Ok, time’s up: what’s your answer? Which generation is the largest consumer group in the US? If you said Millennials, you’re partly right, but it’s actually a little more complicated than that. What do we mean? Well, Millennials have overtaken Baby Boomers as the largest generation (in US history!), but that doesn’t necessarily mean that they’re always outspending Baby Boomers. We’ve found some interesting information that suggests you shouldn’t put all of your efforts into catering to the younger generations just yet, because it doesn’t look like Baby Boomers will be slowing down as consumers anytime soon.
Why Boomers Are Still the Big Spenders
So if there are so many Millennials, why is it that Boomers are such a big-spending class of consumers? Well, the so-called “silver economy” is booming (no pun intended) for a few reasons:
- Seniors are rapidly growing in number – It’s true that Millennials have finally replaced Boomers as the largest generation in American history, but the number of older adults in the US – and the world – is still growing at an incredible pace. Think about this: there are currently 750 million seniors in the world, and that figure will cross the 1 billion mark by 2030; not only that, but the number of seniors is growing by 3.2% every year (compared to 0.8 percent of the whole population). In the US alone, the number of seniors has shot up by well over 10 million in the last few years.
And get this: economists predict that the consumer class in the world (defined as everyone spending at least $11 a day) will jump from 3.9 billion in 2020 to 5.6 billion by 2030, with each age group contributing an average of 41% to this increase – except for the senior group, whose representation in the consumer class is expected to surge by 66%!
- Seniors have more money – Yes, we often hear about struggling seniors, but on the whole, the older generations tend to be wealthier than the younger ones. 76% of them are still in the spending class, compared to 66% of the population as a whole. Not only that, but they are working much longer than they used to, and putting off retirement while also making sure they have money for things like travel and discretionary treats.
Current Spending Vs Long-Term Loyalty
All of the above means that, according to Visa, “consumers over 50 now account for more than half of all U.S. spending.” And: “While the share of spending among younger consumers is expected to decline over the next 10 years, older boomers should gradually spend more, with those aged 60+ reaching a 33% share of aggregate spending by 2025.”
So, although Millennials and Gen Z have enormous potential as customers both because of their current spending and their ability to be loyal in the long-term, Baby Boomers, again, are just more likely to be spending now. And not just because they’re retired and have fewer responsibilities, or that they’ve had time to build up wealth, as we’ve already pointed out – but also because they are actually more likely to have stable jobs.
Even before the pandemic, the last 5 or so years have seen very slow growth in the labor force in most segments of the population. In fact, workforce participation has been declining, dropping from 67% a few decades ago all the way down to 62.2% in 2022. But you know who hasn’t seen this decline? People over 50: the only age group showing growth in labor force participation is people aged 60 and older.
Why might this be? There are any number of reasons, including insufficient skills, the number of people attending college, etc – but one of the major factors is the lack of parental leave and affordable childcare for younger workers. That means younger women especially are having trouble staying in the workforce, while older women are at over 64% participation now, compared to just 59% in 2012.
So we’ll say it again: as tempting as it is these days to spend your time aggressively marketing to the younger folks, you simply can’t ignore the “silver economy.” People aged 50, 60, or even 70 and older are out there, shopping (especially online), and, unless your product or service is very narrowly focused on a younger demographic, it would be unwise to ignore or alienate them.
Today’s Consumer Demographics: Who to Target
With all of that being said, let’s broaden our scope now and talk a little bit about the most important demographics to target in the 2020s. Why? Because, as we have pointed out, younger generations are also extremely important, especially since they’ll be customers for longer. So, again, unless you have a very specific demographic that you cater to, you should be thinking about how to reach the following groups:
1. “The Free Bird”
This segment includes some of the Boomers we’ve been talking about: the ones that are retired (or have more flexibility), have saved up, have few responsibilities, and are looking to spend on new experiences. Remember, this group is living the “60 is the new 40” lifestyle, and are generally healthier, living longer, more tech savvy, and more desirous of staying connected with friends and loved ones, so the biggest mistake you can make is marketing to them as if they’re “old people.”
2. Millennial Parents
Yup, Millennials are parents now! Where did the time go? Seems like they were just the ones coming up with MySpace and now they’re raising a whole new generation! And they take that responsibility very seriously, but also, on the other hand, don’t want to take themselves too seriously as parents. That means recognizing that their children are their world, as well as emphasizing the good your business does for the world (whether philanthropically or for the environment), while keeping your marketing lighthearted and fun.
3. “Health-Curious Millennials”
There are a whole lot of Millennials out there who are into the idea of getting healthier and living well, but aren’t quite sure yet of the path that’s right for them. That means they’re doing a lot of exploring, so brands that can be a partner in their quest for self-improvement will be able to influence their decision-making and gain loyal customers.
4. “The New Independent”
Did you know that single people now make up a majority of the adult population? And we would argue that brands don’t often get it right when it comes to marketing to them – and these “new independent” consumers pick up on that. These are people who are socially active but not ready to settle down, and have money to spend on things they want. If you can show that you understand their lifestyle, you could end up with a large and loyal group of customers. Remember, too, that this group could be young or older, as we’ve already pointed out!
5. Gen Z “Screenagers”
You knew they had to make an appearance on this list: the up-and-coming Gen Zers, stereotypically glued to their screens and living through social media. They’re starting to gain financial independence (yikes!), and since they go online for everything, you’ll have to be there to meet them. With that being said, though, while they do most of their research online, many of them prefer to actually shop in person once they’re ready, so you have to be flexible when dealing with them. In addition, like Millennial parents, they appreciate brands that align with their values (charitable, environmental, etc), and also want businesses to understand their emotional needs.
Truly knowing your customers can seem like a daunting task, but you’ve got to start somewhere, right? The first thing to understand is who is out there shopping, so you’re not making a mistake in your marketing from the get-go. You certainly can’t ignore whole segments of the population, for example, especially if they’re the ones doing a big chunk of the spending. So consider the info we’ve given above, and think about who you might be forgetting in your marketing – and let us know who your biggest spenders are!
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