The G7 countries (Canada, France, Germany, Italy, Japan, UK, USA) account for nearly 50% of global GDP. Today, however, their populations are ageing rapidly.
As consultants AT Kearney (ATK) note in a report on consumer spending patterns:
• The G7 now has more people over the age of 55 than under 15 years
• Global births peaked at 90m in 1989, but were only 73m in 2010
By 2030, the world will therefore have an equal number of people in the New Old 55+ and under-15 cohorts.
This represents a really major shift in consumer buying patterns, as we discuss in chapter 7 of ‘Boom, Gloom and the New Normal’.
Most companies have failed to realise that the New Old 55+ generation are a key growth area for the future. Too many still focus on youth markets, where numbers are declining.
Unsurprisingly, therefore, retail sales have already slowed in most of the developed world.
The ATK chart highlights the importance of the change now underway. It shows the share of income for the over-60′s in 2005, and projected numbers for 2020. Most are rapidly increasing:
• Brazil goes from 10% to 15%, whilst China goes from 11% to 17%
• France goes from 25% to 32%; Germany from 27% to 30%
• Japan goes from 26.2% to 31%; Russia from 18% to 27%
• UK goes from 23% to 29%; USA from 16% to 24%
Countries such as India, Indonesia and S Africa are the exceptions. Their young populations can still support traditional consumer marketing aimed at the 25 – 54 age group.
The issue is very simple. Demographics drive demand:
• Life expectancy in the West was just 66 years as recently as 1950
• Today, it is over 80 years in many countries
• Effectively, therefore, 80 is now the new 60
Sadly, most companies continue to focus on the markets of the past, which have gone ex-growth.
But this is very good news for those who do choose to focus on the growth markets of the future. They will have grateful customers, and very little competition.