Watch out for a new brand of consumer in 2008: the Middle-aged Simplifier
According to John Quelch, a non-executive director of WPP Group plc, the world’s second largest marketing services company, they spent the boom years accumulating status symbols. “As [those at the top] grew richer,” Quelch reports, “pressure increased on those below to trade up. And, as they traded up, pressure increased in turn on the well-off to buy even more—the second home, the big screen TV and the latest sport-utility vehicle.”
- I have more than I need.
- I’m embarrassed by my gas-guzzling Range Rover.
- I no longer feel the need to impress others with possessions.
- I want meaningful experiences, not more stuff.
“Tomorrow’s consumer will buy more ephemeral, less cluttering stuff: fleeting, but expensive, experiences, not heavy goods for the home,” says Quelch.
So where do the the Gen Xs and Ys fit into this new mantra? These generations form the backbone of our workforce and are major consumers. How is the current economy affecting them? Although this survey was conducted in January 2008 you can see the concern is palpable.
Just as a reminder the Gen X generations is usually defined as those born between 1968 and 1979 and the Gen Y generation are those born between 1980 and 1988.
A study* from the American Savings Education Council (ASEC) and AARP surveying 1,752 individuals ages 19 to 39 years old, shows that 91% of young adults report having financial goals for themselves, only 53% report sticking to a monthly budget. And while 62% have given at least some thought to their own retirement, 61% feel their retirement savings is behind schedule. 42% of these young adults give themselves a grade of D or F to describe how well they are saving.
Are they saving for retirement?
In total, nearly four in ten members of these younger generations report that they or their spouse have personally saved money for retirement, not including Social Security taxes or employer-provided money (38%). Gen Xers (45%) are far more likely than Gen Yers (27%) to have started saving for retirement.
Are they financially independent?
57% of the respondents describe themselves as “financially independent.” While 62% of the Gen Y’rs (ages 19 to 27) and 54% of Gen X’rs (28-39) feel financially independent, Gen Y’rs (45%) are significantly more likely than Gen Xers (25%) to say that they have received financial support from family or friends in the past year. Apparently, concludes the report, that at different stages of life, being financially independent has different definitions.
Are they carrying debt?
Four out of five young adults report having some type of non-mortgage debt. This includes 63% with credit card debt, 48% with car loans, 31% with student loans, and 27% with medical debt. However, more than three out of five describe their debt obligation as either a minor problem or not a problem at all.
According to Quelch “This growing segment of Simplifiers presents a challenge to marketers. These are well-off people who value quality over quantity and do not buy proportionately more goods as their net worth increases. Their increasing reluctance to consume will dampen expected demand growth in developed economies further and therefore slow economic recovery, requiring consumer-goods multinationals to further focus their efforts on emerging markets where stuff will still be king.”
*The online survey of 1,752 Americans ages 19-39 was fielded in January 2008. The data were weighted by age, sex, education and race. For more information, contact Colette Thayer at (202) 434-6294.
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