For years, retailers have put most of their stock in Generation X, people in their mid-30s and mid-40s.
But consumer demographics in America are changing rapidly, and major retailers are scrambling to catch up.
Baby Boomers, Hispanics, and millennials are the three groups retailers should be — and are — targeting, according to a recent report by McKinsey.
Here’s why retailers are rushing to impress these groups.
Baby Boomers. The older generation is a source of big spending growth among several major categories, including food and housewares, according to McKinsey. This group, defined as age 55 and older, actually has money to spend — controlling 70% of disposable income in the U.S.
Amazon launched a website for customers over 50 last year that highlights everything from vitamins to easy-to-use tablets. Dos Equis has seen success in the space with its “Most Interesting Man In The World” commercials.
And after Proctor & Gamble realised that Baby Boomers often saw their pets as children, it began offering more premium pet food, according to Bloomberg.
Hispanics. Hispanics will double retail spending in the next two years, according to McKinsey. Bloomberg reports that the demographic will spend $US1.5 trillion on U.S. goods and services by 2015.
In order to appeal to the Hispanic market, Macy’s has started offering more brightly-coloured clothing. Meanwhile, K-Mart launched a fashion line with actress Sofia Vergara.
Target told the New York Times last year that it was going to start carrying Mexican groceries in key markets.
Millennials. This group will account for one-third of retail spending by 2020, according to McKinsey. Millennials, defined as 24- to 37-year-olds, have proved to be tricky for retailers.
“Every store in the world is literally in millennials’ pockets; they can hang out with their friends, sip lattes and shop online — all at the same time,” expert Robin Lewis wrote on his blog.
To capitalise on millennials’ obsession with fitness, brands like Under Armour, Nike, and Lululemon have expanded their offerings. Fast food brand Wendy’s is offering more healthy and premium menu items.
Macy’s also launched a series of fashion lines to appeal to the younger generation.
Here’s a graphic from McKinsey showing the importance of the 3 groups.
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