Homeownership among Millennials has declined to record lows. Last year, iTunes dropped at least 13% in download sales, and the number of cars purchased by people aged 18 to 34 fell almost 30%. A generation that is worth over $200 billion in purchasing power is simply no longer buying. Are millennials are saying goodbye to the Ownership Economy and hello to the Sharing Economy?
The Sharing Economy can be described as the generational shift from purchasing products and services to using the Internet to rent them. Instead of buying a new car, Millennials are ridesharing with Uber or borrowing transportation from Zip Car. Spotify allows music lovers to stream audio from their phones without purchasing a single song, and Netflix gives users instant access to thousands of movies and TV shows for a monthly price instead of buying DVDs at the store.
The Sharing Economy has been driven by three important shifts in the past ten years: Technology, Connectivity, and the generation of Millennials themselves.
- Mobile technology is central to the sharing economy. Without apps, mobile devices, and constant access, the economic shift would not be possible.
- Connectivity is the second driving force behind the Sharing Economy. Because of mobile, social media, and sharing platforms, Millennials have grown up constantly connected to one another. They have learned to expect that same level of access and connectivity from businesses as well.
- Millennials are cash-strapped, innovative, and technology savvy. They have different expectations from businesses, jobs, and credit. Some don’t have the money to own things. Others don’t want to buy when they know something better will come out six months down the road. The Sharing Economy is their answer to get what they want with less cash.
The Sharing Economy has allowed Millennials to travel, listen, connect, and share experiences. Many speculate that this new economy will have a negative effect as Millennials get older. Others say Millennials will start buying again once they are out of student debt and in higher paying jobs.
Although millennials have driven the shift to the Sharing Economy, there is one thing worth mentioning that they are eager to own: their own businesses. Studies show that 40% of millennials have already started their own business or expect to do so, making their entrepreneurship rate 10% higher than that of the general population. Millennials are not only demanding better, faster, and more; they are focused on providing it as well.