For the last twenty years the youth market has been the chosen target for many companies pursuing growth strategies. There were good reasons for this; younger consumers had increasing disposable incomes and they spent their money on products that could command a premium.
This translated into growth and higher profits for the manufacturer. But demographic projections, which should be part of any business plan, lead me to conclude it is time to rethink this strategy.
The youth market, which I will define as 15 to 30 years of age, is likely to peak in Singapore this year and decline thereafter. According to the World Bank projections, there will 11% fewer people in this age group in 2025 than there are today.
If this is your company's focus, expect increasing competition as businesses fight to grow in a declining market.
Contrast this with the 50 to 64 age group which, in Singapore, will grow as fast as the youth market declines. By 2025 it is forecast this demographic will contain 20% more people than the 15 to 30 year age group.
Let's call the 50 to 64 age group the "working empty nester". These are people whose children have left home, giving them much higher discretionary income and which they are more willing to spend than to save.
They are much more likely than previous generations to buy items originally targeted at the youth market. Walk down a street in Singapore and you will see auntie using the latest mobile phone, uncle checking out the internet on his tablet computer.
This age group is not afraid of technology, after all this is the generation that pioneered the internet two decades ago.
Working empty nesters are also much more inclined to travel, eat out, use Apps, be on Facebook, and buy luxury items. In other words, they buy and do a lot of the things that used to be considered the domain of the youth market.
This is great news for suppliers as they do not need to change their products, just reconsider their marketing channels.
The population of working empty nesters will continue to grow and as retirement age gets later, their increased spending power will extend beyond the age of 65.
Similar trends can be seen all across affluent Asia and even in some developing economies such as Vietnam; so the smart marketer who can connect with the older generation will have a growing and increasingly affluent market to chase.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Jeremy has held senior finance roles in Europe, North America, and Asia. He is COO/CFO (GCP Asia Pacific) at Grace. Jeremy is a principal with the CFO Centre Singapore and is also the owner of 3 Continents Consulting.