How the Modern Consumer is Different

There is a prevailing wisdom that says the stereotypical American consumer can be defined by certain characteristics.

Based on what popular culture tells us, as well as years of experiences and data, we all have an idea of what the average consumer might look for in a house, car, restaurant, or shopping center.

But as circumstances change, so do consumer tastes – and according to a recent report by Deloitte, the modern consumer is becoming increasingly distinct from those of years past. For us to truly understand how these changes will affect the marketplace and our investments, we need to rethink and update our image of the modern consumer.

A Changing Consumer Base

In their analysis, Deloitte leans heavily on big picture demographic and economic factors to help in summarizing the three major ways in which consumers are changing.

Here are three ways the new consumer is different than in years past:

1. Increasingly Diverse
In terms of ethnicity, the Baby Boomers are 75% white, while the Millennial generation is 56% white. This diversity also transfers to other areas as well, such as sexual and gender identities.

Not surprisingly, future generations are expected to be even more heterogeneous – Gen Z, for example, identifies as being 49% non-white.

2. Under Greater Financial Pressure
Today’s consumers are more educated than ever before, but it’s come at a stiff price. In fact, the cost of education has increased by 65% between 2007 and 2017, and this has translated to a record-setting $1.5 trillion in student loans on the books.

Other costs have mounted as well, leaving the bottom 80% of consumers with effectively no increase in discretionary income over the last decade. To make matters worse, if you single out just the bottom 40% of earners, they actually have less discretionary income to spend than they did back in 2007.

3. Delaying Key Life Milestones
Getting married, having children, and buying a house all have one major thing in common: they can be expensive.

The average person under 35 years old has a 34% lower net worth than they would have had in the 1990s, making it harder to tackle typical adult milestones. In fact, the average couple today is marrying eight years later than they did in 1965, while the U.S. birthrate is at its lowest point in three decades. Meanwhile, homeownership for those aged 24-32 has dropped by 9% since 2005.

A New Landscape for Business?

The modern consumer base is more diverse, but also must deal with increased financial pressures and a delayed start in achieving traditional milestones of adulthood. These demographic and economic factors ultimately have a ripple effect down to businesses and investors.

How do these big picture changes impact your business or investments?

How Different Generations Approach Work

View the full-size version of the infographic by clicking here

The first representatives of Generation Z have started to trickle into the workplace – and like generations before them, they are bringing a different perspective to things.

Did you know that there are now up to five generations now working under any given roof, ranging all the way from the Silent Generation (born Pre-WWII) to the aforementioned Gen Z?

Let’s see how these generational groups differ in their approaches to communication, career priorities, and company loyalty.

Generational Differences at Work

Today’s infographic comes to us from Raconteur, and it breaks down some key differences in how generational groups are thinking about the workplace.

Let’s dive deeper into the data for each category.

Communication

How people prefer to communicate is one major and obvious difference that manifests itself between generations.

While many in older generations have dabbled in new technologies and trends around communications, it’s less likely that they will internalize those methods as habits. Meanwhile, for younger folks, these newer methods (chat, texting, etc.) are what they grew up with.

Top three communication methods by generation:

• Baby Boomers:
  40% of communication is in person, 35% by email, and 13% by phone
• Gen X:
  34% of communication is in person, 34% by email, and 13% by phone
• Millennials:
  33% of communication is by email, 31% is in person, and 12% by chat
• Gen Z:
  31% of communication is by chat, 26% is in person, and 16% by emails

Motivators

Meanwhile, the generations are divided on what motivates them in the workplace. Boomers place health insurance as an important decision factor, while younger groups view salary and pursuing a passion as being key elements to a successful career.

Three most important work motivators by generation (in order):

• Baby Boomers:
  Health insurance, a boss worthy of respect, and salary
• Gen X:
  Salary, job security, and job challenges/excitement
• Millennials:
  Salary, job challenges/excitement, and ability to pursue passion
• Gen Z:
  Salary, ability to pursue passion, and job security

Loyalty

Finally, generational groups have varying perspectives on how long they would be willing to stay in any one role.

• Baby Boomers: 8 years
• Gen X: 7 years
• Millennials: 5 years
• Gen Z: 3 years

Given the above differences, employers will have to think clearly about how to attract and retain talent across a wide scope of generations. Further, employers will have to learn what motivates each group, as well as what makes them each feel the most comfortable in the workplace.