The business world consists of little islands in oceans of economy. Cities and regions are the islands, where merchants are affected by every layoff and expansion of a major employer. Nations are the oceans, barely navigable tides of inexorable forces. Today we examine those oceans.
According to the July 17 edition of The Economist, Europe is facing a population implosion which means fewer people to buy things in the future. “By 2050 the number of Italians may have fallen from 57.5m in 2000 to around 45m; Spain's population may droop from 40m to 37m. Germany, which currently has a population of around 80m, could find itself with just 25m inhabitants by the end of this century. Russia's population is projected to fall from 146m in 2000 to just 103m by 2050. Combine a shrinking population with rising life expectancy, and the economic and political consequences are alarming. In Europe there are already 35 people of pensionable age for every 100 people of working age. By 2050, on present demographic trends, there will be 75 pensioners for every 100 workers.”
As a result of this trend, sales growth of any kind in Europe will be a virtual impossibility for the next 100 years. (God help the poor advertising consultants who will have to dance for all those angry clients.)
“Because of its liberal immigration policies, the U.S. should fare better than Europe. But when you combine slow population growth with an aging population that buys goods less often, a frowning sales curve isn't difficult to predict. And we haven't yet considered the dampening effects that derive from Europe's population implosion. Aside from the irreducible fact that population growth can no longer support growth in consumer demand, we're also facing changes in consumer behavior caused by the aging of our society. The inescapable reality facing American business is that changes in demographic conditions are radically changing the calculus of supply and demand. Population growth — or the lack thereof — is changing the volume of demand, while the aging of the population is changing the nature of demand.”
David B. Wolfe predicted all this fourteen years ago. He also predicted that the frenzied pace of fashion changes in cars, clothes and other product lines would slow dramatically as our population aged. “Younger consumers strive to make social statements in their buying decisions more than older consumers do. Keeping up with – or getting ahead of – the Joneses means much more to the young.” Bottom line: as we get older, we buy less stuff. And we're definitely getting older.
Americans 40 and older now number 125 million compared to just 85 million 18-39. This means a huge majority of consumers are emerging into the years when “self-actualization needs” play a greater influence in consumer behavior than the “ego needs” that so powerfully moved us when we were young.
Obviously, the businesses that will shine in the years ahead will be the ones that understand self-actualization and are able to connect with those needs. But rarely does a business change until the pain of staying the same exceeds the pain of changing.
Is your business ready to change?
Roy H. Williams
VERY FEW DATES remain available between now and the end of the year to schedule a Private Consulting Day in the Austin offices of Roy H. Williams. Is your business at a crossroad you'd like to discuss with the Wizard? For more information contact Corrine@WizardofAds.com, or call Corrine Taylor at 800-425-4769.