Study: The consumer is changing, but not how you think
Consumer fundamentals don’t change, but their environment does.
According to a new study from Deloitte, increased diversity in the U.S. population is having a significant impact on consumer behavior. Millennials, now representing 30% of the population, are the most diverse generational cohort in U.S. history, with roughly 44% consisting of ethnic and racial minorities. In comparison, only 25% of baby boomers belong to ethnic and racial minorities.
The current racial makeup of the United States (and the consumer) is barely 50% white and the number is likely to continue shrinking. The non-Hispanic white population is projected to drop from 199 million in 2020 to 179 million in 2060 — a decline of 10% — even as the U.S. population continues to grow.
As the population becomes more diverse, different ethnic groups show disparate median household incomes. Asians lead the four major U.S. ethnic groups with median household income of $81,000, followed by whites with $68,000, Latinos with $50,000 and blacks with $40,000. This disparity requires retailers to meet a broad and varied set of consumer demands and needs.
In addition, consumers of all ethnicities and incomes are seeing substantial increases in non-discretionary expenditures. Between 2007 and 2017, education costs rose 65%, while food costs increased 26% and health care prices jumped 21%. Other non-discretionary spending areas seeing significant growth in that time period included housing (16%) and transportation (11%).
Deloitte also collected some specific data showing millennial consumers under age 35 face some unique fiscal challenges:
• Since 1996, the net worth of consumers under the age of 35 has fallen by 34%.
• Between 2007 and 2017, the percentage of homeowners under age 35 fell 4%.
• Between 2007 and 2017, the median age of homeowners under age 35 rose 1%.
Furthermore, since 2005, total retail spending in the U.S. has risen by about 13% to around $3 trillion annually. In 2017, retail spending grew 2.3%. However, per capita retail spending remained flat for the most part of the period, which Deloitte analysis indicates as meaning that population growth, rather than greater spending per person, was the primary driver of the increase in spending.
No comments found