Millennial HENRYs (High Earners Not Rich Yet) felt broke before the COVID outbreak. And even those that haven\’t been furloughed or lost their jobs during coronavirus shutdowns will be more cautious spenders on the other side. In 2016, NPD found that over a quarter (29 percent) of \”affluent\” millennials were still shopping at dollar stores. The headline shocked everyone except for the \”affluent\” millennials mentioned in the piece. Since then, there have been multiple studies dedicated to learning why millennial HENRYS-or millennials that make above $100,000 a year–aren\’t willing to shell out for big-ticket items like their predecessors. Living through a recession and a global economic meltdown is just the beginning for these cost-wary consumers.

[callout]But if you thought Gen Zers were minimalistic consumers before the COVID crisis, just think about how withholding their purchasing patterns will be when all of this insanity is over.[/callout]

Retailers have struggled to understand how someone making a six-figure income can still feel (or be) broke most of the time: Are HENRYS just terrible at budgeting? Where is their money going? And how can retailers pander to a generation that makes six figures but still shops at dollar stores and buys food from Trader Joes? It all comes down to market uncertainty and cost of living. Let me break it down it for you.

HENRY Financial Breakdown from the Belly of the Beast

Income increases haven\’t kept up with the cost of living, especially due to rising rent costs in desirable metropolitan areas such as LA, DC, and New York City. For independent contractors, these costs can be even more steep because of the rising cost of health insurance in urban areas. Many are hoping that the coronavirus pandemic will finally lead to health services reform in the U.S., But for now, the average 40-year old in California pays $576 a month for base level health insurance. Add that to the $2,362 average rent cost of a one-bedroom apartment in L.A., about $80,000 in average student loan debt, as well as car and car insurance payments — and it starts to get a lot easier to see how millennial HENRYS can earn six figures but still struggle to make ends meet.

So, how does this factor into how HENRYs do their shopping? Coronavirus is changing millennials\’ spending habits more than any other generation. Value is a priority with no income limit, since HENRYs don\’t feel stable in their careers right now and never had the expendable income of their high-earning predecessors. As young adults, millennials have had to navigate an environment of economic uncertainty that only the Silent Generation has experienced before. And much of the expendable income that millennials do have during the pandemic is going towards stockpiling essentials, health classes on Zoom, or takeout to try to maintain a feeling of normalcy.

Lifestyle Expectations Have Changed Drastically

There are also different expectations for young professionals in the Instagram generation. The expectation is to post on Instagram, one to three times a day or, at the very least, a few times a week. The price of failing to meet this standard is a steep one–many job applications now request to view a person\’s social media handles before offering a position and people interviewing for social media or PR-adjacent roles may even be asked how many followers they have on each platform. And before the outbreak, taking multiple photos in the same outfit or at the same locale could result in lost followers, which might mean missing out on many of the career opportunities reserved for those with a strong social media following.

Keeping up with the Joneses has real implication for millennial job prospects, especially HENRYs, who pursue high-earning jobs with even higher expectations. On average, millennial HENRY households spend 86k a year and invest much less into their futures than their predecessors. Schwab\’s 2019 Modern Wealth Survey found that just under half (49 percent) of millennials have overspent on experiences due to pressure to post fresh content on social media. Add that to pressure to post pics with new outfits, hairstyles, masks, and makeup looks, and it\’s easy to see why two-thirds of millennials report feeling significant financial stress.

Business Insider reports that \”One of a Henry millennial\’s biggest financial issues is that they typically live above their means and fall victim to lifestyle creep.\” This is to say that HENRYs spend money as quickly as they earn it, due to societal pressures, the growing expense of living in urban areas, and an unwillingness to modify their lifestyles to match their means. It may come as no surprise that a full third of American adults (high earners included) would find themselves financially strapped if they had an unexpected expense of just $400–which is why most millennials report feeling completely unprepared to handle costs associated with coronavirus testing and treatment. People earning six-figure incomes a decade ago simply didn\’t face this type of financial uncertainty.

Punch List for Retailers

Now, I\’m not saying that millennial HENRYs have it bad. Most know they\’re fortunate to live where they want to live, or to have the furry (or human) babies that they want to have. But the reality is that many millennial consumers, regardless of their income level, are still struggling to get a grip on their finances.

• Retailers still need to communicate value to millennial HENRYs to benefit from their elusive market share.
• HENRYs will only spend if there\’s a good reason–they\’re focused on food, health, and other essentials.
• Retailers need to communicate the answers to questions like: Why a product is the best option for the money? How long a product will last? And why a specific line is more ethical and durable than the competition?
• To hack into this overworked demographic, retailers need to use clear messaging that communicates both the product\’s value to the consumer themselves, and the global or environmental value of the product\’s production process.
• It\’s also important to realize that HENRYs want to buy products at a broader selection of price-points than their high-earning predecessors (who had more money to burn). No matter what retailers think HENRYs should be spending on non-essential purchases, they have a tighter grip on their purse-strings than their predecessors.

While off-price retailers with a strong CSR are still a go-to for millennial HENRYs, they will still buy luxury items if the value proposition is right. In fact, Deloitte reports that millennial HENRYs actually spend more than any HENRYs from any other demographic, with clothing and footwear being two of their main expenditures. The difference is that retailers need to think outside of the box with quirky messaging and personalized outreach to get millennial HENRYs to continue engaging with the brand during quarantine-think along the lines of the pop-up arcade-style Sonic the Hedgehog game on Louis Vuitton\’s website.

Looking Forward

While some days HENRYs are flying high, some days they\’re living off of ramen and frozen peas. But no matter where they are financially at any given moment, they still face the pressure of generating that fresh visual content for the \’gram and social media. This factors into why secondhand luxury retail is having such a strong moment, as well as why in-store food concepts like Intersect are trending in the luxury sector.

During the coronavirus epidemic, some HENRYs will grow in disposable income, while others will have to make lifestyle modifications to make ends meet. Retailers should continue to create capsule collections of entry-level products in collaboration with off-price retailers to hook new millennial customers. And remember, millennials vote with their wallets. How retailers treat and protect their workers during shutdowns will define whether the brands can tap into millennial HENRY market share when life resumes.