Warning. This report from Bain is not something to embark upon if you only have a couple of mins. It is long and detailed and it makes you think. Those words aren’t code for saying it is boring. It is anything but that. It is terrifying.
Forecasting a decade out is mighty difficult but the waves of change that Bain’s report discusses are not fanciful or trendy concepts. They are heavy duty economic and social changes and they aren’t going away. The difficulty for Bain is drawing conclusions from combining these trends. That’s the hard bit.
I have selected a few items from the report for you to consider.
First the importance and the eventual end of consumer spending growth generated by baby boomers
Baby boomer spending growth will peak in the 2020s before tapering. Compared with previous generations, baby boomers will extend the period of high-income earning and spending by about 10 years. The sheer size of this generation means there are considerable market opportunities for most goods and services, including big-ticket items such as housing and transportation. But growth based on this demographic shift will become more concentrated among the top 20% of households.
Take note of the final sentence “concentrated among the top 20% of households”. OK, here is what that means in marketing-speak. You have to have a refined, no an ultra-refined, marketing strategy to target this group.
The next chart is mighty interesting and it raised an issue I have never considered. That means you almost certainly haven’t considered it.
Bain has combined the direct consumption of older people with ‘subsidised consumption’ to calculate a total household consumption figure. That is a genuinely new way of presenting the data. Not only is it new, but it makes a lot of sense. So when you look at an oldie you see somebody who is spending they own income/wealth and the state’s wealth.
The final chart shows the way that people aged 75+ have increased their household expenditure since 1984 and what has accounted for the growth. Think to yourself – has your business been able to capture any of this consumption growth?
It is going to take me sometime to understand all the implications of Bain’s insights. I really do suggest you spend some time getting to grips with what they have to say. Dick Stroud
Read the original post here.