It wasn’t very long ago that the future looked pretty rosy for American consumers of the future. Boomers were preparing to use the wealth they had accumulated during their working years to retire in comfort, while subsequent generations believed that hard work, the seemingly endless availability of credit, and smart investing would allow them to do the same.
However, the current recession has significantly altered most consumers’ visions of their personal wealth and earning potential. And, though the U.S. has been through recessionary periods before, most recently in the early ’80s and ’90s, this one’s recovery period is expected to be a long, slow, and painful one resulting in a “fundamental shift in the mentality of the American consumer, says David Morris, senior analyst for global consumer, media, and market research for Mintel International Group.
Frank Badillo, senior economist and global program manager for industry analysis firm Retail Forward, points out that the consumer confidence index, which tracks present realities and future expectations, “has fallen to the lowest levels ever in tracked in the index’s history.”
No age demographic is totally immune from the long-term consequences of today’s economic woes, says Morris. But, government and other demographic experts predict, as always, each generation will continue to adapt to the realities of changing economic and technological realities by developing its own distinctive spending, living and shopping patterns.
Percent of 2015 U.S. Population: 23%
In 2015, this age group will represent about 23 percent of the total U.S. population, reflecting an increase of approximately 18 percent from 2010.
This demographic segment will derive its spending power from current income and availability of credit. While income levels for these younger consumers are traditionally lower than for the 35–54 group, their percentage of discretionary spending is higher, particularly at the younger end of this age segment, say Morris and Badillo. The rationale is that these Americans generally do not worry about saving a substantial percentage of their salaries for the future nor have they accumulated investment wealth that they must try to recoup. For the most part, they have not accrued major debt from home purchases and family expenses (although, Morris notes, 25 percent of today‘s college graduates are paying off some credit card and other, particularly school-related, debt). Just as important is the fact that the majority of this group will be too young to really get the full impact of this recession. In sum, when the job market improves and credit becomes more easily available, this is the group that will be most ready and able to resume their more liberal spending habits.
Where They’ll Live
Many members of the younger segment of this group will continue, as they have historically, to gravitate to the city centers during their pre-family formation years, says Dan Stanek, executive vice president of Retail Forward. Members of the group’s upper age levels might also choose to remain in the city, but many will begin migrating to the metropolitan areas close to, but not necessarily in, the city centers.
Where They’ll Shop
As of March of this year, more than 70 percent of the U.S. population had Internet access, according to Neilson Online Research. Today’s heaviest users will be the forerunners in expanding multi- and cross-channel shopping. Mobile devices, particularly “wallet phones” that allow payment directly from the user’s bank or credit account, are gaining traction. By 2012, 700 million consumers worldwide are expected to own and regularly use wallet phones for everything from sharing videos of them modeling clothes to purchasing selections.