Deloitte Changing Consumer Report: Yes, Consumers Are Changing, Perhaps Not How You Think has been added to Bookmarks.
Deloitte Changing Consumer Report: Yes, Consumers Are Changing, Perhaps Not How You Think
New York, May 30, 2019
- Despite what is often characterized as changing preference and behaviors driven by a fundamentally different, technology-driven consumer, what this study found is that today’s consumer in many ways isn’t all that different. What is often overlooked, but a clear driver of changing consumer behavior is a consumer who is under greater financial pressures compared to the consumer of 30 years ago; this situation is particularly evident with low-income, middle-income and millennial consumers.
- While it’s typically thought that millennials are breaking the mold in terms of spending habits, this research found that members of this generation are spending the same percentage of their income on categories as similar age cohorts did in the past. What’s interesting to point out, however, is that since 1996, the net worth of consumers under the age of 35 has fallen by 34%.
- The consumer base is now more diverse and heterogeneous, leading to a broader consumer base with varied sets of demands and needs.
Why does it matter to retailers and consumer products companies?
Over the past year, Deloitte’s Center for Consumer Insights surveyed more than 4,000 consumers to gain insights into their behaviors and underlying attributes. Researchers also analyzed government and spending data, as well as spoke with leaders in the consumer industry to gain insights into the current state of the consumer. The study highlights new pockets of opportunity for retailers; demonstrates the importance of understanding the consumer’s changing demographic, economic and geographic specifics; and underscores the changing competitive landscape.
The changing consumer
Gone are the days of the “average consumer.” More diversity in areas such as race, education, income and rural-urban residence has led to increased fragmentation and distinct subsets of consumers with varied needs. Reduced barriers to entry have resulted in an abundance of new niche retailers and products that provide access to extensive and more competitive options. However, how people choose to spend their money is not all that different from 10, or even 30, years ago. Instead, it’s the economic, demographic and cultural factors around them that are creating the nuances that are turning traditional retail and consumer products sectors on their heads.
Share of wallet
Examining consumer data over a 30-year period, results show relatively consistent spending patterns across most categories. Food, alcohol, furniture, food away from home, and housing all constitute roughly the same percentage of the consumer’s wallet today as they did three decades ago. Even entertainment, a category where one might expect to see an increase in experience-driven spending, was basically flat. The real differences show up in several nondiscretionary expenses, such as health care.
The millennial consumer
Millennials are financially worse off than their predecessors, with a 34% decrease in their net worth since 1996. And the rise in the education level of millennials hasn’t come cheap; since 2004, the cost of student debt has soared by 160%. A growing share of the millennial’s wallet is going toward health care, housing and education. Thus, it’s not so much a change in the consumer, but rather a change in the economic pressures that the young consumer is under. Simply typecasting the millennial as being different overlooks a much bigger factor — that of their economic constraints.
Deloitte’s findings debunked many conventional wisdoms about the new-age consumer. In many ways, the consumer hasn’t fundamentally changed. Instead, their behaviors have been triggered by a rise in nondiscretionary expenses and the growing bifurcation between high and low income groups.