For the answer to this question, please visit our NEW sister Blog, MILLENNIALS At HOME at http://millennialsathome.blogspot.com.  And be sure to comment...

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In a March 2010 AIM online survey of over *500 US Millennial home owners/renters, we found that 83% are at least somewhat concerned about the current state of the national economy.  Only 5% are not concerned at all.

Yet, 63% hold an optimistic view for the near future.  Twenty-two percent “hope” that 2010 will be better than 2009, while 41% think 2010 will be challenging, but that things will “improve in the second half.”  An additional 10% are optimistic for the long-term, saying that it “may take a long time (2-5 years),” but “we will be better off” eventually.

This is not to say that Millennials are NOT concerned about the economic situation, however.  When asked whether economic concerns would impact their spending plans this year, only 17% said it will have "little or no impact." 

*Randomly selected per US geographic distribution, ethnicity, and gender distribution.  Age 20-29 years.

 

MILLENNIALS At HOME

Millennials make up almost a third of the U.S. population.

Their spending power already exceeds $300 billion.

They will fundamentally change how you do business in the future.

-What will their homes look like?

-And what products will they buy to fill those homes?

A groundbreaking study from Albing International Marketing LLC, the research leader in the home furnishings industry.

To be published April 2010

For more information, call (908) 788-5411 or email ralbing@albing.com

 

 

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Last night was a night that gave me hope for America. 

 

2010 has been pretty depressing so far – unemployment is still sky high, change isn’t happening fast enough, no one in Washington seems to be able to get along, and it seems like the “anger” that a lot of people are feeling could ignite some real violence.  Europe is in financial turmoil and China owns all our debt…    

 

And yet, a 23-year-old kid, who just happens to own his own mountain, provided the lift we all needed. For those of you who didn’t watch the Olympics last night, a daring redhead showed us what America is all about – innovation, creativity and guts.  Shaun White not only won an Olympic gold, but he did a trick that he didn’t have to do in order to win!

 

Both Lindsay Vonn and Shani Davis showed strength and determination yesterday in their respective gold medal races, but Shaun White was my personal favorite.  He’s kind of crazy and optimistic, in a wild, young sport and he loves to push the envelope.  As I watched him approach his final run up the side of the halfpipe, he had already clinched the gold and he had very little height…surely he would NOT try his new trick?  And yet he did it anyway - the incredible "Double McTwist 1260" - which involves two off-axis backflips while doing 3.5 full rotations, all in one jump.  Then he iced the landing, finishing with a huge smile.

 

It’s the Millennial Twenty-Something kids like Shaun and their daring spirit that are going to lift America out of these challenging economic times.  The willingness to create and try new things is what makes this country different during each succeeding generation and gives me hope for the future. 

 

And next time some snowboarder cuts off me off while skiing, instead of cursing to myself, I am going to be thankful that we have kids who are willing to try new and challenging things.

(For more information on Millennials, AIM's new study MILLENNIALS At HOME, will be published in April.  Contact info@albing.com for details.)

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It’s a snowy day here in New Jersey, in fact, so snowy that I am working in my kitchen at home.  It’s a perfect day to sift through the mountains of material that we have been collecting for MILLENNIALS At HOME, AIM’s in-depth look at consumers now in their Twenties.  This group already has more than $350 billion in spending power and that is going up every day as more and more young people enter the work force.  We’ll be doing more primary research over the next month, but even the materials gathered so far make for some fascinating reading.  I thought I knew a lot about this generation since I have three Millennial kids, but I am learning a lot.  For example, I knew that they love to shop online, but did you know that Millennials are also three times as likely to buy from an infomercial as someone my age (Boomers)?  Or that, even though they love to shop online resources (like amazon.com) for many items, they rarely consider it for kitchen items and are 25 times more likely to shop at a discount store like Walmart or Target.  (These stats came from some research AIM conducted late in 2009.)  Stay tuned as we delve deeper into these issues and continue to report on our findings…

 

Also, be sure to stop by the Design Center Theater at the International Home & Housewares Show on Monday March 15^th where I will be previewing MILLENNIALS At HOME at 11:30 AM.  

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My kids are always accusing me of being cheap.  In fact, they claim that the recession has just provided me with a convenient excuse for saying "no" and for cutting back on their expenditures.  Maybe... but our research among US consumers has indicated that I am not alone and that we have become a nation of cheapskates.  And being cheap has become a badge of honor.  Finding a bargain not only makes sense, but it is fun.  That's the reason consumers tell us they like to scour tag sales and downscale antique (junk) emporiums.  It's also why they love retailers like TJ Maxx and Home Goods where they have to sift through the clutter to find the "good stuff."  AT AIM, we call it Treasure Troving and it's a major trend that is likely to stick around even after the economy recovers.  Why?  Because Cheap Chic seems to be trickling down from Baby Boomer parents to their Millennial kids (now in their late teens and twenties).  And these young people may just carry their thrifty spending patterns, developed during the Great Recession, throughout their lives just as their Depression Era grandparents did.  In AIM's research, the Millennials are telling us about how they scour the web for bargains and then brag about it to their friends, who in turn also visit the same sites seeking deals.  The internet has expanded bargain shopping beyond the traditional concept of "sale" to best price/best product all the time.

Interestingly, Cheap Chic and Treasure Troving are not just American trends.  Just as the economic downturn affected all economies to a certain extent, so, too, has Cheap Chic permeated even the most brand-conscious and status seeking shoppers abroad.  Japan, with half the population of of the US and less land than California, has more than twice as many Burberry, Hermes, and Prada stores as all of America.  Luxury labels fuel a $20 billion-a-year market, yet according to an article in Newsweek (citing a McKinsey report), for every one luxury (brand) bag, there are 10 Uniglo, Forever 21 or H&M bags."  The report claims that there are several reasons in addition to the Recession for this shift and that "upscale marketers should not give up on Japan, but they should adjust their expectations: an economic recovery will help sales rebound, but the fact is that some former luxury buyers may have traded down permanently."  (See Newsweek 9/28/09, "Japan's Cheap Chic")

We have the same advice for our clients in the luxury goods category of the home market.  There will always be a small percentage of the rich who will demand luxury brands and highly priced goods, but the acceptance of Cheap Chic is likely to decrease the overall size of the luxury goods market for at least the next ten years and maybe longer.     

At AIM, our clients have asked us to delve into the mind of the Millennial consumer.  We have embarked on a major effort over the next 12 months, MILLENIALS At HOME, a combination of both quantitative and qualitative research.  If you want to learn more about these consumers, or if you have information you would like to share, please contact us at millennials@albing.com.   

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Here is a link to today's NY Times article which highlights the outcome of this month's election in India:

http://www.nytimes.com/2009/05/18/world/asia/18india.html

We will continue to post how these political conditions are likely to affect the economic situation and the potential for business in the Indian consumer goods market.

 

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AT AIM, we are watching the month long elections (that started last week) in India with strong interest.  We are particularly interested in how the elections might affect India’s overall economic situation which has offered so much potential for US consumer products companies over the past several years.  So far, so good.   

 

From the BBC:

 

Under the headline "Ballots stronger than bullets", the Times of India said that the high turnout was a "celebration and an affirmation" of the country's democratic ideals.

It also praised awareness campaigns over the past few weeks that encouraged middle class urban voters "to step out like never before to vote".

"Neither the blazing summer sun nor extremist gunfire could keep away the voter from the booth," the paper said.

It said the turnout was a setback for Maoists and other extremist groups who saw "a successful electoral democracy as a negation of their political beliefs".

 

To better understand the players in India’s elections, we recommend visiting CNN’s website:

http://www.cnn.com/2009/WORLD/asiapcf/04/17/india.election.explainer/

 

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Over the past two days in the course of research for a project, I visited two leading upscale retail venues.  What I found was surprising…or maybe it wasn’t.  As a trend watcher, I wanted to learn if people are still shopping in light of our current economic crisis and if so, what are they buying?

 

I visited the Short Hills Mall, a very upscale shopping center not far from Manhattan in a New Jersey suburb inhabited by a lot of Wall Street executives.   And I also spent time at The Crossings Outlet Center in the Pocono Mountain region of Pennsylvania.  The Crossings houses an array of upscale factory outlets like Ralph Lauren, Coach and Burberry.  On Sunday, it was packed and people were shopping like there was no tomorrow.  Why?

 

1. Because there is no tomorrow?
2. Because the economic situation doesn’t affect people outside the New York to Washington corridor?  (Most auto plates were from Pennsylvania)
3. Because outlet centers are where people turn for discounts in an economic downturn?
4. Because it was a holiday weekend and they were running incredible promotions?

 

I spoke with a number of salespeople and they said business was very good, although they were not sure it would be as good as last year.  The promotions were deeper and they were surprised that people were still signing up for new credit cards to get increased discounts.  I was surprised that banks were still letting people sign up for credit???

 

The consumers were buying everything.  Clothing and accessories were every bit as popular as home goods and gourmet food.  At the Coach outlet, I watched one woman buy five handbags.  She did not appear particularly affluent and I asked her why she was buying so many.  Was she perhaps doing some early holiday gift shopping?  No, she just recognized that the prices were very good and she just loves Coach…I asked another young shopper who appeared to be in her Twenties if she was concerned about the economy and she said that her job was “not affected by the economy.”    

 

On the other hand, Short Hills was like a tomb yesterday, despite the Columbus Day holiday and the prevalence of promotions.  I spent a lot of time at Neiman Marcus chatting with one of the department managers.  (He didn’t have anything else to do…)  He said that the store “traffic died when the stock market started plummeting.”  And, despite yesterday’s rise on Wall Street, people had yet to return to the stores. 

 

The high end designer shops at Short Hills like Gucci, Fendi, and Jimmy Choo were particularly empty.  The only action in the mall was at the chains like JCrew, Williams Sonoma, The Gap, and the only department store with traffic was Macy’s. Shoppers at J Crew were snapping up a lot of promotional items, especially sweaters and accessories.  At Williams Sonoma, they were buying gourmet food items and small cooking tools like cookie cutters and bread molds.  (All of these items fall into the category of “small indulgences” and we will examine this trend in a later column.)  The designer shops were begging for business.  Every time I walked in, the sales people were all over me.  

 

Of course, the economic crisis is now over (hah!) so maybe people will start to shop again…OR will upscale/luxury consumers shift their shopping downwards to more affordable retailers and more affordable venues, like outlet centers?  And if the upscale consumer is shifting downward, what will less affluent consumers do?  Shop only at Wal-Mart or stop shopping altogether?  We, at AIM, will be out in the retailers monitoring the situation and will keep you posted… 

 

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Last week in the NY Times, Paul Krugman wrote a column called “Stranded in Suburbia” and it got me thinking about what “home” is going to look like for a lot of us aging Baby Boomers over the next few decades.  At AIM, the most important thing we do is monitor trends for the home and predict trends in an effort to help our clients develop the best and most successful products for the home. 

 

For those of you who aren’t familiar with Krugman, he is, in addition to a columnist, a professor of economics at Princeton and is known for his progressive (yet globalist) politics.  (Some of my friends say he is way too liberal, but today’s column was relevant to the home products business, regardless of your political point of view.)  The gist of the op-ed was that while we’re “supposed to see the future in China or India,” “old Europe” has a lot to teach America about how to exist in a world of increasingly high fuel prices.  Krugman goes on to describe the city-centered model found in Western Europe where people own smaller and fewer cars.  Europeans also do not need to use cars as often because they have a sophisticated system of public transportation and they live much closer to urban centers.  In the US, on the other hand, we live in far flung suburbs and have grown dependent on our SUVs and big cars.  Krugman says it won’t be easy to make any kind of societal shift to the European system because pleasant urban neighborhoods are not as common here as in Europe and there is a “longstanding American association of higher-density living with poverty and personal danger.”  In America, there is also an issue of race and class.  We tend to think of cities as dwelling places for the rich and the poor; the middle classes live in the suburbs.  And infrastructure is another large problem – even our best served metro-centers are far behind Europe in terms of public transportation.

 

So all this got me thinking about the home of the future and where I myself might like to live in a few years when I am an empty nester.   We have been increasingly hearing people in our research at AIM talk about moving back into urban areas.  And these people are not just young twenty-somethings.  They are growing families and they are “older folks” like me who cite the lack of culture and inconvenience of the suburbs.  They are weary of cutting the grass, painting the house, and getting in the car to go everywhere.  (After years of trying to squeeze it in between my kids’ sporting events, I am even tired of my garden.)  In our area, we keep seeing ads in the paper for high rise condominiums on the New Jersey side of the Hudson and for townhouses in Center City Philadelphia.  Other trend watchers such as Age Wave and builders like Toll Brothers are predicting an “insodus” - the opposite of exodus - back to the cities.  And not just on the two coasts, but also in places like Kansas City and Minneapolis and Houston.  Across the country, developments and high rises are cropping up to accommodate this movement, offering hotel-like amenities such as room service, dry cleaning delivery and in-house fitness centers.  So if this is a viable movement, we would like to learn more about it from consumers on our blog…Is this appealing now or later in life?  What amenities would draw you to the city?  What would you leave behind?  What would you want to buy?  We’ll be exploring this more in our research, but we’d like to hear what YOU think…     

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Yesterday, I went to the mall to buy my son a new iPod for his 14^th birthday.  It was around dinnertime and a beautiful day so maybe that's why the mall was so empty.  Maybe, but I really don't think that's the reason.

 

According to AIM's recent Internet survey of consumers across the country, the economy is significantly affecting consumer behavior and priorities.  65% of those we surveyed said that current conditions are affecting their spending for the home. Since AIM specializes in the home and home furnishings products, we were especially interested in home spending, but we also found that the economy is affecting personal budgets for food, clothing, and travel as well as for home improvement, furnishings, and entertaining.  Next week we will have more of the statistics from our survey on the Blog, but today I wanted to address my trip to the mall because I saw something else at the mall that gave me room for optimism.

 

As I said, the mall was empty.  All except for one store - the one store where I was headed - the Apple store.  And it was packed.  The customers in the store were mostly young, but not entirely.  Some of them were Baby Boomers like me and they were buying computers, iPhones and iPods for themselves (not just for their kids).  Apple has created and exploited a business model that other American companies should be emulating.  They have concentrated on design, innovation and brand marketing.  As a result, they are the acknowledged leader in their product categories.  According to Fareed Zakaria's new book, The Post American World and an Atlantic Monthly article by James Fallows, Apple is operating according to the "Smiley Curve" and they are generating substantial profits.  "The 'Smiley Curve,' named for the U-shaped smile on the simple 1970's cartoon of a happy face, illustrates the development of a product, from conception to sale."  At the top left of the curve are the idea, the high level industrial design and the engineering.  At the bottom of the curve are manufacturing, assembly and shipping.  Rising up on the right side are distribution, marketing, retail sales, service contracts, and sales of parts and accessories.  Companies like Apple that concentrate on the high sides of the U are operating where the profits are, while those that concentrate on the low part in the middle have a much lower potential for profit.  Like Apple, a lot of US companies are manufacturing overseas in low cost countries, but many of these companies are only concentrating on the low end of the curve.  Most of them are not very good at the high sides of the curve - especially design and innovation - where the process begins; nor have they concentrated on brand identity and reinforcement of the brand at retail.

 

If companies want to make it through this downturn or recession or whatever it is, they are going to have to differentiate themselves by concentrating on both of the high sides of the "Smiley Curve."  They can't survive by just concentrating on the low middle, by finding a lower cost source of supply.  As the cost for fuel and raw materials rises, the cheap sources of supply are drying up.  And they can't succeed by concentrating on only one high side of the curve.  Like Apple, to survive and succeed, during not only this period but also in the global marketplace of the future, will require an emphasis on both high sides of that "Smiley Curve."

 

Wall Street analysts are concerned that Apple may be vulnerable to slowing consumer spending in the United States because of its stronger presence here than overseas and because many of its products carry a premium price tag.  But if the crowds in the stores are any indication, I think they will weather this economic storm just fine.  Our AIM consultants report that the Apple stores in New York, Washington and LA are packed with foreign tourists, buying multiple iPods and Macs to take home.

 

As I said, my local Apple store was full of shoppers yesterday and they, too, were spending money.  When I purchased an iPod for my son, I was surprised to be asked for my email so that they could send me my receipt.  Of course, I understand that I will now forever be bombarded with emails from Apple.  And I was also faintly uncomfortable walking out without a paper receipt, but I couldn't resist the urge to join the paperless world.  I am now a loyal Apple consumer and I might even consider a Mac for my next laptop!  (More on this for another day...)

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News about the US economy is not good.  Some say we might even be headed into a situation similar to Japan’s in the 1990’s.  (Twenty years later, Japan is still struggling with the bursting of their property and market bubbles.)  In order to counter the downturn, the US government has initiated an aid package aimed at maintaining unsustainable high rates of personal consumption.  As a business person and a consumer, I have problems with spending to “save” the economy.  It’s like buying drinks for an alcoholic.  It seems like a very short term strategy for some long term problems like industry shifts, crumbling infrastructure and massive debt.  I’d rather see an investment strategy, an innovation drive and a more global point of view.  And apparently I am not alone with this point of view.  On today’s NY Times Op-Ed pages, Stephen Roach, Chairman of Morgan Stanley Asia, states, “A more effective strategy would be to try to tilt the economy away from consumption and towards exports and long needed investments in infrastructure.” 

At AIM, we are very involved in helping our clients sell into the hot growth markets such as India, China and Poland and in re-visiting markets on the upswing (again) like Japan.  India is now the world’s second fastest growing economy with a huge population of eager shoppers (600 million upscale and mid market consumers) and the hottest retail market in the world.  Yet, as a culture, Indians still have a creativity gap.  The most prestigious careers are still engineering, medicine and investment banking.  The country needs more designers, writers AND creative salespeople.  And more creative and well designed product.  Smart marketers from the US are seeking to fill this gap in India (and in other markets).  And they will certainly profit from this effort, whether their products are actually made in the US or manufactured in Asia using American design and know-how.  Too bad our government doesn’t help more with this export opportunity instead of merely providing Americans with a free check for spending on more imported products here that they don’t really need…

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Robin Albing, AIM's President, presented "The Green Kitchen - Fleeting Fad or Long Term Trend?  Implications for the Future" on Sunday March 16th at  the International Home & Housewares Show in Chicago.  For a copy of her presentation, contact us at info@albing.com.

Visit Housewares.org for more info

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