Common sense would suggest economic growth would go through 2 quite remarkable changes:
- Phase 1. Growth would accelerate, as the population became concentrated in the wealth creating 25 – 54 age group, and the need to spend money on dependent children reduced
- Growth would then move into SuperCycle mode as large numbers of women became able to re-enter the workforce after childbirth, and could demand major increases in their earnings relative to men
- Phase 2. Growth would steadily slow, as the number of wealth creators would begin to steadily reduce, with more and more men and women joining the New Old 55+ group
- This Phase would also see massive change in demand patterns, as the New Old represent a replacement economy. They bought most of their major items (housing, cars, furniture etc) when younger, and their incomes reduce as they enter retirement
Of course, this is not just a theoretical exercise. It is instead, as we describe in Boom, Gloom and the New Normal, exactly today’s situation. And the transition from Phase 1 to Phase 2 is well underway, having begun in 2001 when the first BabyBoomers (born globally between 1946 – 1970) entered the New Old generation. The Boomers are the largest generation in history, and the average Boomer (born 1958) joined the New Old last year.
Small wonder therefore that a new report from the UK’s leading consumer credit agency, Experian, suggests “The UK is undergoing unparalleled seismic demographic shifts”. And, of course, this scenario is not just confined to the UK. All Western nations, and many of the main emerging countries, are experiencing the same seismic shifts. This is truly a global earthquake: profound and long-lasting changes are inevitable as it takes place.
Another sign of these changes comes from EuroMonitor consumer research, captured in the chart above. As they discovered, consumers no longer define themselves by the size of their car, house or kitchen:
- Instead, their focus is value for money, less complex lifestyles
- They value family and friends, and small moments of indulgence
- Trust and carbon footprint are important to them
- And they want less hassle and more convenience in their daily lives
Change is always difficult within a corporate structure. But all the evidence suggests that companies who fail to reposition themselves for this New Normal are at risk of being swept away by the earthquake now underway.