Home & Baby Companies Plan To Profit as Millennials Settle Down

8/28/14Follow @xconomy

Sure, he’s in love with artful neck tattoos and outlandish facial hair right now. But that hipster at your favorite coffee bar down the street is going to get older, and a growing group of businesses are betting that his search for domestic bliss will be a profitable one.

A wave of e-commerce companies has started to take root just as a huge swath of Americans enters the big-spending years of middle adulthood, when young people settle down, find a mate, and start filling up gift registries for their new homes and babies.

These so-called millennials are the largest demographic chunk in America, accounting for some 80 million people born between the early 1980s and early 2000s. And if you’re running the cash register as those consumers start to earn more money—and spend it on big-ticket items—you could see a big payoff.

That’s more than just idle speculation. Online home-furnishings retailer Wayfair, for example, is counting on increased e-commerce spending by millennials as part of its long-term growth strategy.

In its recently filed IPO paperwork, the Boston-based company said its typical customer is “a 35 to 65 year old woman with an annual household income of $60,000 to $175,000.” That pool will obviously grow as younger people age, but consumers who grew up in the Internet age bring another boost: they’ve never known a world where people didn’t buy things online.

“We believe there are approximately 73 million millennials (which we define as individuals currently between the ages of 18 to 31) in the United States, many of whom are accustomed to purchasing goods online,” the company reports. “As millennials age, start new families and move into new homes, we expect online sales of home goods to increase.”

Wayfair isn’t the only growing company poised to capture an aging millennial demographic.

Zulily, which went public late last year, sells discounted mom and baby goods through daily email blasts. Care.com, which held an IPO earlier this year, operates an online marketplace for nannies and other caregivers. The Honest Company, an e-commerce brand dedicated to environmentally friendly diapers and other baby-care products, has just raised $70 million in private investment on its way to an expected IPO of its own.

A corporate bet on younger people spending more as they age might seem a bit more risky today than in years past, since the U.S. economy is still recovering from the Great Recession.

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