Consumers are changing – or not – in ways that retailers may not understand
For all the talk about the changing consumer shopping and buying behavior, it turns out that Millennials and other consumers aren’t all that much different than past generations. They just don’t have as much disposable income, according to a new report by Deloitte.
According to the research, which included a survey of more than 4,000 consumers as well as an analysis of government and spending data, the net worth of consumers under the age of 35 has fallen by 34 percent since 1996. The cost of student debt today is 160 percent higher than it was in 2004. Deloitte found that while consumer spending at retail has increased about 13 percent since 2005, per capita spending has remained flat for much of that time. In short, retail sales gains are largely due to a growing population.
When it comes to purchases, these consumers are essentially spending the same percentage on discretionary and non-discretionary categories — alcohol, entertainment, food (at-home and outside) and housing — as previous generations.
Even as similarities between today’s consumers with older generations is made clear in Deloitte’s research, the once popular brand testing question — “Will it play in Peoria?” — no longer holds the same relevance as way back when. The reason is the growing diversity in the U.S. population. While race is part of the equation, diversity also speaks to differences based on education, income and whether individuals live in an urban, suburban or rural environment. These “economic, demographic and cultural factors,” according to Deloitte, “are turning traditional retail and consumer products sectors on their heads.”
So where have spending changes taken place?
One significant area of change is healthcare where consumers today are spending more than in the past. Part of this is due to two facts: consumers are living longer than in the past, even though simultaneously being less healthy at the same time. The research points to life expectancy rates, which have risen by an average of 2.5 years, while the percentage of overweight and obese people has jumped from 22 percent in 1994 to 42 percent today.
Two other categories — clothing and mobile communications — point to other changes in spending by American consumers. The percentage of spending on apparel has fallen from five percent in 1987 to two percent at present. Spending on mobile device and call/data plans is an expense that has largely grown over the past decade with the popularity of smartphones.
- The consumer is changing, but perhaps not how you think – Deloitte Insights
- Deloitte Changing Consumer Report: Yes, consumers are changing, perhaps not how you think – Deloitte/PRNewswire
DISCUSSION QUESTIONS: What do you see as the most significant changes in consumer behavior over the past 10 to 20 years in the U.S.? What recent or coming changes in consumer behavior do you think are most likely to affect retailers over the next decade?