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 care.
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.
A lot.
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
No comments:
Post a Comment