Studying generational trends is crucial in understanding the world’s consumer landscape. New research from the McKinsey Global Institute (MGI) finds certain groups of consumers are set to generate half of all global urban consumption growth from 2015 to 2030 – and the generations they are a part of might surprise you!
According to MCI’s research, until the turn of this century, population growth generated more than half of all global consumption. But between 2015 and 2030, three-quarters of global consumption growth will be driven by people spending more.
Two major groups that are driving this change? Baby Boomers and Gen Z and younger Millennials.
MGI predicts that the Baby Boomer generation will increase from 164 million in 2015 to 222 million in 2030! To give an idea of this generation’s dominance, the 60-plus age group will account for 60 percent of total urban consumption growth in Western Europe and Northeast Asia (Japan and South Korea).
Boomer consumers already spend more than younger people, largely because of how much they spend on healthcare. But in addition to that, in the United States, Boomers are expected to contribute more than 40 percent of consumption growth in housing, transport, and entertainment by 2030.
In fact, people over 50 bought nearly two-thirds of the new cars sold in the United States in 2011!
As for younger Millennials and Gen Z, MGI research finds that many younger consumers are under income pressure, may actually be poorer than the previous generation, and are more cost conscious. Some interesting aspects of this age group:
- They are more ethnically diverse. In the United States, for instance, the share of Hispanic young adults (aged 15 to 34) tripled from 7 percent in 1980 to 21 percent in 2012.
- Compared with older generations, young adults are 10 to 20 percentage points more likely to consider and use sharing-economy services for everything from accommodation to car rental to furnishings. This is especially true if these sharing services are licensed and have gone through background checks.
It will be fascinating to see the consumer trends this younger group sets into motion once they gain the purchasing power that their Baby Boomer predecessors already have. Once members of Gen Z begin graduating college and entering the workforce, and once Millennials start getting married, buying houses, cars, and starting families of their own will we be able to truly see these trends in action.
Until then, it will be crucial for businesses to pay special attention to their Baby Boomer and Gen Z customers.
Read the entire study on global consumers here!