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Until recently, Baby Boomers have largely driven the consumption demand across the country, but that has started to change.
As Baby Boomers approach retirement age, they are shifting their consumption habits for a variety of reasons. Here are a few possible explanations:
- Limited income: Retirement often means living on a fixed income, which may be significantly lower than their pre-retirement salary. This may lead Baby Boomers to become more mindful of their spending habits, prioritizing necessities over discretionary spending.
- Health concerns: As people age, their health becomes a more significant concern. This may lead Baby Boomers to shift their spending towards healthcare expenses, such as doctor visits, medication, and health insurance premiums.
- Lifestyle changes: Retirement may provide more free time to pursue hobbies and interests. This could lead Baby Boomers to shift their spending towards leisure activities, travel, or other pursuits that they previously didn’t have time for.
- Downsizing: As Baby Boomers age, they may find that they no longer need as much space or as many possessions. This could lead to downsizing, selling or donating items, and spending less on housing, furnishings, and other material goods.
If not Boomers, then who?
The rising cost of assets, particularly real estate, has made it increasingly difficult for younger generations to achieve the traditional American dream of owning a home. Bloomberg wrote an opinion piece titled America Should Become a Nation of Renters.
As a result, many younger people are shifting their priorities and spending their disposable income on experiences and name brands instead of trying to save up for a home. For example, they may choose to take vacations or attend music festivals, rather than putting money towards a down payment on a home. Additionally, they may choose to purchase high-end clothing or other luxury items, rather than saving for a home.
There are a few reasons why younger generations are making this shift in priorities. First, the high cost of assets has made it feel like a more distant and unattainable goal, which can be demotivating. Additionally, many younger people place a higher value on experiences and self-expression than they do on owning a home. They may feel that owning a home is a traditional marker of success that doesn’t align with their personal values and goals.
Finally, the rise of social media and other digital platforms has also played a role in this shift. Social media platforms have made it easier for younger generations to showcase their experiences and purchases, which may motivate them to prioritize these things over more traditional markers of success.
Go Where the Money is
As more Baby Boomers enter retirement and begin to pull back on their spending, businesses will need to shift their focus towards attracting younger customers in order to stay competitive. This is because the overall pool of disposable income will be shrinking as Boomers reduce their spending, which means that businesses will need to work harder to attract a larger share of a smaller pie.
To attract younger customers, businesses will need to focus on creating products and services that resonate with younger generations. This may involve incorporating technology into their offerings, creating more personalized experiences, or placing a greater emphasis on sustainability and social responsibility.
Additionally, businesses will need to be more proactive in reaching out to younger customers and building relationships with them. This may involve leveraging social media and other digital platforms to engage with younger audiences, creating targeted marketing campaigns, or offering loyalty programs and other incentives.
