NEW YORK (TheStreet) -- They waited longer than previous generations to do it, but Millennials -- the biggest generation in history -- are now becoming parents and beginning to transform retail and consumer markets as they do so.
The generation of U.S. residents born from 1980 to 2000 numbers about 92 million, outflanking Baby Boomers by about 20 percent, according to new research from Goldman Sachs. They're now 15 to 35 years old, with an average age of 25 -- one year shy of the average age of a first-time mother, Goldman's report says.
Millennials wield tremendous buying power -- spending about $1 trillion a year on their children, not counting college and university costs -- and they research many of their purchases through social media. They're more likely than previous generations to prioritize safety and convenience, Goldman says, and they're not averse to paying a premium for brands that cater to their values.
Here are some takeaways on the behavior patterns Goldman identified, along with the bank's assessment of companies pitching their products to Millennials:
1. Millennial parents watch what they eat. In previous generations, Campbell's (CPB) soup fixed every cold, and kids started their day with Kellogg's (K) Frosted Flakes. Amid concerns about the nutrition content of sugary cereals, though, millennial parents are increasingly filling their pantries with food from Enfamil infant formula-maker Mead Johnson (MJN), White Wave (WWAV), and Hain Celestial (HAIN).
The companies may not all sound immediately familiar, but no doubt you've heard of some of their brands, from White Wave's Horizon Organic, Silk and Earthbound Farm to Hain Celestial's Earth's Best Organic, Terra Chips and Celestial Seasonings.
"Millennials are not buying brands our parents had," Hain Celestial Founder Irwin Simon said in the report. "Millennials today go back and check what the product is made from, where it came from, how the animal has been treated and
that's something that Hain is focused on."
While the cool kids of the '80s had their birthday parties at McDonalds (MCD), today's are more likely to find a fast-food fix at Chipotle (CMG). On a calorie basis, the brand appears on par with McDonalds, but it wins on using high--quality ingredients as well as its recent commitment to using non-genetically modified, or GMO, foods.
2. Millennial parents want toys that teach. While Mattel's (MAT) Barbie was among the most coveted toys for earlier generations, millennial parents are favoring products from from companies like Hasbro (HAS), The Michaels Companies (MIK), Lego, and Crayola for their children.
Hasbro's website shows one of the reasons: Its homepage features games and crafts that encourage children to create. While Goldman Sachs credits Hasbro for their licensing agreement with Disney, their toys are more action-driven than character-driven.
Smaller brands like Melissa & Doug, KidKraft and Rainbow Loom, are gaining momentum, Goldman said, while larger companies such as Mattel will find themselves forced to adapt or lose some of their markets.
One misstep for Mattel recently was its "Barbie: I Can Be A Computer Engineer" book in which Barbie crashes Skipper's computer and has to rely on the boys to fix it. The book, which sparked a social media backlash last year, prompted an apology from Mattel on Barbie's official Facebook page.
Mattel President Richard Dickson said in the report that the company's Fisher Price toy brand, which includes cars, buildings and figures that kids can mix together, is "Mattel's first handshake with mom" and "the beginning of an emotional partnership for not just the brand but for the entire Mattel portfolio."
3. Millennial parents want convenience and they want it now. Forget spending Saturday mornings popping in and out of stores in the local strip mall. Millennial parents are able to get a lot of their errands done online.
Amazon (AMZN) now delivers many household goods which frees up time for browsing the aisles at Whole Foods (WFM). As an added benefit, even after factoring in an Amazon Prime membership, shoppers are still able to get deals on many household goods.
Similarly, millennial parents are more likely to use a host of start-ups to get errands done. TaskRabbit provides a network of laborers willing to fulfill all sorts of odd jobs at a variety of price points while Blue Apron provides ready to cook meals to time-crunched parents and The Honest Company sells items from diapers and baby wipes to home-cleaning products.
"A few years ago, I had an idea for a company that would be the trusted lifestyle brand for millennial families, like mine," actress Jessica Alba, the Honest Company's co-founder, said in the report. "I wanted effective, safe, beautifully designed products that are convenient to get. I mean, who wouldn't want that?, I thought."