New consumer groups are emerging, and retailers can profit by focusting on their needs. In this first installment of the two-part 'Twixt & Between series, DDI investigates the twixters—a growing segment of consumers migrating through the transformative life stage between college and financial independence. In the upcoming October issue, we will take a look at the older boomer consumer segment, traveling new paths and making the most of their time between retirement and the rocking chair.

Some say they are lazy, irresponsible, disrespectful and disloyal. Others argue they are hardworking, adventurous, quizzical and optimistic. They're the "twixters"—a group of American young adults, typically classified as age 18 through the mid- to late-20s, who are in limbo between adolescence and adulthood. Floating between two life stages in a sort of transitional state that has evolved over the last several decades, the twixters are putting off the full-blown responsibilities of adulthood and delaying growing up.

Twixters are young adults of the middle and upper class, raised by their baby boomer parents, who are the most affluent generation. Many still live at home, or are not otherwise financially independent. Young people are extending education, trying on different jobs and postponing marriage during this transitional period, or as a New York Times article describes, they are taking "the scenic route from adolescence to adulthood." The trend has become so pervasive in American society that pop culture has chronicled the plight of the 20-somethings through music, TV shows and movies.

Spending power

The fact that today's young adults are postponing marriage greatly impacts their shopping behavior. This group is skeptical and wary of marriage, growing up in a time when more than half of marriages end in divorce. "By deferring both marriage and childbearing until later in life, twixters have far more discretionary spending than past generations," says David Morrison, president and founder of Philadelphia-based management consultancy Twentysomething Inc.

Twentysomethings are staying single longer, but that doesn't mean they aren't testing out new mates and even living together. About two-thirds of emerging adults cohabit before marriage. Marriage and children are often deferred until their 30s. The average age for marriage is now about 27 for men and 25 for women, compared to 23 and 20 about 30 years ago. "Twixters are taking phenomenal trips to exotic locales, driving new or lightly used luxury cars, buying state-of-the-art electronics and patronizing high-end retailers for categories that they are passionate about," Morrison says. "The [consumer] is a low/high shopper, so they'll go to Costco or Target for basics and then jump over to Bloomingdale's or an Apple Store the next." Industries, from apparel to quick-service restaurants, could benefit from the twixters' spending habits. It is a self-focused stage in terms of their buying habits, so they're interested in clothes, travel and going out to restaurants and clubs.

According to U.S. Census Bureau statistics about young adults (ages 18 to 24) released in 2006, 53 percent of males and 46 percent of females in 2005 were still living with their parents. And according to Twentysomething Inc.'s research, nearly 60 percent of college students from the most recent graduating class plan on moving back home with their parents instead of immediately striking out on their own.

For twixters living at home, basic needs are often covered by their parents—rent, utilities, insurance, meals, gas, etc.—which allows them to live a lifestyle they'd otherwise not be able to afford. "They are freed to devote a far greater portion of their earnings (if not all of it) to purely discretional purchases," Morrison explains. "Twixters are, by and large, living the good life. Contrary to stereotypes, most are working and many are generating substantial incomes. There are many investment bankers who are twixters. This group enjoys having their meals covered by Mom and Dad, and are often saving their income to buy their first apartment or home. It would be a grave mistake to presume that twixters are a low-spending market."

Drifting in transition

Experts and sociologists aren't sure what to call the twixters; they've been dubbed "permakids," "kidults" and "boomerang kids," and have been described as being in "adultescence" or "youthhood." Most twixters are part of Generation Y, or what is sometimes known as the "Me Too Generation."

"Think of Peter Pan in the 21st century, and that's a modern day image of a twixter," Morrison says. "They're largely refusing to grow up or being held back in a quasi-adolescent stage due to exogenous (external) factors."

Twixters don't represent a generational change; they represent a new life stage.

Where did they come from?

The twixter phenomenon is not just a trend in the United States; it's a global one, garnering various names—"Kippers," "Tanguy Syndrome," "Nesthocker," "Mammone" and "Freeter." In many European countries, like Spain and Italy, it is not uncommon for adults to live at home with their parents until marriage. Oftentimes, parents continue to provide financial support even after they've left home.

Morrison says the phenomenon began in Asia more than 20 years ago, spreading into Europe and Latin America, before hitting the United States with the 1990/1991 recession. "At the time, though, neither young adults nor their parents spoke about it, as it was an embarrassing topic. Parents felt as if they failed their children. Children felt that they had failed their parents by not going directly from college to their first apartment," Morrison explains. "However, by the next recession, in 2000/2001, the Boomerang Effect became widely accepted, and the stigma of students moving back home was permanently lost." He believes it is a rational response to several developments, such as job insecurity, a post-9/11 world where young adults and parents are eager to develop stronger connections with each other, and the "Me Too Generation's" desire to self-indulge.

The economic changes of the last half-century have influenced the development of the twixters further. As the economy moved away from manufacturing and more toward information and technology, post-secondary education has become mandatory. Going to college is no longer just an option for middle- to upper-class young adults—it's essential in the increasingly competitive job market. It also takes longer to develop the skills needed for jobs today. The average college student takes five years to graduate now, as opposed to the traditional four years of the past. And it's no longer good enough to have a Bachelor's degree. Many young adults also opt to attend graduate school, further extending their education in hopes of gaining a competitive edge in the work force.

But college students graduate with more than just a degree under their belts; they are leaving with record-high amounts of debt and student loans. In today's world, college is taking longer to complete and costing more than ever before. The average graduate has about $15,000 of debt, and that figure dramatically increases for those attending private universities, according to Arnett. A TIME poll found that 66 percent of those surveyed owed more than $10,000 when they graduated. Add on the rising amount of credit card debt being accrued by young adults in recent years, and college grads aren't in the best position for a smooth start. Twentysomething Inc. estimates that a graduate needs $4,295 upfront for a new apartment, deposits, furniture and supplies. With starting salaries slumping and housing costs rising, it's no wonder why many graduates are moving back to the nest post-diploma.

While twixters live at home, they search for the job that fits them just right and often use the time to travel. During this time, young adults have the freedom to try out different things before making choices that are more permanent—like a dress rehearsal for the rest of their lives.

Financial stability

Even for the twixters opting to live on their own, many of them are still receiving a great deal of financial support from home. Parents are carrying their children financially for longer after graduation, spending thousands—even tens of thousands—of dollars on them. According to a study by the Institute of Social Research at the University of Michigan and published in "On the Frontier of Adulthood," 34 percent of adults ages 18 to 34 receive financial assistance from their parents. So are parents coddling their grown children too much? Bob Schoeni, an author of the study, told The New York Times that parental support "is not the driver of a delayed transition, it is a response to it."

Although twixters aren't making much money in their entry-level jobs, financial help from their parents and being able to save money while living at home puts them in a unique position. Some young adults are venturing into the housing market to purchase their first homes. As first-time home buyers, the Gen Y-ers represent easier and quicker sales for sellers—and real estate agents are taking note, developing new ways of reaching out to this tech-savvy generation. However, with home prices continuing to fall, young buyers have become wary, and in today's market it is harder for them to secure financing. Additionally, with the high amount of debt many Gen Y-ers have, it can be difficult for them to save enough money for a down payment.

But a little—even a lot—of debt hasn't stopped the twixters from spending money eating out at restaurants and purchasing the latest electronics or fashion trends. Twixters have been raised in a very affluent time, and their wealthy baby boomer parents have fewer children than people had 50 years ago.

Targeted marketing

Retailers should recognize that twixters are educated, incredibly marketing savvy and eager to self-indulge, Morrison points out, adding that this lifestyle will only become more high-end over the years. "As the current twixters age out and become mainstreamed, they will be replaced by a new crop, because this is very much a trend and not at all a fad. The twixter phenomenon is here to stay and retailers would be well advised to understand it, learn about the unique needs and preferences of this market, and to execute on-target strategies to build lasting brand loyalties."

There are retailers out there doing an excellent job of capturing the loyalty of this demographic. But it's not an easy job—twixters are tougher to reach and harder to persuade than generations past.

As one of the savviest generations, twixters want to be treated with respect by retailers, which means being given whatever sales information they request and then being given the space to make a decision. Forget hard sells, which will only alienate or insult them. In terms of store design, an intuitive layout will speak to time-compressed twixters the most, Morrison says. "Information should be accessible via multiple touchpoints such as kiosks, displays, in-store demonstrations (live or recorded), knowledgeable salespeople and signage," he adds. "Any elements of a store that can be used as a point of difference, such as a coffee lounge, can have great impact." If retailers can snag the twixters' loyalty now, they're building priceless relationships for the future.

Retail success

Several luxury brands have done an especially good job at targeting the high-spending twixters. Luxury accessories brands such as Coach and Kate Spade have done well serving them, too. Twixters may not be able to afford the Gucci suit, but they can afford pricey handbags and shoes.

Target "has done a near perfect job in providing Gen Y with upscale clothing at discounted prices," Morrison notes. "They are often willing to forego the luxury experience to purchase a luxury item at discounted pricing. They see the big picture." Perhaps this explains why outlet stores and warehouse clubs are popular among this demographic. Target and Costco top Morrison's list of discount retailers successfully reaching the twixters. "For many there's no reason to pay a premium for plush carpeting, lattés and overly attentive salespeople if a Gen Y-er possesses strong category knowledge," he notes. "In this case, warehouse shopping is ideal since that's where the best buys are."

In the consumer electronics segment, retailers such as Apple and Best Buy reign supreme with the twixters for their product design and pricing, respectively. "Apple provides a unique example of a luxury marketer that commands premium pricing," Morrison says. "It's not just the Apple mystique, but their products have been elevated to a new level: consumer electronics as fashion."

Similarly, cell phone service providers have tapped into this group's desire to have the latest technology toys in their hands, as well as the desire to stay connected—constantly. The twixters rely on a host of technologies to stay plugged in. This is a generation that considers even e-mail too formal for communication with friends—today, it's all about texting. And the most innovative products and companies allow them to remain in constant communication with each other and to multitask—everything from texting to downloading mp3s to checking e-mail to surfing the Web to making phone calls, all available in one device.

Apparel retailers, especially those with popular brand names or an emphasis on the latest fashion trends, are doing well with twixters. "The fashion industry is one of the best examples of Generation Y's tendency towards instant gratification. Gen Y embraces brand names and seeks out apparel that fits their leisurely lifestyle, pursuit of fitness activities and their tendency to make last-minute arrangements," according to The Sydney Morning Herald. Fast-fashion retailers such as H&M, Forever21 and Zara feature off-the-runway fashions at affordable price points. These retailers get the latest trends into the stores quickly, and offer up a mix of apparel suitable for both the office and the weekend. Specialty apparel retailers, including Express, The Limited and Anthropologie, also feature a comprehensive mix of merchandise for work and play that resonates well with twixters.

Home furnishings and décor retailers such as IKEA, Z Gallerie and CB2 (a modern furniture and home accessories offshoot from Crate and Barrel) are also frequented by young adults. Their offerings are simple, functional and project a cool vibe. With affordable pricing and contemporary styles, these retailers make it easier for twixters to afford their first homes and apartments after leaving the nest. Retailers who acknowledge their lifestyle needs and cater to the twixters will be poised for the future young adults to come, and may also retain these consumers' loyalty as they transition into the life stages of marriage and children.

Why grow up?

The twixters are equally praised as they are admonished by experts and social scientists. Some give them too much leeway, while others don't cut them enough slack. With all the meandering they seemingly do, it's not hard to see why they catch a bad rap. But in a society where growing older is seen as undesirable—where women in their 20s are considering Botox and 50-year-old men are scrutinized for not maintaining six-pack abs—is it any wonder young people don't want to grow up?

However, some experts firmly believe putting off adulthood—at least temporarily—is a good thing. There is evidence that suggests the human brain continues to develop into the early-20s. And according to Newsweek, a nationwide study in 2007 predicts Gen Y may become "more capable" adults than preceding generations. "In generations past, some young adults resented parenthood and marriage because they felt it cut off a period of self exploration that hadn't run its course," said Newsweek. "But today's young people are going to be able to look back and say, 'I've screwed around for 10 years. I've gotten that out of my system.' So there's not going to be an undertone of resentment or regret."

Despite the challenges faced by twixters, many of them struggling financially and grappling with what they want to do with their lives, they are a resilient group.

* * *

YOUNG ADULT MARKETERS!

Order "Marketing to the Campus Crowd" now!
Learn more...

© 2008 Nielson Business Media