Perhaps you have a young adult living in your basement, on your insurance plan, or teaching you how to post something to your Facebook page. If so, then you may know a Millennial.

Born between 1977 and 1995 (give or take a few years on either end), Millennials currently range in age from about 19 to 37. These children of Baby Boomers make up about 25 percent of the U.S. population and outnumber their parent’s generation. Their ranks total about 84 million (compared to an estimated 75 million Boomers), but the figure is predicted to grow to 92 million by 2020 due to immigration. They are the newest adult generation.

When asked to describe themselves, Millennials use adjectives such as technologically savvy, young, modern, risk-taking, rebellious, hip, smart, fun, trendy, energetic, social, open-minded, multitasking, creative, environmentally conscious, authentic, original and clever, according to a research study by the Boston Consulting Group.

Compare these traits to Baby Boomers’ self-described characteristics – ethical, religious, selfless, giving, nostalgic, responsible, hard-working and ambitious – and one might conclude these groups are not on the same wavelength. It’s easy to see why Baby Boomers – the age group to which many specialty retailers and their current customers belong – might find it difficult to communicate with this unique generation.

But considering that Millennials currently make up the largest segment of the population and are about to become your next customers, it’s critical to understand who they are, how they live, shop and think, and how best to reach them. The Millennial generation is a completely new consumer model that will drive the economy in the coming years and we need to know how to adapt our stores, products, price points and marketing efforts to meet their needs.

“If you think you can market and merchandise to this generation like you’ve been marketing to Baby Boomers in the past, you won’t be in business for long in the future,” says Susan Yashinsky, vice president and innovation predictor at Sphere Trending in Waterford, Michigan.

Who are the Millennials?

Millennials, also called “Generation Now,” have a propensity to “live in the moment,” a trait possibly developed from growing up in a post 9-11 world.

Millennials are also the first generation to grow up with digital technology, and that is one of the most important and influential factors that define and unify the group. As “digital natives,” Millennials are behind the phenomenon of “reverse mentoring,” in which this younger generation is teaching older generations how to use technology, as well as about food, music and fashion trends.

“Baby Boomers are turning to Millennials to help them stay young, current and vibrant,” says Yashinsky.

The group is much more culturally and racially diverse than generations prior. Millennials incorporate many second- and third-generation Hispanic- and Asian-Americans who consider themselves bi-cultural. While their parents and grandparents were more concerned with assimilating into the American culture, this group takes pride in simultaneously maintaining their heritage.

“They are American, but still hold on to and are proud of their customs and culture,” says Yashinsky. In addition, U.S. government statistics show 43 percent of Millennials are non-white, the highest percentage of any generation.

Millennials are less trusting of other people, the government and businesses. According to the Pew Research Center, only 19 percent of Millennials believe “most people can be trusted,” versus 31 percent of Generation Xers, and 40 percent of Baby Boomers.

Many Millennials face unstable financial footing and that has been a major hurdle on their road to economic stability and independence. This group – the most educated generation in American history, according to The New York Times – has graduated or will graduate from college in a depressed job  market, leaving many of them unemployed or underemployed.

A Pew Research Center study reveals that Millennials have higher levels of poverty and unemployment, and lower levels of wealth and personal income, than Gen Xers and Baby Boomers had when they were that age.

In addition, they are saddled with historically high student loan debt. More than 70 percent of students graduate with educational debt greater than $30,000, a figure that rose 35 percent (adjusted for inflation) between 2005 and 2012, while median salaries declined 2.2 percent during the same period, according to The Wall Street Journal.

Cell-phone bills, cable television and/or Netflix fees – luxuries this generation considers indispensable – further syphon Millennials’ discretionary income. Consequently, many have had to move back into their parents’ homes after college until their financial situations improve. This scenario has earned them another nickname, “the boomerang generation.”

According to the U.S. Census Bureau’s Current Population Survey, the number of households headed by people aged 25 to 34 declined by about 9,000 households between 2013 and 2014.

On average, Millennials are living at home until their late 20s, about five years longer than prior generations. Good thing this generation, as a whole, likes their parents, according to Yashinsky, in contrast to many Baby Boomers who couldn’t wait to leave their perceived restrictive nests. But even when they finally do move out, 40 to 50 percent of Millennials are supported to some degree by their parents, who often continue to subsidize rent, and pay student loans or other bills.

Another fallout from this economic situation is that young adults are delaying marriage. A report by the Pew Research Center shows just over a quarter of 18- to 35-year-olds are married, compared with nearly half of Baby Boomers who were married at that age. However, the Pew study indicates 69 percent of Millennials say they aspire to get married.

According to Yashinsky, while Baby Boomers typically married in their 20s, Millennials are waiting until their 30s to wed. As a result, without the benefit of two incomes in a household, their buying power is significantly reduced. Yashinsky says Millennials are not expected to hit their peak earning years until their early 50s, compared with Baby Boomers whose peak earning years occurred in their early 40s.

“As a rule, Millennials are hitting most milestones about a decade behind when their parents’ generation hit them,” Yashinsky says.

Despite what some would consider depressing lifestyle and economic realities, Millennials are a very optimistic group. According to the report “How Millennials are Changing the Face of Marketing Forever,” by Christine Barton, Lara Koslow and Christine Beauchamp of the Boston Consulting Group, 69 percent of Millennials view their personal situations and outlooks as “bright,” versus 42 percent for other generations.

In addition, 58 percent say they have “peace of mind,” 60 percent are “happy with their lives now,” and 47 percent believe they “have enough fun.” Only time will tell, but double the number of Millennials than Gen-Xers are convinced they “will have a better life than previous generations.”

“This is an incredibly optimistic generation,” adds Yashinsky. “They are highly educated, grew up in a privileged environment, and have enjoyed many experiences previous generations did not. They have been raised to think they can do anything. They have access to the world through the Internet, and are using technology to do good for others and change the world.”

Case in point: the recent Ice Bucket Challenge. This social media campaign report edly was started by a young man who challenged friends to donate $100 to ALS (“Lou Gehrig’s disease”) charities or dump a bucket of ice water over their heads. The video challenges went viral, spreading all over the world, and the grassroots campaign raised millions of dollars for ALS research. Millennials are also behind many of the petitions on Change.org, a free online petition tool that helps individuals and non-profit organizations launch grassroots, social-change campaigns.

Home Sweet Home

Approximately 30 percent of Millennials now live in core urban areas, a higher percentage than other generations (although there is a simultaneous surge in Baby Boomers retiring to the cities), according to Yashinsky. For instance, while nearby suburban communities are shrinking, the population of Brooklyn, one of the five New York City boroughs and a haven for Millennials, grew 3.3 percent between 2010 and 2013, an increase of more than 82,000 residents. City-bound Millennials value being able to walk to work, restaurants and other attractions, and are happy to live without car expenses and maintenance.

They are also, apparently, willing to live without much personal space in compact city apartments. “They would rather sacrifice space to be able to afford the privacy of their own apartment, or at least their own room in an apartment,” Yashinsky adds. As architect Gregory Soltis of RDL Architects in Cleveland says, “They don’t think as much about what’s in their apartment as what’s outside it. They believe, ‘Home is where I sleep and keep my stuff. I want it to be cool, but it doesn’t have to be super great.’”

As trade-off for smaller personal spaces, Millennials demand large and inviting communal spaces for socialization and recreation in their apartment buildings. That translates to amenities such as onsite fitness centers, party lounge areas and poolside outdoor living spaces.

Despite home ownership being out of reach for many Millennials, according to a Fannie Mae National Housing Survey, the majority still feel a strong desire to own a home and believe home ownership provides “broader security and lifestyle benefits.” In fact, the U.S. Census reveals that as this group enters their 30s, they are finally beginning to move out of their parents’ houses and buy homes of their own.

According to Jonathan Smoke, chief economist for Realtor.com, use of real estate mobile applications and websites by people aged 25 to 34 is up 61 percent over last year, suggesting that Millennials are, “at least thinking about buying or renting a home and researching their options.”

A report by the Demand Institute, a consumer trends think tank, reveals over 70 percent of Millennials surveyed plan to move to a better home or apartment in the next five years. Sixty percent expect to purchase the home, collectively spending an estimated $1.6 trillion in the process. Furthermore, the study indicates nearly 50 percent of Millennial prospective home buyers plan to purchase in the suburbs.

Affordability is a huge issue for these first-time home buyers. Paying pricey rents for urban apartments has limited down-payment savings, according to a report from Redfin, a national real estate brokerage firm. Student debt also significantly hampers home ownership.

An article by Millennial experts Morley Winograd and Michael D. Hais points out that only half of those with student debt own homes today, versus two-thirds of those without student loan debt. The authors say the student-loan burden “is the single most important issue facing realtors’ and home builders’ future success.”

As Sarah Bloom Raskin, deputy secretary of the U.S. Treasury Department, put it at a National Association for Business Economics conference in September: “Money spent on debt service cannot be spent on housing.”

When they do buy, Millennials are looking for smaller, modest homes that “are flexible, live larger, and do more with less,” according to Yashinsky. For example, a rarely used, dedicated dining room is not considered a practical use of space by this generation. Instead, that room might be a home office or media room most days of the year, but when files are put away and the worktable is cleared, it can morph into a dining room for entertaining company.

They disdain the “McMansions” of their parents’ generation, preferring smaller, but more open floor plans.

Millennials are interested in sustainability and energy-efficiency, and don’t want to waste the energy – or money – to air-condition or heat rooms they don’t often use, according to Houseplans.com, an online home-design and remodeling planning resource.

Considering there are 26 million Baby Boomer-owned homes that will likely be put up for sale in the coming decades, Yashinsky forecasts excellent growth for the remodeling industry as Millennials purchase and revamp these homes to their liking.

When it comes to design and decorating, Millennials are big on authenticity. They are interested in learning about the architectural style of a home and the architect who designed it (same goes for the artist whose painting hangs on the wall, or the chef who prepared their restaurant dinner). They believe that the interior décor should match the exterior style of the house and would not, for instance, decorate a Colonial-style home with modern furnishings as their parents might have.

Design experts see a preference for clean, contemporary design with natural light and “rough, tough and authentic” materials such as distressed wood, exposed concrete, recycled glass, and metals. According to Mark Humphreys, CEO of Humphrey & Partners Architects in Dallas, Millennials want looks that are completely different from their parents’ style.

Given this, contemporary linear fireplaces would likely appeal to Millennials, as long as they coordinate with the architectural style of the home. Regardless of how they decorate, Millennials believe their home is an important personal statement that reflects who they are and how they live.

“They are buying homes for livability not re-salability,” says Yashinsky.

The most frequent viewers of television home design shows, Millennials are aspirational about how they would like their home to look and function, and get design and decorating ideas from television, and websites such as Houzz and Pinterest. This is a do-it-yourself generation who likes to tackle home decorating, repair and remodeling projects themselves. But because their Baby Boomer parents are more likely to hire professionals to do these tasks, Millennials haven’t learned the skills to master DIY projects.

As a result, classes or online tutorials are important to them. One caveat regarding DIY endeavors: the project must be convenient to do and relatively easy to complete, according to Yashinsky. “They might want to make a DIY fire pit,” she says, “but they won’t spend a month of weekends doing it. They want it now.”

A front porch is a major attraction for Millennial home buyers, and part of the growing trend of “living streetside,” says Yashinsky. “People are searching for a sense of community, and spending time on a front porch allows them to connect with neighbors,” she says.

Millennials consider the outdoors to be an extension of a home’s overall living space. They are looking for seamless living between indoors and out, and try to maximize every square foot of their back, side and front yards. But just as interior rooms and furnishings must be flexible so, too must Outdoor Rooms, according to Yashinsky.

For instance, she predicts that masonry outdoor kitchens may not be as appealing to this generation as they are to Baby Boomers. Rather than a permanent-structure, she says Millennials are more likely to prefer a freestanding, cart-based grill teamed with a separate mobile serving cart that can be wheeled to another location, or converted from a buffet station to an extra dining table when the need arises.

“They live very flexibly, so products must adapt,” Yashinsky adds. “They want an outdoor kitchen, but they need more flexible and affordable options. The ecosystem of the grilling area must suit their lifestyle.”

In addition, with budgets tight, Millennials buying a first home will not be able to purchase everything for an

Outdoor Room all at once. According to Yashinksy, they are unconcerned about all the elements in an outdoor space matching, or coming from the same manufacturer. “They will buy individual elements that work for them,” she says.

Read Meet the Millennials — Part II