Marketers put a lot of time, attention, and valuable marketing dollars on targeting Millennials and Gen Z. There are some arguments to be made about how warranted that effort is, given that there’s a generation that has much more money to spend: Baby Boomers, according to Epsilon’s latest report on cross-generational marketing [download page].
Figures from Epsilon’s transaction database confirm that Baby Boomers as a whole spend the most on an annual basis:
- Baby Boomers (ages 55-75 years old) spend a total of $548.1 billion annually;
- Gen X (ages 36-54 years old) follow Boomers with $357 billion annual spend;
- Millennials (25-35) are next with $322.5 billion in annual spend; and
- The Silent generation (ages 76 years and older) spend $162.9 billion annually.
One thing to note is that these figures are influenced by the selected age ranges. For example, many define Millennials as being in the 18-34 age group, or in the 21-37 range. This study uses a narrower 10-year age range, which obviously limits the amount of total spend. The definition of Boomers uses a 20-year age range. This would result in a larger population among Boomers than Millennials, but it’s unlikely that that fully accounts for the more than 3 times greater total spend by the older than younger generation.
Perhaps this isn’t too surprising. Boomers, after all, have the disposable income. Statistics provided by Epsilon in 2017 showed that while Gen X had the largest median income ($63,832), Baby Boomers had a median income twice that of Millennials’ ($55,928 and $25,759, respectively). Moreover, given their age, they are more likely to have paid off the mortgage and seen their children fly the nest, likely leaving the average Boomer with considerably more disposable income.
Wait… Gen Z Spends?
While older generations have more income to use at their discretion (Gen X – with its higher incomes – spends the most by dollar volume in various categories), it’s also true that younger generations aren’t shy about spending, according to Epsilon’s data.
In fact, they make more transactions than older ones. Gen Z (under the age of 25) makes the most transactions annually, at 358 on average. Millennials and Gen X follow with 330 and 306 average transactions, respectively.
Baby Boomers (269) and Silents (202) make considerably fewer transactions, but they do spend more on average per transaction. With an average spend per transaction of $61.69, Boomers lead the pack in this area. Millennials, on the other hand, spend the least per transaction, at $54.91 on average spent, with Gen Z close behind ($58.30).
Add it all up, though, and Gen Z doesn’t seem thrifty. In fact, Gen Z’s higher volume of transactions more than makes up for its lower per-transaction spend. As Epsilon notes, there are fewer active buyers in this cohort, but they emerge as very heavy spenders. That could be in part due to they’re not spending their own money…
Where Are the Generations Spending Their Money?
When spending was broken down by industry, active Gen Z buyers outdid all other generations in 9 of the 11 industries tracked. While it could be expected that younger people would spend more on entertainment and retail than older people, they also, surprisingly, were found to spend more on industries like automotive, financial services and travel.
In other highlights about shopping preference and behaviors across the generations, generated by an accompanying survey, the report revealed that:
- Generation Z has influence over channel preferences of other generations. For example, Millennials and Gen Xers with children are more likely than those without to use a smartphone to shop.
- While 81% of individuals ages 50 years and older have made purchases online, Epsilon found that the older generations prefer to shop in-store to experience the products and for easy returns.
- Three-quarters of Gen Z and Millennials use smartphones to shop online.
- All generations prefer Amazon for online shopping but Millennials are the biggest users at 65%.
Read more about marketing across the generations here.
About the Data: The data from the report comes from two sources. The first being using Epsilon’s transactional data which analyzed the 12-month spend of 85 million US consumers across the generations. The second uses Epsilon’s proprietary consumer panel, Shopper’s Voice™, where they surveyed 3,000+ cross-generational US individuals on a variety of topics including shopping preferences, technology attitudes, media usage and privacy.