by Everyone knows how hard it can be to hit a moving target. But considering that today’s consumers no longer fit into traditional buckets, that’s exactly what today’s home furnishings retailers are up against.
However, a new study from McKinsey & Co. called State of the Consumer 2024: What’s Now and What’s Next identifies nine consumer trends worth understanding.
According to the study, McKinsey & Co. has concluded that while consumer demographics are changing, it also determined that a number of the most important consumer segments of tomorrow are currently underserved.
As part of the first of nine emerging consumer trends, the study focused on young consumers in emerging markets. Here, the study found that by 2030, three-fourths of consumers in emerging markets will be between the ages of 15 and 34. The date gathered from the study resulted in McKinsey & Co. determining that these consumers will not only be optimistic about the economy but will be willing to spend.
The second trend involved retired consumers. Here, longer life expectancies are increasing the global population of consumers 65 and older to increase at a faster rate than the population of younger consumers. “High-income baby boomer and Silent Generation consumers (those whose household incomes exceed $100,000) are a sizable cohort in the United States, making up 30% of the market — and they’re more likely to spend on discretionary purchases, such as home improvement and gardening, compared with lower-income consumers their age,” the study found.
The study referred to the third trend as “the squeezed-but-splurging middle.” The report concludes that while cost-of-living increases in advanced economies will continue to put pressure on middle-income consumers, the data surprisingly indicates that middle-income consumers both in the United States and Europe say they intend to splurge on discretionary items at a rate similar to that of high-income consumers.
The fourth trend identified by the study focused on brand exploration. It found that when consumers couldn’t find the brands they used because of the pandemic, roughly half of consumers switched products or brands. That willingness to explore alternative brands has not diminished and subsequently, brand loyalty is fading, the study determined.
Sustainability was also mentioned in the study. Specifically, the report found that value upstages values. In recent years, young consumers participating in McKinsey’s surveys said they prioritized sustainability considerations when making purchases.
In the United States, sales of products with sustainability-related claims outpaced sales of products without such claims. But in this most recent study, while young consumers still say they care about sustainability, they are now making clear trade-offs in the face of economic uncertainty and inflation. In Europe and the United States, fewer Gen Zers and millennials ranked sustainability claims as an important purchasing factor at the beginning of 2024 than in 2023.
The next trend, a growing global appetite for the wellness market, also seems to be worth watching. McKinsey estimates the global wellness market to be worth more than $1.8 trillion, growing 5% to 10% annually. Here, the study found that it is not only Gen Zers and millennials who are propelling growth in this space, but also Gen Xers and baby boomers. Next, the study identified wellness for women as another key consumer trend.
Investments in women’s wellness are also growing. Consumers in both advanced and emerging markets are indicating a greater interest in spending on women’s wellness products and services, as well as on adjacent personal-care categories. “We estimate that closing the women’s health gap could be worth $1 trillion annually by 2040,” the study concluded.
The report also discussed what it calls “the new urban hot spots.” In both advanced and emerging markets, people are moving to seek out new opportunities and a better quality of life, the study said, adding that in advanced markets like the United States, consumers are moving away from larger cities in the Pacific Northwest and the Northeast to “secondary cities,” or those with populations between 50,000 and 500,000 people.
Two-thirds of the fastest-growing U.S. cities are in the South and West. In these cities, the cost of living is lower than in larger cities, and remote work opportunities are plentiful. Millennials, Gen Xers and boomers are propelling this trend. Just because U.S. consumers are moving to scaled-down versions of metropolises does not mean they are curtailing their spending: Just as many consumers in secondary cities say they plan to splurge as do consumers in the largest American cities. Meanwhile, 1.3 times more consumers in secondary cities say they plan to splurge, compared with U.S. consumers in rural areas.
The last trend focuses on social commerce. For several years, China has led the world in the adoption of social commerce, in which consumers browse and buy directly through social media and content creation platforms.
The study said that initiatives to grow the social-commerce market in the West have had limited success. Companies simply may have been too early to embrace this opportunity. Looking ahead, the report said it expects social commerce in the United States to expand to $145 billion by 2027, up from $67 billion today with Gen Zers and millennials propelling this growth.
To read the complete report, click here.
