There has been much written about how Gen Ys, given their sheer size, will impact the housing market, the financial markets and many other consumer products – from financial services to vehicles. But what is at the core of these discussions is a shift in perspective. Many of our clients are still banking on the fact that Gen Ys will purchase products and services like their parents did (buy a car, a house, a mortgage, an RRSP, an annual vacation) or that as employees they will ‘consume’ career opportunities in a traditional fashion of commit to an organization, work hard, be loyal, get promoted. Both notions of consumption are changing.
Gen Ys and Ownership
Gen Ys are redefining what ownership means to them and where their priorities lie. From cars to homes to luxury goods, Gen Ys are looking at ownership in a completely different way.
This can be seen in the “sharing economy” that is growing rapidly. Companies like Uber, Lyft and Airbnb are redefining industries and, in many ways, changing the overall economy. Gen Ys are giving their money to companies that embrace their values and are eschewing traditional ownership.
While previous generations may have focused their life goals around ownership, Gen Ys have different values and goals. It was once seen as a freeing moment of independence the day you owned your own car. Now, many Gen Ys don’t even have driver’s licenses. Previous generations saw buying their own home as a crucial milestone in life. Many Gen Ys are more than happy with the mobility and freedom that renting provides.
It isn’t just that Gen Ys can’t afford to make larger purchases (many can) but, instead, there is a change in attitude that is concerned with why people buy things and what they get from the money they spend. Instead of buying houses and cars, Gen Ys are consuming experiences.
Approaches to Ownership Change with New Technology
Many Gen Ys are less interested in owning goods and more focused on improving their quality of life. This means more money spent on eating out, attending concerts, traveling and other life experiences, and less spent on real estate and vehicles. This attitude is bolstered by technological advances, especially in large urban areas.
In addition to services like Uber (which makes ordering a ride simple and convenient) there are services like Zipcar (car sharing) and Bike Share (bike sharing) that allow people to receive many of the benefits of ownership, without having to actually do so. In fact, people can now derive the positive value from an item, where and when they wish, without the burden or full cost of owning the desired item.
This culture of technological sharing also extends to music (services such as Spotify) and television (Netflix). More often Gen Ys are choosing ease of access and varied experiences over physical ownership of goods.
This doesn’t mean that Gen Y doesn’t spend money.
According to American Express Canada, Gen Y had an 89 per cent increase in luxury travel spending in 2012, when compared to 2011. Conversely, between 2007 and 2011, the number of cars purchased by Gen Ys fell almost 30 per cent (according to the AAA Foundation for Traffic Safety).
Another technological reason for this change in attitude is social media. Facebook status updates and Instagram pictures of exotic locations, elaborate dinners and the hottest concert in town have begun to trump shots of luxurious homes and fancy cars.
For many Gen Ys, doing something is preferable to owning something.
What This Means for Organizations
Gen Ys desire flexibility. This isn’t just true in leisure time, but also at work. Just as they don’t want to be “stuck” with a mortgage, they also don’t want to be chained to a desk. They much prefer flexible schedules and the ability to work remotely, than a 9-to-5 job in an office. Organizations can embrace this desire by providing more flexibility and greater opportunities to work remotely.
Gen Ys also expect their employers to embrace technology in the same way that they have. While many Gen Ys use apps like Snapchat, Spotify and Instagram regularly, they become frustrated when their employers don’t offer them the same convenience. Organizations can satisfy these desires by embracing social media (rather than banning it at work), by opening up more communication through instant messages and by using technology to make it possible for employees to collaborate with one another in real-time. Applications now exist that make it possible to provide training, feedback and employee rewards electronically with ease. Gen Ys don’t want a world of monthly meetings and yearly performance reviews. They expect organizations to use technology to improve these concepts, just as they use technology themselves to improve their own lives.
Gen Ys are also seeking more meaningful experiences, even at work. They want jobs that have meaning and they want to work for companies that are making a difference. In addition, they want to know how the specific work that they are doing adds to the organization as a whole. By making a link between the work done by an employee and the goals of the organization (both in terms of organizational success and how the work of the organization contributes to society), you can inspire Gen Ys to do more. Their work life can become an “experience” they want to Tweet about and consume for a longer period of time. This will improve the emotional connection to the work they do and increase retention.