Older generations, like mine, too often look down on millennials.
We shouldn’t, because there’s a lot we can learn from them, especially when it comes to personal finance and economic issues. They are real friends of small business.
Despite being born into an era in which online retailing is to them old technology, a normal way of doing things, millennials aren’t sold on it. Most older folks would think that buying things from the Amazons of the world would far and away be the preferred means of doing business for young people. It’s not.
Studies have shown that nearly half of millennials prefer to shop at brick-and-mortar stores and, at the same time, are willing to pay more money to do so.
Now, compare that to the others. 38 percent of those who are members of Generation X and 42 percent of baby boomers prefer shopping real stores – even though they knew nothing but that that until the late-90s, early 2000s.
Why the millennials’ affinity for smaller businesses?
They realize that every dollar they spend is, in part, reinvested in their community. Those same studies have found that they want to shop local because of the benefits to area employment (their friends and families have jobs), entrepreneurs (who will grow their businesses and their communities), and local tax rolls (the sales taxes prioritize the quality of life in their neighborhood). They are driven by a desire to empower their communities – economically and socially – rather than some far away warehouse, an unknown person on the other end of the internet, or some corporate big box store.
That’s the way older generations used to shop, and that’s why the Main Streets of small towns were once more vibrant than they are now – they were the centers of commerce that we all benefitted from. Now, my generations and our elders have made the internet -- something that can’t be seen, touched or felt, -- that economic destination. And, mind you, those guilty consumers are the same ones who cry when they see malls and downtown storefronts shuttered.
The economically-beneficial young’uns are also spot-on in how they positively impact businesses at the point of transactions. They don’t cost businesses money when they give them their money.
My generation has grown to live and die by the credit card – even if they have access to cash in the bank. They cite, above all, its convenience (odd, given that I find real money incredibly more convenient than credit). I know many people who don’t carry one single greenback in their pocket, but have multiple credit cards on them.
That overuse of credit cards benefits the Wall Street financial institutions backing them, but absolutely pains the Main Street businesses accepting them. The standard processing fee imposed on a credit card is somewhere between 2.5 and 3 percent of the cost of the transaction. Which means $2.50 to $3.00 of every one hundred spent via credit at a store or restaurant is frittered away.
To consumers, that probably seems like a small number, especially since it doesn’t impact them.
They need to put themselves in the business owners’ shoes.
Every one of those fees cuts deeply into – and, in some cases, wipes out -- their profits. Small businesses aren’t reaping big profits to begin with. The average profit margin at a restaurant ranges between 3 and 5 percent; it’s even less at diners. For independent grocers, the margin is between 1 and 3 percent. As you can see, credit cards are their enemy.
Millennials aren’t fans of the cards. Despite being fresh out of college and entering the labor market and adulthood and all the needs that come with it, they don’t lean on credit. The average balance on a millennial’s card is half that of a Gen Xer and two-thirds that of a boomer.
On average, only 27 percent of their purchases are made with credit cards. They know cash is king, whether it’s in the form of cold, hard bills or money-backed debit cards. Since debit cards aren’t founded on fake money, the creation of debt, and risk management, the transaction fees are much smaller, around one-quarter of one percent.
The millennials’ preference for cash, or low cost alternatives to cash, puts more money into the hands of the small businesses that desperately need it…the same small businesses who the millennials champion by their very nature.
There’s a lot to be learned from those youngsters.
They know what keeps our economy going. They know what grows our towns and villages. If we all followed their lead Main Street would be just as fruitful as Wall Street.
Isn’t that what we all want – and need?
From the 01 October 2018 Greater Niagara Newspapers and Batavia Daily News