As a result of recession-shrunk Baby Boomer household wealth, Generations X and Y will fuel the shopping growth needed to spur an economic recovery, according to [pdf] a new study from PriceWaterhouseCoopers and Kantar Retail.
GenX in Big Shopping Stage
Baby Boomers (ages 46-64) were largely responsible for the retail spending that fueled the recoveries from the economic recessions of the early 1990s and turn of the century. However, they have now matured to a point where they need to recoup wealth lost during the recession of the past few years in order to save and invest for the future.
Therefore, even though Gen X (ages 29-45) is only about 75% the size of the Baby Boom generation, it is one of two demographic age groups that will increase retail spending in the near future. Seventy-one percent of Gen X members have children under the age of 18, and Gen Xers are entering their peak earning years.
In particular, up-market Gen Xers will substantially outperform up-market Baby Boomers in terms of retail spending. Forty-seven percent of up-market Baby Boomers plan to buy only things they truly need, compared to 38% of up-market Gen Xers. Thirty-eight percent of up-market Baby Boomers plan to shop less often, compared to 29% of up-market Gen Xers. Twenty-one percent of up-market Baby Boomers plan to buy only items needed in the near term, compared to 12% of up-market Gen Xers.
The difference in shopping behavior between up-market Gen Xers and up-market Baby Boomers is less significant in two areas. Thirty-six percent of up-market Baby Boomers plan to buy fewer things, compared to 32% of up-market Gen Xers. The difference is even less wide between the percentage of up-market Baby Boomers (17%) and up-market Gen Xers (15%) doing more shopping at discount/value retailers.
PriceWaterhouseCoopers advises that due to the impact of the dotcom bust, heavy student loans, and lack of pensions or reliable future Social Security, Gen Xers will be less able to contribute to an economic recovery than consumers in their demographic typically would be.
Gen Y More Resilient, Tech-focused
Gen Y (ages 10-28) is more resilient to the effects of the recession than Gen X. They have plenty of earning and saving runway ahead of them, and as a result are seemingly less reactive to economic events.
Since the beginning of the recession, Gen Yers have consistently indicated a greater willingness to spend more in the coming months than Gen Xers or Baby Boomers. They also are significantly less likely than older consumers to indicate plans to continue recession-induced shopping behaviors in the recovery.
Gen Y, with 85 million members, actually outnumbers the Boomers, but currently only
accounts for 6% of all households and 4% of household spending, primarily because most are not yet heads of households. Gen Yers may spend the next few years leaving home, “boomeranging” back and leaving home again before establishing their own homes. This would delay the maximum impact this generation could have on spending for big-ticket items such as furniture, appliances and home improvement goods.
However, PriceWaterhouseCoopers advises that with fewer debts and a less-urgent need to accumulate wealth in the immediate term than older shoppers, a higher proportion of this generation’s income is discretionary. As a result, until they establish their own households, most of the income earned by this generation is highly likely to be spent.
In addition, Gen Y is accustomed to instant gratification; a tech lifestyle is a need, not a want. For Gen Yers, spending on the technology staples of this generation, such as iPods and MP3 players, smartphones, laptop computers, and video games, will remain a priority and
will continue to create unique opportunities for tech-oriented retailers.
Nielsen Offers Gen X, Y Tips
The Nielsen Company also recently offered tips for retailers seeking to market to Generations X and Y. Retailers seeking the business of consumers in these demographics should pursue the following strategies, according to Nielsen:
Generation X: Time is a precious commodity for these busy young families, so reduce deadline pressure by offering meal planning and deals, school supplies and little indulgences like lattes to make shopping less onerous. Child care activity centers or computer kiosks keep kids engaged while parents shop. In-store cooking or craft classes offer family fun and a reason to increase the trip count. More than 80% of X-ers are online checking out Facebook, MySpace and Twitter, shopping and price-checking online and texting or emailing friends. Deliver quick hit info and offers using new media for fast results.
Millennials: Consider upgrading piped-in music in stores to current hits to attract contemporary shoppers. Coffee stations with battery chargers and in-store WiFi let them kick back and review internet or mobile coupons and shopping lists. Convert their need for immediate gratification into impulse buy sales with enticing end caps and front-of-store bins. These visually-oriented shoppers will tweet and text about special deals real-time from the store aisles about what looks good today, where to meet up, and anything cool that catches their eye on site. If you’re lucky, you’ll hit a quirky Millennial sweet spot, and they’ll YouTube or Hulu a video of a helpful employee or unusual in-store promotion.