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The group of young people coming up behind the baby boomers will spend plenty in the years ahead, so get ready for some major marketing opportunities. Generation Xers, as they are known, now between the ages of 22 and 35, are staying single longer and earning good salaries, so they're a big part of the consumer market.
In sheer numbers, they don't come close to the baby boomers...52 million compared with 77 million...but on a per-person basis they can be a gold mine.
Gen Xers have considerable discretionary income in part because they are delaying marriage and childbirth at a higher rate than their parents did. Of today's 25-29-year-old males, just over 50% have never married, compared with 33% in 1980. For females in that age range, 39% have never married, compared with 21% in 1980. Also, many Gen Xers will live with their parents for a period after reaching adulthood...43% of 20-24-year-olds and 16% of 25-29-year-olds. So they'll pay less rent and spend more on apparel, entertainment, automobiles, travel and personal goods.
The oldest of the Gen Xers are settling down. When they marry, roughly one-third will buck tradition and pay for the wedding themselves. That's good news for wedding-related businesses, such as jewelers, bridal shops and caterers, because many of today's couples waited until they commanded good salaries before getting married. They'll be able to afford better of everything. And many will turn to the Internet for wedding planning. Two popular sites are WeddingChannel.com and The Knot.
Spending Money on Leisure, Travel
Because so many of this age group are delaying family formation to get better educated or to work in this strong economy, they're spending money on themselves. Take meals, for example: Gen Xers are big on dining out. And they want action. Live music and open-display cooking are more to their tastes. They are likely to seek out new foods too, menus with an ethnic, organic or vegetarian twist.
Pleasure travel is another pastime of Gen Xers. When they take trips, they opt for less-traditional sightseeing destinations, and they take in lots of nightlife. They also tend not to use travel agents but prefer do-it-yourself arrangements. However, as more women travel alone, they will gravitate toward prearranged tours on which they can be independent but have the security of a group. REI Adventures, a travel service affiliated with the outdoor-gear stores, has noted an uptick in the past few years in single women signing up for bike trips, canoe trips, etc.
Retailers selling to this age group will find many opportunities when it comes to recreation. Gen Xers will participate in adult sports leagues at a higher rate than boomers do, which bodes well for athletic apparel and equipment. Gen X women represent the groundbreaking market: They participate in sports more than young women from earlier generations did.
The group that invented "extreme sports" will gravitate to less risky activities as it gets older. Their level of intensity will drop, but Xers will stay very active. As Mike May of the Sporting Goods Manufacturers Association notes, "The 32-year-old is typically not as supple as he used to be and is less adventurous." While for boomers that might have meant touch football instead of tackle, for Xers it will mean paintball instead of aggressive in-line skating.
As for games, the Interactive Digital Software Association (IDSA), a trade group for the video game industry, also reports big sales of video games to young adults. Research done for IDSA by NPD Group indicates that those purchasing games for Sega, Sony and Nintendo systems are primarily age 18-35. Half of all buyers of Lego Mindstorms, robotic Legos programmed from a personal computer, are men over 18.
Greater Brand Consciousness
As Gen Xers age, they'll become brand-conscious in buying clothes. David Wolfe, director of fashion and forecasting for Donegar Group, notes that a few years ago this age group was the "thrift shop generation." But they're making good money now, so high-end brands will make a big splash. Gen Xers will embrace Gucci, Yves Saint Laurent and Kate Spade. "They love J. Crew, Banana Republic, Bebe, and they've made [makeup companies] Trish McEvoy and Bobbi Brown," says Cynthia Cohen of Strategic Mindshares.
But that doesn't make brand advertising easy. "They have heavy cynicism toward responding to advertising, even as they buy up Calvin Kleins," notes Cohen. "They don't like to have the image of conspicuous consumption of the '80s." Consequently, Gen X women don't dress head to toe in one brand as much as their mothers did. They'll go for hot products and have multiple personas, making them a tough market for brands looking for repeat sales.
Among Gen Xers there are degrees of this intense consumerism. The older the Xers, the less susceptible they are. That's in large part because of their place at the tail end of the baby-boom generation: It was hard for them to get jobs and advance at first because the pipeline ahead of them was clogged. In addition, they were leaving school and entering the workforce a decade or so ago when the country was experiencing an economic slowdown. Meanwhile, those at the younger end of the generation are coming of age during boom times and have a very different outlook.
Big-Ticket Items: Houses and Cars
The Gen Xers' delay in settling down means a delay as well in buying homes. However, the good news for builders is that when Gen Xers do buy, they're don't skimp. According to a Chicago Title Corp. homebuyers' survey, a first-time buyer today is 32 years old as opposed to 28 in 1976. "They will buy bigger, not smaller homes," says Gopal Ahluwalia of the National Association of Home Builders.
And Gen X buyers will drive an explosion in home technology in the next few years. They'll want refrigerators that tell them when the milk is gone, microwaves that will call up recipes from the Internet, high-speed wiring, multiple telephone lines and more. As for furnishings, take a look at what retailer Crate & Barrel is doing: The company, known for marketing housewares to boomers, just opened a new store called CB2 that focuses on Gen X. CB2 specializes in furniture, especially home office pieces and products for organizing, such as CD holders.
Carmakers, meanwhile, will want to rethink minivans in the years ahead. Boomers embraced them because they weren't the same old station wagons driven by their parents, and now Gen X will have the same attitude toward boomer preferences. They'll want something different. Gen Xers are going for sport-utility vehicles (SUVs) with fancy features and trimmings. As Gen Xers start having children, carmakers that merge adventure cars, such as SUVs, with family cars will do well.
Gen Xers in the Workplace
Employers will discover that Gen Xers are good with technology, creative and independent, but also work well in groups. They are comfortable with the fast pace of change that is so much a part of today's business world. They're quick to grasp software and are terrific at multitasking. Although they are casual and friendly, they also demand a sense of freedom and are not intimidated by authority.
Offering benefits to Gen Xers will be a challenge for employers. This age group won't tend to stay with one company for an extended period of time, so pension plans and other such perks aren't for them. They do, however, want a life outside work, so they will respond well to the employer that offers flexible scheduling and has a range of benefits to choose from that fit their lifestyle.
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