In Depth: The Future Consumers Every Brand Needs to Know About

Date:Friday, March 8, 2019
Author:Charlie Gilbert

15 min read

The consumer landscape is changing, fast. Why are millennials migrating from the city to the country? Why does Gen Z have so much spending power? How come Gen Alpha, aged between nought and nine, already has influencers? And what of the emerging cohorts united not by age, but by lifestyles and values?

One thing’s for sure: these consumer groups will affect your business and its bottom line. Speak to their emerging needs and you’ll reap the rewards; ignore them and risk falling behind. It is, in essence, that simple.

But before you can give these consumers what they want, you need to understand where they’re coming from, what they’re motivated by, and where they’re looking to brands for help. Oh, and who they actually are.

Who better to reveal this than four of our eagle-eyed experts, each of whom can be found on the frontline of consumer trend intelligence:

Marian Berelowitz – US senior editor
Emily Gordon-Smith – director of Consumer Product
Stephen Graves – acting senior editor, Consumer Attitudes & Technology
Elspeth Taylor – researcher, Consumer Attitudes & Technology

We’ll kick off with a generation that, for one reason or another, has been almost criminally overlooked.

The forgotten generation: who are Gen X?

People born between 1965 and 1979 account for more than 25% of consumption in the US, but they’re a group that, for one reason or another, has been largely forgotten. “A recent CBS News infographic said there were only four generations. It left Gen X off altogether,” Stephen says.

But why? Well, they’re bookended by millennials and boomers – two all-conquering generations that, according to Emily, aren’t really that different. “They’ve both lived through periods of wealth, and their expectations and aspirations are similar,” she explains. “Gen X are wedged in the middle, brought up in a different time.”

So how to look at a generation that others simply don’t see? “There are two ways,” Stephen adds. “Firstly, through their spending power, which is huge. And secondly, the influence they have over the generations either side of them. They’re the parents of Gen Z, their own parents are seniors, and they work with millennials and boomers – so consider them a nexus.”

The point about their spending power can’t really be underestimated. Gen Xers have more disposable income than millennials and, compared to boomers, are happier to get into debt. According to Bankrate, they also spend more money in bars, restaurants, and on vices like gambling, than any other demographic.

“They’re not really interested in saving; the money they have, they want to spend,” Emily says. “Only now are brands and retailers becoming aware that Gen X is woefully underserved – not just in terms of products, but how they’re spoken to. Gen Xers look very different, and behave very differently, to the previous generation of over 40s.”

It’s clear, then, that Gen X represent a missed opportunity. “From a brand perspective, it really is careless,” Elspeth says. “They might not be the biggest demographic, but Gen Xers are aged between 39 and 53. That’s a pretty substantial group; one that’s arguably in its financial prime.”

Gen Z spending power: how big is it?

From the forgotten generation to the generation on everybody’s lips. They’re spectacularly diverse, almost fanatically entrepreneurial, and they share virtually everything online. And now that they’re entering the workforce, they may soon usurp millennials in terms of influence.

This is in no small part down to their finances. “Compared to millennials, Gen Z has far more disposable income,” Emily says. “In the US it’s something like three times as much. Most of them are living at home, but their entrepreneurial spirit comes into it; a lot of Gen Zers are bringing in money in really interesting ways. And everything they’re bringing in, including their allowances, is disposable.”

Where does this entrepreneurial spirit come from? “It’s worth remembering that Gen Z’s formative years were during the financial crash,” Elspeth explains. “Because they’re constantly exposed to the idea of ‘poor millennials’, they’ve been aware of the importance of a secure financial future from a very young age.”

“Brands and retailers are keen to talk to this audience, but I’m not sure they’re mindful of how wealthy they actually are,” Emily adds. “A good starting point, perhaps, is appreciating that they value experiences over possessions; we’re noticing that Gen Zers are prioritising food over fashion, for example.

“Be mindful, also, of Gen Z shopping in unchartered and unmeasured ways; peer-to-peer shopping apps like Depop are huge now. The lesson here is that Gen Zers may be less interested in brands as status symbols; from a fashion perspective, they’re more interested in the Depop influencer who sells x amount of bundles of vintage 90s dead stock.”

Meet the millennials done with city life

Ask yourself this: are millennials who you think they are? They’re perceived as the back-to-the-city generation; a group that wants work life, home life and social life to exist in the same (urban) space. A recent study, published in the journal Regional Studies, backs this up by concluding that, of all the generations, millennials are happiest in cities.

The harsh reality, however, is that they can’t all afford to live there. In the US, in fact, over two-thirds of millennials – 67% – already live in suburban and rural areas. And while their environments are different to their city-dwelling counterparts, their overarching needs and motivations are broadly similar.

“Aside from being concerned by things like climate change and housing,” Stephen explains, “these post-urbanite millennials want to build networks of like-minded people to address the issues they’re facing, the problems they’re solving, and the best practices they’ve discovered – networks that already exist in cities.

“They also want to build and sustain links between the rural communities they’re moving to and urban communities – so there’s a real opportunity here to utilise millennials as the hubs of networks that connect underserved areas with more established urban networks.

“Their desire to create communities of like-minded rural natives, and to tap into the creativity being stifled by city living, are powerful drivers that are currently underserved by brands.”

Gen Alpha: the first generation of AI natives

They will, before long, be the generation that changes everything. Aged nought to nine, Gen Alpha kids are vastly different to the children of preceding generations. They’re playing with super-charged toys, reading stories that reject traditional narratives, and dressing in clothes that look beyond gender and ability.

And it’s not too early for them to carry real financial clout, as evidenced by the highest-earning YouTuber of 2018: seven-year-old Ryan ToysReview, who’s already grossed $22m (proof, also, that Gen Alpha already has influencers).

So, what are their defining characteristics? “They’re the first generation of AI natives,” says Elspeth. “Look at today’s under-fives; most of the things they’ll be interacting with will incorporate AI in some way. In the absence of social and behavioural learnings, this is one thing that, at this stage, we can confidently say will unite them.”

So too will the values they inherit from their (mostly) millennial parents. “This is why we’re seeing books like My Name is not Refugee and Good Night Stories for Rebel Girls,” Stephen says. “These are now key products for Gen Alpha.”

“Millennial mums and dads accept that the stories they grew up with have quite troubling messages,” Elspeth adds. “They’re looking for alternatives, and in this case progressive publishers are providing them.

“As they grow up, they’ll understand that there are people from different races, orientations and social backgrounds. It sounds simple, until you break it down. Take gender fluidity, for example. For my generation – young millennials – it’s a relatively new thing. My boyfriend’s sister, by contrast, is 17, and there are five non-binary people in her year at school. It’s normal.

“Society is becoming more inclusive, but every time a brand drives positive change there’s someone who isn’t quite included. So there is some way to go, and I think Gen Alpha, by virtue of being the most inclusive, diverse generation yet, will recognise this.”

Sustainability will be a key concern for today’s children. Unless older generations quickly get their act together, Gen Alpha will inherit an unmitigated climate catastrophe, where extreme heat, floods and drought are widespread, and where hundreds of millions of people live in poverty.

“Gen Alpha won’t just be AI natives,” Elspeth explains, “they’ll be sustainability natives. I’m still getting used to buying a coffee with a KeepCup, and not buying water bottles. These are learnt habits I need to get out of. Gen Alpha won’t have them in the first place.”

The Experimentals: smashing taboos, owning their pleasures

Some emerging audiences are defined not by their age, but their values or lifestyles. And few will be as important as The Experimentals: a cross-generational group unapologetically smashing long-held taboos and taking ownership of their myriad pleasures.

“It’s not about tearing down taboos for the sake of it, from an anti-establishment angle,” Marian explains. “It’s really experimenting or indulging in a conscious and mindful way. When you look at cannabis especially, it’s now seen more as a wellness tool than a vice. More people, especially women, are using cannabis for mind-body elevation, for example integrating it into meditation regimens or as arousal enhancers.”

Facilitating this are more discerning methods of cannabis consumption; the Experimentals don’t sit around smoking joints. “Cannabis products in commercialised markets are sophisticated in terms of branding, design, formulation, and being safety conscious,” Marian adds.

“They’re also easier to use; you can experiment by simply drinking a THC beverage. This means parents can conveniently indulge in a micro-dose – eating a mint, for instance – to help take the edge off a hectic household or be a bit more patient with their kids.

“A key takeaway is that many consumers are happy to be helped out of their comfort zone, but not too far out. And they want to be assured that it makes sense to do so. There’s an opportunity in the other direction for leading-edge consumers – to offer them rawer experiences beyond the mainstream.”

What about sexual taboos? “They’re not necessarily being busted,” Stephen says. “They’re being normalised to the point that they’re going mainstream, with Netflix shows like Sex Education and Big Mouth being cases in point.

Clearly, though, there’s some way to go. “At CES in January, a female pleasure device was stripped of the commendation it received because the event had a sudden attack of squeamishness. There was, understandably, a massive backlash against the decision.”

Boundary breakers: championing a new space age

Other emerging consumer groups’ sights are altogether more stellar in ambition. We refer to one such group as the Boundary Breakers and, as their name suggests, they want to break free of their planetary shackles and explore worlds beyond our own.

They’re the drivers of the new space age. And if that sounds far-fetched, consider this: by 2023, the space tourism market is projected to reach $1.27bn.

“For the first time in a generation or two,” Stephen explains, “people are excited about space travel. I mean, Elon Musk is loudly talking about flying passengers around the Moon within five to 10 years. We’re being taken back to the days of Apollo. Brands can exploit this fascination with the final frontier by tapping into consumers’ passions for big ideas that transcend the everyday.

“It will be fascinating to see how this develops. Where tech-savvy consumers may have once fixated on messianic figures – like Musk, or Mark Zuckerberg – now it’s the boundary-pushing science that’s really exciting. And it’s not just space travel, but developments like hypersonic jets and brain-computer interfaces.

“Ideas are being disconnected from individuals. Will some of them usurp the big power centres – the Facebooks and Googles of the world – and hand some kind of control back to the people, while at the same time exposing new opportunities for brands?

“The decentralised web – Web 3.0 – may be an example of this. Brands should consider what they could achieve by creating apps that take advantage of this new web architecture.”

Are brands already responding to these new consumers?

“When we’re talking to brands and retailers,” says Emily, “we’re seeing a real uptick in people looking at their strategies and trying to tap into other demographics. I was speaking to a global denim brand recently, and one of its key priorities is talking to demographics beyond millennials.”

“We’re already seeing brands tapping into the emerging Gen Alpha demographic – like Lego, which is bringing a physical dimension to the principles of coding with its Coding Express train set,” Stephen explains. “Gen Alpha’s parents are keen to teach kids the skills they’ll need to excel in the future – while maintaining a healthy distance from screens. Gen Alphas themselves don’t distinguish between virtual and physical play, having grown up around digital devices – so brands need to start thinking about how to bridge that gap now.”

What about Gen X? “Savvy brands have started making the most of its connections with other demographics – like luxury travel company Black Tomato,” Stephen adds. “It has launched a bespoke holiday service, Blink, which specialises in packages that accommodate a spectrum of ages within one trip. It combines luxury, which speaks to Gen X’s spending power, with a multi-generational element that makes the most of its connections with other demographics.”

We’ll end on the Experimentals, who appear to have really captured brands’ attention. “There was a lot of buzz in February when Barneys announced a cannabis-themed department in its Beverly Hills store,” Marian explains. “It’s not actually selling cannabis – the space will feature lifestyle goods and accessories – but it’s partnering with cannabis company Beboe, which will have representatives there discussing its strains of cannabis and how to buy them. So here you have a luxury retailer showcasing its own Experimentalist attitude and, in turn, potentially bringing new Experimentals into this arena.”

Get under the skin of this year’s emerging consumer cohorts in our 2019 Consumer Zodiac. Download yours here, no strings attached.

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