It has always been the case in the workforce—as one generation retires, a new one steps up to take their place. Just ask the current group of Millennial workers who increasingly dominate the workplace, not just numerically but through their growing clout.
This shift in demographics is particularly evident in the arena of industrial buying, where the purchasing behavior of Millennials, those born between 1981 and 1996, is beginning to disrupt the way industrial procurement is conducted.
The increasing Millennial influence is one of the major trends highlighted in UPS’s 2019 Industrial Buying Dynamics study, now in its fourth edition. The research, based on a survey of approximately 1,500 industrial buyers in the United States between the ages of 22 and 70, also reveals that Millennials are fast growing in purchasing authority as they move up the career ladder.
As the study found, these shifts in power among the generations are steadily disrupting patterns of industrial buying in a variety of ways.
New buyers bring with them different behaviors and expectations. For the most part, this generation of Millennial consumers grew up with digital technology at their fingertips. Many are digital natives, which translates into a high degree of comfort engaging with technology both inside and outside the workplace.
It also translates into the high expectations that Millennials have around customer service. As a group, Millennials greatly value choice, convenience, and customization—three pillars of the modern consumer economy.
These factors bear directly on the changes the study found in industrial buying. Among Millennials, there’s a greater desire to experiment with different ways of conducting business electronically. There’s also a willingness to look overseas when sourcing industrial parts and equipment.
Perhaps unsurprisingly, Generation Xers, those born between 1965 and 1980, tend to fall somewhere between these up-and-coming Millennials and their older Boomer colleagues when it comes to their level of digital comfort: they are digitally savvy, but are not completely willing to give up their paper and pens.
And although Boomers may be retiring at an average rate of about 10,000 per day, they are not entirely going away. According to a 2018 Gallup poll, 41% of Boomers expect to work past age 65. Compare this with 1995, when fewer than 15% of Boomers expected to keep working past the traditional retirement age.
The workplace is becoming generationally stretched, with significant differences in age between co-workers. At the same time, its composition is inevitably skewing Millennial. More than one out of every three respondents to the 2019 study was born between 1981 and 1996, compared with the same study in 2017 in which Millennials comprised just one in four respondents. That’s a lot of change in just a few short years.
For the most part, it’s no surprise to hear Millennials view online purchasing as second nature. But what is notable is how seriously they take the buying process, investing significant time and effort into online research.
In an effort to secure the best value for their companies, they gather information from a range of sources, from social media channels and mobile apps to web videos and blogs. This is good news for businesses eager to ensure due diligence amid a sea of options.
Boomers themselves are not digitally averse. They are equally happy to conduct online research, but they tend to be more conservative, preferring to stick with websites rather than venturing off into mobile apps or other online venues such as social platforms. Boomers continue to value face-to-face interaction and the opportunity to speak directly with company sales reps.
The net impact of these differences in approach is noticeable. Take the tendency among Millennial buyers to cut out the middleman and buy directly from manufacturers or the many online marketplaces at their disposal. This is putting pressure on distributors, typically a favored resource for Boomers, and requiring them to up their game.
That said, Millennials do not yet enjoy unfettered control over purchasing decisions. It’s often the case that more senior buyers, whether GenXers or Boomers, retain final say over buying decisions, particularly for higher levels of spending.
As demographics continue to shift and market demands evolve, how are today’s suppliers faring?
The 2019 Industrial Buying Dynamics study found that medium and large distributors appear out of step with the evolving requirements of this new generation of purchaser. Interestingly, smaller distributors seem to be one step ahead by offering higher levels of customer service to their prospective buyers, exactly what Millennial purchasers want.
The larger distributors might wish to follow the lead of their smaller counterparts and re-energize their service approach to better engage Millennial buyers.
What’s equally fascinating is that distance is much less of a barrier to procurement for industrial buying nowadays. By itself, that may not come as a shock, but the vast difference in outlook between Millennials and Boomers is worth noting. While Millennials say they place nearly half their orders internationally, the vast majority of Boomers (92%) prefer to source domestically.
This is a remarkable variation in behavior. Suppliers can no longer assume they have a local or regional advantage because of location. That thinking may still hold true with Boomers, but Millennials are clearly less restricted when it comes to geography.
To truly meet the demands of the modern industrial buyer, there are plenty of lessons to draw from the study.
Don’t create a drastic distinction between business-to-business and business-to-consumer best practice when seeking to attract buyers. Millennial buyers expect a great customer experience whether they are dropping $100 on a new pair of sneakers or $10,000 on replacement parts for assembly line equipment.
Be flexible in dealing with your buyer and remember that Millennials tend to adopt a self-serve mentality when conducting product research. Provide quality content online about your product and make it easy for your prospective buyer to get educated about what you offer.
Whatever your role in the supply chain, prioritize the development of your customer experience strategy. While factors such as price and value continue to exert influence for Boomers, everyone likes good customer service regardless of age or seniority.
The buying landscape is changing, and information is power when it comes to optimizing your operations for your target demographic. For further insights into the study, which explores the behavior of industrial buyers across 15 different sectors, download the 2019 Industrial Buying Dynamics white paper now.
Sign up for email offers, insights, and industry news that can help improve your shipping. You can manage your preferences at any time.
News and Insights to help you ship smarter
Service Updates to alert you to severe weather and events impacting operations
Promotions and Offers to help you get the most for your money
Product News to keep you up-to-date on new services, tools, and features