Important life choices such as leaving the parental home, first house purchases, and marriage are being made are now being made significantly later in life, which is impacting spending patterns and retailers’ fortunes.
The Office of National Statistics (ONS) is not usually known for its exciting press releases but there was a lot of pick up from media of its recent Milestones: Journeying into Adulthood statistics which starkly showed how much later on in life people are making choices.
The ONS only provides data – it does not extrapolate from that to infer any other conclusions – but it seems obvious that there could be a knock-on effect on retailers and expenditure as money is shared out in ever more complex ways between the generations.
The most startling figure is the rise in the age of first time buyers. In 1997 it was 26. Twenty years later it was 34 – a huge difference and one which begs the question of what is happening to the money previously used to pay a mortgage if it is not being spent on a house? And where are people living if they are not buying their own property?
In the same dataset the ONS said that in 1997 the age by which over 50% of people had left home was 21. Two decades later it has crept up to 23 and looks set to go only one way in future years. A corollary to that is the rise in renting with 35% of 25-34 year olds doing so in 1998 compared to a clear majority of 55% in 2017.
The most common living arrangement for the 18-34 year old bracket in 1997 was being in a couple with children (28.8%). That category has now fallen to 21.8% in 2017. The new most common arrangement is living with the parents, which comes in at a remarkable 32%. Times of traditionally high retail expenditure are being pushed further and further back – first baby for women at age 29 in 2017 compared to 27 in 1997, first marriage for both genders now in the early 30s compared to late 20s in 1997.
Unpicking the ramifications of all this is not easy but it seems clear that a lot more youngsters are renting which costs a lot and a lot more are living at home which costs a lot less.
This leaves retailers with lots of questions on how and who to market their products to. In the past a lot of marketing has been based on age group brackets assuming that 18-24 year old’s mainly exhibit the same spending patterns and have the same aspirations. This may be now too broad a brush.
For many years, it has also been that large marketing budgets have been directed at the youth sector – surely this is now also an outmoded presumption. If youngsters are living at home, do they save madly for their first house or are they actually giving themselves a much larger slice of their disposable income every month to spend on goods and services. But conversely does living at home mean that they are constrained on space and will probably be consigned to their childhood bedrooms meaning that buying ‘stuff’ won’t be a priority as it is not practical and their money is going on experiences instead.
And are the young people who are renting saving any income left over or do they feel like blowing the residual money on their social lives and hitting the clothes/gadget shops, which is good news for retailers.
As so often, one set of data mainly leads to a request for more data. But it’s not all change – some things remain resolutely the same. The figures also confirm that it is still the boys that are most wedded to home comforts as 37% of 18-34 year old males still live with their parents. This compares to 26% of females of the same age. Retailers offering ‘Fending for Yourself Life Skills Kits’ for boys could make a killing.