Customer of the future
October 2, 2019
On the 3rd of September, we rose (very) early to attend a breakfast session by The Demographics group on the Customer of the Future.
The session was led by the Managing Director of The Demographics Group, Bernard Salt, one of Australia’s most sought-after social commentators and Director of Research, Simon Kuestenmacher.
Bernard and Simon draw on big-picture datasets to offer interpretations of how the our society is changing, and the impact these trends are likely to have over the next 5 to 10 years.
So what did we learn? That “pillowfication” is our new favourite word, and that tea is likely to make a comeback.
But we learnt a few more things too.
1) Australia is one of the richest and most dynamic consumer markets, and continued population growth will ensure a healthy decade ahead for most industries.
Australia is one of the richest countries per capita, and it is continuing to grow. Perhaps at a lower rate than other regions in Africa and Asia, but it is seen as a safer, more stable investment environment, thereby presenting itself as a considerable and worthy market. We should expect a continuous capita flow into Australia based on demographics alone over the next decade.
2) Teenagers, ageing millennials and life-stylers are emerging customer segments with the most opportunity
The traditional lifecycle and transitions has evolved and presents new opportunities for brands and marketers.
Adolescence is extending into earning years (beyond 30 years old). Which means there is a growing group of consumers with more income to spend, and no or little responsibility. A marketer’s dream.
Ageing millennials also present a new opportunity: they are now coming of age, moving up in their careers, and likely entering a phase of high spending with new homes and families to splurge on. They are also currently known for relatively frivolous spending (as Bernard reminded us through the avocado on toast vs house deposit debate), so it will be interesting to see if this tendency evolves as they (finally) enter true adulthood.
Later on in life, life-stylers also come into play as a relatively recent, and very attractive group: wealthy boomers in their mid 50s to mid 60s, who have both time and money, and are anchored in the belief that they deserve to treat themselves after working hard up until now.
Source: BBC News
3) The hollowing of middle class Australia creates an opportunity for repackaging products and services to the higher and lower ends of the market.
The number of jobs created in middle skill industries has been decreasing, and is significantly lower compared to the number of jobs created in high or low skill industries. This has important consequences for the size of consumer groups in these jobs: high income and low income earners will grow, while the middle class hollows out. This has implications for product offering, where the value end of the market and the higher end of the market are likely to thrive more than the mainstream.
4) There has been an important shift in values across generations that should be examined carefully when marketing to different groups of Australian consumers
When we think about what will impact customer behaviour in the next 10 years, we need to look into the values that will guide future consumers’ choices. Our value set shifts and evolves over time and as the world and cultural context evolves around us, which is why at the Lab we are always exploring how culture impacts what Australians believe in, and how to best connect with them.
During this session Simon explained how consumers in the 2020s will be more anxious and environmentally conscious than ever before. He highlighted how Gen Z tend to think big picture, are highly political, smart, aware, prefer small business over large corporations, and won’t stand for brands who don’t do the right thing.
5) Australia is a pliable, plastic, culture absorbing and an aspirational country
Possibly the most fascinating commentary Bernard made in this session was about the aspiration and adaptability of Australians.
He explained how Australians are the most “plastic, pliable, culture absorbing consumer market”. We continually embed other cultures and practices into our own, and perceive this “absorption” as the ultimate form of social sophistication. For example in the 80s, Mediterranean lifestyles were the epitome of culture and style, and we all started to drink coffee, cook with olive oil and kiss each other on the cheek….The next shift is likely to be the continuation of Asianification in our lives, our behaviours and our homes (hence Bernard’s belief in tea making a comeback).
We Australians are obsessed with lifestyle and have experienced 25 years of unbroken prosperity. Most of us can’t remember what life in a depression looks like. This has led to an era of entitlement, privilege, and aspiration which are reflected in the choices we make, the products we buy, the holidays we go on and so on. Bernard provided fantastic illustration of how our obsession with lifestyle has changed the way we live. He compared the design on a traditional 3 bedroom house in Australia in the 50s, with one “good room” to host guests, with the more affluent, status and lifestyle driven design of Australian homes today, with more bedrooms, bathrooms, entertaining areas (and pillows only for show).
Benchmarks have changed, and expectations are higher than ever.
This session was insightful and relatable, with a myriad of examples and stories that will stick with us.
But one of the most important learnings from this session went beyond the content that was shared: it was the power of looking for one data point, one number, and finding all the different stories it is telling us.
If ABS data shows growth of Asian population groups in Australia, what influence will that have on how we design our homes in the future? What does that mean for the beverage and tea industry?
This is also part of what we love doing at The Lab, and an important part of the work we do through the Australia Project our proprietary study. In the Australia Project we find meaning across different data points to decode the current social environment, deliver a perspective on how it’s impacting us, and create a model brands can apply to meaningfully connect with Australians.
As Bernard puts it; the numbers are boring: what’s the story behind the numbers?
Elaine is a Strategy Director at the Lab Insight & Strategy Melbourne. Siu Mei is a Strategy Consultant at the Lab Insight & Strategy Melbourne.