Much has been made of the economic struggles plaguing young people. But of all the statistics and trend lines being bandied about, one chart in particular stopped me in my tracks recently. One that all brand marketers should take note of.
A post at the economics blog SoberLook.com plotted the growth curves of population and family household formation. It is a tight linear relationship – the bigger the population, the greater the number of family households. Until 2008, that is. In 2008, the two trend lines decoupled, with the number of family households actually falling. As the blog notes, only three years since 1947 show negative household formation – 2008, 2010 and 2011.
This chart is the most telling measure of what’s happening to today’s generation of twenty-somethings, a cohort facing such disproportionately long odds of solid employment that some pundits have started characterizing them by the disheartening tag of Generation Jobless. Because of unemployment, young people have been unable to start their own family households. So many are moving back in with their parents that the number of family households is shrinking. (The depth of these struggles was explored in detail in two Future Perspectives from The Futures Company, Unmasking Millennials and Millennials in Crisis.)
This chart is also the most telling indicator of how marketing is being turned on its head. The long-standing priority that brands have given to young consumers and to their progression through mid-life lifestage transitions is being eroded by a generation of young people unable to start their lives because they can’t find work. As a result, contrary to conventional marketing wisdom, older people not young people will be a better source of brand growth, and lifestages after 50 not before will have greater revenue potential.
While young people have been frozen out by the downturn, older people have been locked in. Struggles with savings, investments and pensions have left many older people with no choice but to change their retirement plans and work longer. This hurts young people because the longer that older people work, the fewer the replacement job opportunities. This is not going to change anytime soon. Harvard economist Edward Glaeser arguesthat the past 70 years were a “retirement boom” we’re unlikely to see again.
For brand marketers, the struggles of young people make them less attractive consumers to target, but the reverse is true for older people. The longer older people work, the more attractive they become as consumers. Rather than leaving their peak consumption years behind after age 50, older people will now be extending their peak consumption years. In a remarkable reversal of traditional marketing presumptions, for many brands, older people are becoming a more attractive source of growth than young people.
Accenture and Oxford Economics have pointed to older consumers, or the silver economy, as a robust source of innovation and future growth, with opportunities ranging from training and education to experiential offerings to everything to do with health care to financial services for people living longer lives to “age-inclusive consumer goods.”
Older people are also critical to economic recovery. Accenture and Oxford Economics calculate that a combination of increased labor force participation rates by older people and “productivity-enhancing human-capital investments” could create 5 million jobs and raise 2020 U.S. GDP levels above current trajectories by 2.2 percent.
The potential in older consumers is no excuse to overlook the critical employment needs of young people. But it is a silver lining of growth opportunities in an otherwise dark generational cloud.
Contributed to Branding Strategy Insider by: J. Walker Smith, Executive Chairman, The Futures Company
Sponsored by: The Brand Positioning Workshop