Millennials Prefer to Rent Versus Buy

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Millennials Prefer to Rent Versus Buy

Millennial-buyers-225x140.jpgI've been writing a lot about the buying habits of the three main generations in the AV world today. It turns out that you can really tick off a bunch of Baby Boomers when you point out that 70-year-olds aren't really that amped to buy audio gear like they did when they were 50 or even 60. Gen Xers are a smaller generation compared with Boomers and Millennials, but their buying habits are more robust. Millennials are the unknown variable; nobody really has this huge group of potential consumers figured out, except perhaps Apple.

I was recently on a golf trip to play the absolutely fantastic San Francisco Golf Club. While loading my bags and clubs into an Uber SUV, the driver pointed across the street at a stunning, new residential building. It was gorgeous. The driver quipped, "$10,000 a month for 1,200 square feet. Month-to-month rental only." I couldn't believe what I was hearing. I asked, "Who the hell pays that much for an apartment with no write-off and no guarantee that you won't get kicked out?" He explained to me that the building was nearly filled with Millennials who simply don't want a long-term commitment. Most of them don't own a car, but they may own a bike. They use Uber or Lyft when they need transportation locally, and they'll rent a car from a company like Zip Car for longer trips. Many of them have high-paying jobs in or around the City by the Bay, but they don't view those jobs in the long-term scope that older farts (like me) do. They might be employed by a tech or social media company today, but tomorrow they could get an offer from a "Silicon Beach" company in Los Angeles or an agency in Manhattan--so they want to stay flexible.

These particular Millennials certainly have the money to invest in some nice home theater and audio gear; but, given their "stay flexible" mindset, it's easier to understand why they view things differently when it comes to making AV purchases. Large-screen HDTVs are cool, but they're also big and bulky. So are tower speakers. At this point, Millennials in general seem more drawn to portable and wireless solutions. Audio systems from companies like Sonos, HEOS, Riva Audio, Bluesound, and others are easy to set up wirelessly, easy to relocate, and easy to mate with mobile devices, using new-school sources like Spotify, Pandora, and TIDAL. If it's not easy to pack the stuff in a modestly sized box and ship it off, then it's not as appealing. Immersive Atmos sound and gorgeous HDR video may have a huge WOW factor, but at this stage it doesn't have the same appeal as the more portable, lower-commitment (and lower-cost) components and systems.

I was treated to another example of the out-of-the-box way that Millennials view big-ticket purchases through my five-year-old son's babysitter. In her appearance, she's a check-all-the-boxes Millennial, complete with the mermaid hair, foot tattoos, and messenger bag. For over a year, we paid her to pick up our son each day from his former preschool, entertain him for an hour or so, then bring him back to our house at the end the work day. Then one day she crashed her car. Thankfully no one was hurt, but the car was totaled. When I asked her what she planned to do about getting another car, she first mentioned something about getting a used car. I offered to help her perhaps get something new. My friend at Volkswagen of Santa Monica could hook her up with a neat little Jetta that gets 50 MPG and has lane-changing warnings and a navigation system on a 36-month lease ... for $2,000 down and $99 per month. My wife and I even offered her $1,000 to help with the down payment--that plus whatever the insurance company gave her for her old car would've been enough to get her into a brand new car with a full warranty. But she declined, deciding instead to just take Uber everywhere she goes--thus ending our babysitting arrangement and leaving my wife and I wondering if we will ever understand Millennials.

Suffice to say, Xers and Millennials are very, very different in the way they look at the world of lusty goods, intellectual property, and many other things. The AV industry hasn't figured out Millennials, but we aren't alone. Vegas is seeing that Millennials don't have the focus to sit down to play table games, but they will save all year to attend a Molly-ridden rave at The Hard Rock Hotel on a Sunday morning. Millennials like spending money on experiences more than goods. Just look at festivals like Coachella and Bonnaroo.

Could this change? Very possibly. Salaries will go up, and punishing student loans will get paid down. At least some Millennials will choose to have children, and perhaps that will inspire a nesting instinct and the purchase of cars, homes, and other durable goods like AV gear. Then again, maybe it won't change. Maybe we have entered into a "rent-first" economy where Millennials skip the juicy tax write-off of mortgage deduction and stay footloose and fancy free.

The one thing we know for sure about Millennials is that, with strength in numbers, they are a force to be reckoned with--even if they are a force you can't relate to. They do love a fancy experience, and the AV business specializes in delivering that. I think this is where hope blooms. The desire to experience audio and video in an awesome way is something we all have in common; the industry just has to work on ways to tweak the delivery methods to suit this new Millennial mindset.

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