What if you could accurately predict consumer trends and the demand for different products and services over the next 10 years? You would be in the right place at the right time offering the right product. You would be developing the right policies that resonated with the community even before the polls were taken.
At KPMG we understand these trends. We research these trends in order to better understand what might be driving consumer behaviour, over the next decade.
The first opportunity over the next 10 years, that I want to talk about, is in the 30 to 44 segment. This is the household formation stage of the lifecycle. This lot have kids, they take out loans, they buy consumer goods and services. If you look at the number of people added to the 30 to 44 segment of the lifecycle every year for the last 50 years, there has been steady growth, even predictable growth, of about 20,000 per year. And then in the late 1970s through to the 1990s that number increased to 100,000 per year.
This of course was the ‘Baby boomer’ generation, pushing into household formation. The demand for housing … suburbia blossomed … property values surged … there was even demand for new discount department stores out in the suburbs.
Fast forward a quarter of a century to the 2010s … and a new generation is spilling into the household formation stage of the lifecycle. This is ‘Generation Y’ the ‘echo boom’, the children of the ‘Baby boomers’ now moving into their own households over the next decade.
But ‘Generation Y’ being ‘Generation Y’ will do things differently to their parents. They will demand affordable housing … some will require an inner-city apartment; others will require a standard house on the suburban fringe. The common denominator here is the demand for consumer goods and household products and services that should surge as ‘Generation Y’ move into this stage of the lifecycle.
And then there’s the issue of the financing of all this … perhaps there’s a market for a ‘Gen Y’ mortgage product that draws support from the ‘bank of Mum and Dad’.
So where else are the demographic opportunities over the next 10 years?
The 5 to 17 segment, the ‘School age’ population is set to surge over the next decade. In the year to 2021, the number of people added to this segment is 80,000; in that single year alone. This will drive the demand for government education services and skills training. It will also underpin demand for fashion, fast food, music, even technology – especially phones.
The last time there was a surge in the ‘School age’ population was in the late 1950s and early 1960s when the ‘Baby boomers’ poured into this stage of the lifecycle. Youth culture flourished in the late 1960s as a consequence. By the 1970s and the 1980s, growth in this segment subsided and in some years the ‘School age’ population actually contracted.
Business had moved elsewhere … the market opportunities had shifted and the market segments began to shift.
Now let’s talk about the ageing of the population – which will create both challenges and opportunities over the next decade.
Over the last 60 years the number of Australians aged 70 something has never increased by any more than 20,000 in a single year. But in the 2014 year alone, this increase will not be 20,000 – it will be 60,000 – and within 3 years it will be 80,000. Tax rates … the delivery of healthcare services … retirement services … over the last 6 decades, has been based on the logic of around 20,000 extra people per year presenting to this stage in the lifecycle.
Over the next 10 years – this equation must shift. There’ll be demand for more aged pensions … for more health care cards and for a greater delivery of health care and medical technology and services.
These are the challenges and the opportunities for the next 10 years.
Looking at demographic data from a high altitude and over the long term, provides real insight into the rise and fall of consumer trends and social behaviour. Getting it right in business is all about being in the right place at the right time with the right product.
The next decade, must be shaped, by business opportunity and by government policy that is designed to meet the needs of Australia’s growing population.