're renting until their 30s, and that first house they buy is
a million dollars, and they just are not even buying the
$200,000, $300,000, $400,000 home, which is a total mind shift as
compared with previous generations. So they're still buying homes
- they're just buying them later and buying them bigger."
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Beer
In late July, Goldman Sachs downgraded both Boston Beer
Company and Constellation Brands based on data suggesting that
younger consumers prefer wine and spirits to beer, as well as the
fact that they're drinking less alcohol than older generations
more generally.
Beer penetration fell 1% from 2016 to 2017 in the US market,
while both wine and spirits were unmoved, according to Nielsen
ratings.
The Post points to a survey conducted by Mintel, which highlights
that only 56% of shoppers said they bought napkins in the past
six months. At the same time, 86% surveyed said they had
purchased paper towels.
Paper towels are more functional than napkins and can be used for
more purposes. And the Post noted that millennials are more
likely to eat meals out of the home, contributing to the decline.
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For "breastaurants" like Hooters and Twin Peaks, a loss of
interest in breasts is bad for business. The number of Hooters
locations in the US has dropped by more than 7%
from 2012 to 2016, and sales have stagnated,
according
to industry reports.
Hooters has struggled to win over millennials for some time
now. In 2012, the chain attempted to revamp its image with
updated decor and new menu items to attract more millennial
and female customers.
Instead, younger consumers are turning to convenient options with
minimal cleanup that can be eaten on the go, from yogurt to
fast-food breakfast sandwiches.
Cereal sales dropped 5% from 2009 to 2014, even though more
Americans are eating breakfast than ever before.
Companies such as Kellogg and General Mills have reported that
sales have stopped falling in 2017, so cereal may not be dead
just yet.
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Golf
"From the golf industry statistics, we know that rounds are
down," Matt Powell of the industry-research firm NPD
said in a video in 2016. "We know that millennials are not
picking up the game, and boomers are aging out. The game is in
decline."
While millennials have created new fitness crazes, like SoulCycle
and barre classes, golf has failed to capture their interest in
the same manner.
Motorcycles
"Our data suggests the younger Gen Y population is adopting
motorcycling at a far lower rate than prior generations," AB
analyst David Beckel said in a July note downgrading its rating
of Harley-Davidson shares from "outperform" to "market perform."
The company shipped 262,221 motorcycles overall, which fell short
of expectations of 264,000 to 269,000 units.
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"We believe the delay in homeownership is due to tighter credit
standard and lifestyle changes, including delayed marriage and
children," Michelle Meyer, a US economist at BAML, wrote in a
recent note.
"We do not expect these factors to change in the medium term,
keeping the homeownership rate low for young adults."
Yogurt — especially light yogurt
Light yogurt sales fell 8.5% in the year ended in September 2016,
dropping $200 million from roughly $1.2 billion to $1 billion,
according to Nielsen data.
Wider yogurt industry sales declined 1.5%, the fourth consecutive
year of falling sales.
The decline in light yogurt can be traced to a growing demand for
natural, protein-rich foods that fill up health-conscious
consumers, instead of simply low-calorie and low-fat options.
That's been a huge help for Greek yogurt, which appeals to
customers seeking a filling option packed with protein.
On the flip side of the rise of protein and organic options is
the fall of sugar.
Low fat-diets were the norm in the US in the 1980s and '90s. As
food makers worked to cut fat from products, they began replacing
it with another ingredient: sugar. As a result, "light" yogurts
were often packed with sugar yet advertised as low-fat, healthy
choices.
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Bars of soap
Bar soap sales fell 2.2% from 2014 to 2015, a time when the rest
of the shower-and-bath category grew, according to Mintel.
And, millennials are to blame.
"Almost half (48%) of all US consumers believe bar soaps are
covered in germs after use, a feeling that is particularly strong
among consumers aged 18-24 (60%), as opposed to just 31% of older
consumers aged 65-plus,"
Mintel wrote in a press release.
Diamonds
Fewer millennials are getting married, and those who are are
increasingly choosing nontraditional rings,
CNBC reported.
As sales of diamonds have slowed globally, trade associations
such as Diamond Producers Association have attempted to win over
millennial customers by
retooling how the jewels are branded.
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Fabric softener
Sales of liquid fabric softeners fell 15% in the US from 2007 to
2015,
The Wall Street Journal reported. The market leader Downy
fell 26% in the same period.
According to Downy maker Procter & Gamble's head of global
fabric care, millennials "don't even know what the product is
for."
Banks
Millennials distrust financial establishments and rarely visit
physical banks.
"There's a massive shift in consumer behavior and consumer
trust," Rick Yang, a partner at the venture-capital firm New
Enterprise Associates,
told Business Insider. "I think coming out of [the financial
crisis], millennials have a massive distrust of existing
financial services."
While banks themselves will probably never die, bank branches and
physical bank locations may soon be a thing of the past.
Nearly three-quarters of millennials with a bank account visit a
branch once or less a month, according to
BI Intelligence data. And slightly less than 40% of
millennials do not visit physical banks at all.
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Part of the reason is that when millennials do spend money,
they're spending more on experiences like restaurants and
traveling. Millennials are less
drawn to aspirational, designer brands, and they're perfectly
happy saving money by buying private-label lines, which further
hurts traditional department stores.
Brands like Michael Kors and Kate Spade have been forced to sell
handbags at major discounts as millennials lose interest (and
lack the money to spend on the bags). In some ways, the brands'
mega-popularity contributed to their downfall.
Widespread popularity is the "kiss of death for trendy fashion
brands, particularly those positioned in the up-market younger
consumer sectors," industry expert Robin Lewis
wrote on his blog.
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Gyms
While millennials like to workout, they're ditching gyms in favor
of boutique, class-centric centers.
"Millennials don't want to be tied down," Megan Smyth, the CEO of
FitReserve, a service that lets members book boutique studio
classes,
told the New York Post. "It's a spontaneous demographic."
In July,
Foursquare found that mid-market gyms like 24 Hour Fitness,
Snap Fitness, and New York Sports Club lost 5% of their gym visit
share in the past year, as boutique fitness visits grew.
Home-improvement stores like Home Depot and Lowe's
While people have been
investing more in their homes, some experts have questioned
whether millennials' reluctance to buy homes could ultimately
hurt these retailers.
"Millennials are redefining the American family,"
Jeff Fromm wrote in Forbes. "Millennials are delaying
marriage and childbirth at rates never seen before. This cultural
shift will have a near-term impact on housing: millennials may
not need the same space, permanence, and practicality that most
Americans want out of their housing."
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Analysts said the drop could be tied to
numerous things - the 2016 election, protests as NFL players
have taken a knee during the national anthem, or that the game
has simply gotten more boring.
However, one explanation would directly target millennials:
Younger people are ditching cable at an increasing rate, leaving
them to watch games in groups or simply stay updated on their
iPhones.
McKinsey found that 14% of millennials say they would not want to
work in the oil and gas industry because of its negative image -
the highest percentage of any industry. And a recent survey by EY
found that millennials "question the longevity of the industry
... Further, they primarily see the industry's careers as
unstable, blue-collar, difficult, dangerous and harmful to
society."
Teens are even more critical, with two out of three saying the
oil and gas industry causes problems instead of solving them.
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