Story first appeared on WSJ.com.
The Smith family has always approached Christmas shopping on overdrive, piling dozens of presents under a small forest of decorated trees. But the Smiths and their four children wrangle the annual extravaganza in different ways, underscoring the challenge facing retailers as technological changes transform Americans' buying rituals.
During a recent holiday shopping trip, Chris Smith, and her husband happily wandered the suburban Easton Town Center mall here, sipping caramel frappuccinos and admiring the festive horse-drawn carriages.
Mr. and Mrs. Smith, who met as sales clerks at J.C. Penny Co. 35 years ago, say they are shopping more online these days, but they have yet to make a major purchase on their cellphones. For the mall, they came armed with clipped-out paper coupons.
Their children are a different matter. Ranging from age 10 to 27, the offspring mostly ignore the holiday décor, and instead peer into their smartphones, comparing prices, looking for deals and seeking friends' advice about potential purchases.
Daughter Danielle, 24, who works at a payroll company, is accustomed to receiving pitches through social media and email, so much so, she said, that it takes something special—like a call to her cellphone from a saleswoman—to grab her attention. "A personalized call usually gets me in the store," she said.
Despite a lot of looking, Danielle left the mall without spending any money. When she got home, though, she went online and bought herself a red lace dress she had seen earlier in the day at J. Crew Group Inc.'s Madewell. That is not surprising; about 70% of people age 18 to 34 plan to "self gift" this year, compared with 44% of people over age 65, the National Retail Federation said.
Little sister Drew, 10, uses her rhinestone-encased iPhone to post photos of potential purchases as she shops, while polling her friends with an Instagram app to get opinions on which clothes to wear to school the next day.
Retail chains are struggling with how to respond to families like the Smiths, hoping to capture the attention of the so-called Millennial generation, ages 16 to 34, but fearful that moving too fast will alienate baby boomers.
The 79 million people who make up the Millennial generation wield $200 billion in annual spending power. While that is only a sliver of the $3.4 trillion that baby boomers spend each year, analysts say, retailers need to try to nab those younger shoppers now, because their spending is likely to rival the boomers' as early as 2020 and they already exert a disproportionate influence on their parents' spending decisions.
Moreover, during the holidays, shoppers age 25 to 44 plan to spend the most of any age group, about $820, according to the NRF. But shoppers aged 45 to 64 are also heavy spenders, planning to spend about $760.
At Macy's, Mrs. Smith dug through her purse for a 20% off coupon to buy a pair of boots. Although she couldn't find the coupon, she successfully persuaded the saleswoman to give her the discount anyway. The boots joined two shopping bags of loot from Justice, a tween apparel chain.
The bags were crammed with jeans, sweaters and a $75 sparkly blue makeup case Mrs. Smith bought using a 50%-off coupon.
Her son Derek, a 26-year-old Ohio State student, who is also a loyal Macy's customer, told his mom he prefers to shop online and search for coupon codes rather than keep track of offers in the mail. He didn't buy anything at the mall but picked out a Timex watch at Nordstrom for Santa to bring. He said he plans to do his holiday shopping on macys.com.
Derek's brother Dustin, 27, also would rather be anywhere but a physical store. The real-estate agent says he shops only when he need something" and favors discounters like Target Corp. He focuses his spending on big, important items, like his new, white Audi and left the mall empty-handed.
Retailers includeing Wal-Mart Stores Inc and Best Buy Co. are trying to target younger consumers this holiday season by offering some of their in-store deals online, while others such as Macy's and Sears Holdings Inc. are Technology plays an increasing role in the generational shopping split. Millennials are 2½ times more likely to be early adopters of technology than older generations, serving as a leading indicator for retailers of what is likely to become mainstream, said Christine Barton, a partner at Boston Consulting Group. Millennials are more likely than older shoppers to check out brands on social networks (53% versus 37%) and use mobile devices to read reviews, research products and compare prices while shopping (50% versus 21%), according to a recent BCG/Barkley report.
Macy's, which created a separate Millennial division this year, has sectioned off parts of its department stores to house Impulse and MStyle Lab, boutique-like spaces with bright signage and pop music to attract shoppers ages 13 to 30.
Retailers can run the risk of taking the quest for youth too far. In an attempt to overhaul its century-old store in search for younger customers, J.C. Penney has remodeled stores, altered its merchandise mix, changed its logo and, most of all, is eschewing special discounts in favor of overall lower prices. But so far the plan has largely backfired: Penney's sales fell 27% in the three months ended Oct. 27, in a fourth consecutive quarterly drop.
Impressions are hard to change, though. While Mrs. Smith says she was raised going to Penney, where you never buy things full price, her daughter Drew refers to Penney as a place "for old people."
Meanwhile, with her phone Drew points her mother to Christmas gifts, highlighting the best deals on things including Amazon.com's latest tablet