We saw this seismic shift coming a generation away. Members of both the G.I. and Silent generations, those now ages 64 and older, led the way by reducing their own consumption of goods and services as they grew older. Their desires shifted as they reached age 50 and then 60: fewer material goods, more enriching experiences. Fast on their heels comes the largest, wealthiest and most important demographic group America has even seen. Boomers, raised in front of television sets, a target for marketers from age five upward, are now reaching 60 at the rate of one every eight seconds.
That's right. The generation that put the mass into consumption is now at the stage of life where people naturally shift focus from the material to the ethereal. What's fascinating (or worrisome, if you're in a retail or consumer-products business) is that the impact of this shift on America's consumption-driven economy is just beginning.
But wait, there's more: This shift away from spending by our largest demographic group coincides with a larger societal trend towards sustainability. Consumers of all ages are thinking more about the environmental impact of their purchase behavior and consumption patterns. In a national study we conducted among all adults last year, before the economic meltdown, 80% of all consumers told us they think or act in a "green," or in an environmentally responsible fashion. Green is mainstream, and here to stay.
One last ingredient to this perfect storm: the worst recession since the Great Depression. Put all three trends in a blender and the future for marketers is grim indeed. Mass consumption, the underpinning of the American economy since 1946, is dead, dead, dead.
The Reach of Responsible Consumerism
McKinsey recently advised companies to plan on Boomers ruling the economy until 2016, which is when the number of younger households will finally surpass Boomer households. We've long predicted that Boomers will spend time and money pursuing their own vitality as they pass through their remaining midlife years and reach old age. Now we believe this quest for vitality will operate with a new filter: frugality and responsibility.
The economy is already feeling the effects as individual Boomers curtail spending and place more emphasis on saving. The retail sector is already contracting, as are consumer products manufacturers. Sales tax receipts are tumbling, too, and governments are wrestling with revenue shortfalls and services will be curtailed. The global economy is suffering a wrenching restructuring -- Chinese manufacturers are experiencing mass layoffs -- as frugality and responsible consumerism take root across America.
Talk in recent weeks that the "stimulus" isn't working misses the broader point -- we're not going to return to a consumption economy. What's to come? An energy economy? A green economy? Or a global economy? We don't know. But we do know consumers have moved and smart marketers will need to get busy to determine the new destination.
By luck or brilliance, we think Wal-Mart will thrive in this Responsible Consumer future: The company's current tagline, "Live better, save more" almost captures the mindset completely -- which is more along the lines of "spend less, live smarter." For Boomers, we think the immediate priority will be to act frugally, in consumption and savings, and only then focus on being vital.
The future of consumerism won't be built on buying more but getting more out of what we buy. We think those marketers who figure out how to deliver modest prices and modest living will enjoy mega sales.