"Little' consumers influence spending decisions - youth as consumers - Marketing

Discount Store News, August 5, 1991 by James U. McNeal

|Little' Consumers Influence Spending Decisions

There was a time when merchants thought of kids as penny-candy purchasers, or worse, as those little nuisances that accompany customers and who should be seen, at most, and not heard at all. Not anymore.

A combination of social forces--newly marrieds postponing children until careers are established, families choosing a smaller number of children, moms working full time and a growing number of single-parent households--have produced a generation of children that parents give more to and ask more of. The net result is more self-reliant children who have a lot of money to spend and have influence on household spending.

All this translates into new market opportunity for merchants. And not just one market, but three markets in one. Our research shows that children, ages 4-to-12, are a primary market of consumers that spend $6.1 billion a year of their own money on whatever they wish. They allocate it roughly in this manner. They spend $2.1 billion on sweets and snacks, $1.9 billion on play items, $690 million on clothing and shoes, $606 million on movies and sporting events, $486 million on entertainment at video arcades, and $264 million on a wide array of other items including music, hobbies and consumer electronics. Kids' spending has increased around 10% a year during the decade of the '80s and shows letting up.

Children spend their own money in a relatively wide range of retail outlets. For instance, they buy toys from toy stores, mass merchandisers, supermarkets and convenience stores. A 10-year-old, for example, may shop, with and without parents, five times a week or 250 times a year.

Children's store visits actually begin as soon as they are able to sit erect in a shopping cart. By the time they are tweens (not kids, not teens, in betweens) they probably have made 1,500 visits to most types of stores. These interactions with stores provide children extensive opportunity to form knowledge, attitudes and preferences about specific retail outlets. And they provide retailers much opportunity to build relationships with the younsters--relationships that hopefully last a lifetime.

Children are also a market of influences who directly cause the spending of over $128 billion of household purchases through their requests to parents. For example, children may average making 15 purchase requests to parents during a store visit with them. In addition to influencing parents' purchases in the shopping environment, kids make purchase requests at home, in the car, at the movies, during TV viewing, even in church.

The $128 billion of household spending that children directly influence consists of $79.3 billion for foods and beverages, $16.5 billion on play items, $13.2 billion for apparel, $3.26 billion for health and beauty aids, and $16.2 billion on general household items such as consumer electronics and furnishings.

The amount of influence that children have on parental purchases and the kinds of things they influence are both likely to grow as parents increasingly view their requests as responsibility. That is, their requests give direction to what otherwise may be postponed or not even considered by their busy working parents. One working mom told us her 9-year-old often calls her at work "to put in an order." "He usually wants me to stop by Blockbuster and get a movie and Pizza Hut to get a pizza." The traffic is bad but I usually do it".

Finally, and in many ways most important, children are a future market for all goods and services. Thus, as future consumers they are an important market to all merchants. This is not just an airy statement to those retailers who must competitively cultivate preferences among consumers for their stores and their offerings. There are, after all, only two places for a store to get new customers. It either can switch them away from competitors--by definition they can be switched back--or it can develop them from the pool of young potential customers who have not yet entered the marketplace. The latter strategy produces a more loyal customer.

A new study shows that well over half of major retail chains now acknowledge children as one or more of these three markets through a variety of merchandising strategies. Some retailers whose offerings are not targeted to children still direct some marketing efforts to them in order to make it easier to convert then into customers when they reach market age. One of these retailers has developed an ongoing community affairs program aimed primarily at children. Other store chains have instituted a multidimensional segmentation strategy through which they target children as members of all three markets. They offer a merchandise mix to them as current consumers, they encourage them as potential influencers of household purchasers through advertising and promotions, and they have some overall policies and practices aimed at keeping them as customers.

Retailers who target children as potential customers should keep in mind that kids are not just mini-adults. They are consumer trainees with the minds of children who happen to be maturing earlier in the consumer role than those of past generations. They can be easily misled, offended and misunderstood. Marketing to them requires special skills to be developed or brought on board. They require an investment just as any other new market segment does. But they are worth more than any other market segment because they have more potential.