It’s a new age of branding and marcom outreach, catalyzed by a new age of consumer—or is it? Despite what is often characterized as changing preference and behaviors driven by a fundamentally different, tech-driven consumer, new research from Deloittefinds that today’s consumer in many ways isn’t really all that different.
What is often overlooked—but a clear driver of changing consumer behavior—is a consumer who is under greater financial pressures compared to those of 30 years ago, a situation particularly evident with low-income, middle-income and millennial consumers.
While it’s typically thought that millennials are breaking the mold in terms of spending habits, the new research found that members of this generation are spending the same percentage of their income on categories as similar age cohorts did in the past. What’s interesting to point out, however, is that since 1996, the net worth of consumers under the age of 35 has fallen by 34 percent.
The consumer base is now more diverse and heterogeneous, leading to a broader consumer base with varied sets of demands and needs.
“Deloitte’s findings debunked many conventional wisdoms about the new-age consumer. In many ways, the consumer hasn’t fundamentally changed,” said Kasey Lobaugh, principal and chief retail innovation officer with Deloitte Consulting LLP, in a news release. “Instead, their behaviors have been triggered by a rise in nondiscretionary expenses and the growing bifurcation between high and low income groups.”
Why does it matter to retailers and consumer products companies?
Over the past year, Deloitte’s Center for Consumer Insights surveyed more than 4,000 consumers to gain insights into their behaviors and underlying attributes. Researchers also analyzed government and spending data, as well as spoke with leaders in the consumer industry to gain insights into the current state of the consumer.
The study highlights new pockets of opportunity for retailers, highlights the importance of understanding the consumer’s changing demographic, economic and geographic specifics, and underscores the changing competitive landscape.
The changing consumer
Gone are the days of the “average consumer.” More diversity in areas such as race, education, income and rural-urban residence has led to increased fragmentation and distinct subsets of consumers with varied needs. Reduced barriers to entry have resulted in an abundance of new niche retailers and products that provide access to extensive and more competitive options.
However, how people choose to spend their money is not all that different from 10, or even 30, years ago. Instead, it’s the economic, demographic and cultural factors around them that are creating the nuances that are turning traditional retail and consumer products sectors on their heads.
Share of wallet
Examining consumer data over a 30-year period, results show relatively consistent spending patterns across most categories. Food, alcohol, furniture, food away from home, and housing all constitute roughly the same percentage of the consumer’s wallet today as they did three decades ago. Even entertainment, a category where one might expect to see an increase in experience-driven spending, was basically flat. The real differences show up in several nondiscretionary expenses, such as healthcare.
The millennial consumer
Millennials are financially worse off than their predecessors, with a 34% decrease in their net worth since 1996. And the rise in the education level of millennials hasn’t come cheap; since 2004, the cost of student debt has soared by 160 percent. A growing share of the millennial’s wallet is going toward health care, housing and education.
Thus, it’s not so much a change in the consumer, but rather a change in the economic pressures that the young consumer is under. Simply typecasting the millennial as being different overlooks a much bigger factor—that of their economic constraints.
How consumers spend their time
More than three-quarters of survey respondents (76 percent) reported having less or the same amount of free time than just a year before. While the total hours worked in the U.S. has risen by 43 percent since 1980, the increase has been driven by the growth of the workforce. Interestingly, despite what consumers may be feeling, discretionary time is actually up overall, with time spent on leisure and sports increasing 5 percent between 2007 and 2017, or an additional 14 minutes daily.
This somewhat debunks the myth of the “time starved consumer.” What consumers appear to be reacting to is likely the stress of having more choices of how to spend their increased discretionary time—and having to choose between multiple options.
Consumers are still making trips to stores
In 2018, consumers traveled to more stores, more often; when compared to the previous year, consumer-oriented traffic (retail, convenience, and hospitality/travel) increased by 6%. Even brick-and-mortar retail saw a 2-percent increase in traffic. Overall, the biggest gains were seen in grocery-related trips, which grew 7.7 percent in 2018, with a notable decrease in visits to traditional retail locations, such as apparel stores, slipping 1.7 percent, and department stores falling 10.3 percent. However, the trends related to traffic are not homogeneous by market. The 15 fastest-declining markets largely center around West Coast urban centers, and the 15 fastest-gaining markets appear in the Southeast and Texas, where traffic is up 29 percent.
Get Your Daily PR Updates
Subscribe to get daily PR News updates from Bulldog Reporter
The teen trends of today are often indicators of the leading trends of tomorrow throughout the general population, and new research from media trust advocates Common Sense and SurveyMonkey paints a bleak picture for traditional media outlets, even those making...
The face of the marketing and public relations industries is one that’s always evolving. A new concept here, an emerging platform there. But what pervades throughout both industries is the notion that space is growing continuously more crowded and customer attention...
Managing the public relations of a growing company can start to feel like a challenge as you begin to interact with more customers, clients, partners, investors, consumers, competitors and other parties, all of whom have their own unique interests and opinions. As the...