Your 21st-century customer

It’s no coincidence that specialty catalog shopping came of age in the mid-1980s, shortly after the baby boomers did. But the first of the boomers are now rolling into their 50s. And by the turn of the century, much of the generation will be entrenched in middle age: According to the U.S. Bureau of the Census, in 2001, 18.1 million Americans will be between the ages of 50 and 54, while 20.3 million will be 45-49 years old.

Catalogers that have grown fat selling high-fashion apparel, high-end home furnishings, and high-tech toys to the boomers may well be asking themselves if they should begin adding easy chairs, walking sticks, and laxatives to their merchandise mix.

The answer is no: As Ken Gronbach, president/CEO of KGA Advertising in Middletown, CT, says, “The boomers are going to be the youngest old people we’ve ever seen.” Making selling in the future even more complex, there will be two other significant cohorts to deal with: Generation X and “echo boomers.” Members of Generation X, born between 1965 and 1980, will be entering their peak earning-and spending-years by 2001. And the oldest members of the echo boom-the children of the baby boomers, an even larger generation than that of their parents-will be entering adulthood. The challenge of cataloging 2001 will be finding the keys with which to market most effectively to each of these three age groups.

The thundering boom It’s easy to see why so many marketers have fixated on the baby boomers-the largest generation in U.S. history. More than 73 million Americans were born between 1946 and 1964. By the mid-’80s, members of this generation were enjoying an unparalleled period of peacetime prosperity as they established themselves in their careers. The older boomers setting up households and starting families needed to buy home furnishings, household appliances, and new, improved electronics to replace those made obsolete by advances in technology.

This same technology boom that spurred spending also made the boomers’ careers more fast-paced than those of their parents-thereby requiring more of their time and leaving them less leisure time in which to shop. As Al Bell, director of marketing for the J.C. Penney catalog, puts it, “The one disappointment we’ve had as boomers is that the prediction of more leisure time didn’t come through.”

Even those boomers who didn’t benefit directly from the strong economy spent money as if they did. Used to being spoiled by their parents-Depression babies eager to give their offspring all the advantages they hadn’t had-boomers indulged themselves in clothes, high-tech gadgets, and adventure vacations, spending rather than saving.

But as they face their 50s, boomers are beginning to realize that they need to save, if not for their children’s college education, then for retirement. And they need fewer possessions: Their homes are already decorated, and their closets are crammed. According to the newsletter The Maturing Marketplace, Americans over the age of 54 “are decreasing their shopping for most leading indicator categories,” including clothing, fashion accessories, hair care and skin care products, home decoration items, and collectibles. As the boomers cross over into that demographic, it’s logical to expect them to reduce their expenditures as well.

Or is it?

The new middle age “Boomers are going to reshape what it’s like to be elderly,” says KGA Advertising’s Gronbach. “It’s not going to be Mick Jagger performing big band music.”

In other words, the boomers aren’t going to shuck their love of style and novelty just because they’re getting older. “With Mark, Fore & Strike, we have focused on an older customer, and we see the market moving into our sweet spot,” says Michael Tiernan, president/CEO of Boca Raton, FL-based The Mark Group, whose three catalogs include women’s apparel book Mark, Fore & Strike. “We recognize that tomorrow’s 50-year-old is different from yesterday’s 50-year-old. Fifty-year-olds today are more active and travel more.” (For instance, forget the image of pensioners dining at home alone. According to the Bureau of Labor Statistics’ 1995 Consumer Expenditure Survey, homeowners ages 65-74 spend 9% more on dining at restaurants than do homeowners 25-34.) So rather than showcase the drab, styleless dresses typical of a previous generation’s 50- and 60-year-olds, Mark, Fore & Strike sells colorful easy-care garments that wouldn’t look out-of-place on career-minded 30-year-olds but are loose-fitting enough for less agile, less toned bodies.

So much for gray-haired grannies knitting afghans from their rockers. “People don’t need rest when they retire; they need stimulation,” says Jennifer Jarratt, vice president of Washington-based futuristics firm Coates & Jarratt. “Many people take up for the first time something they wanted to take up when they were 22.” In fact, according to Orange, CA-based consultancy Primelife, Americans over the age of 50 account for 46% of all vacation travel, even though they make up only 28% of the population. That explains the growing number of tour groups catering to seniors and the success of catalogers such as Backroads (which targets a number of its cycling trips to seniors) and Magellan’s (which sells travel clothing and accessories largely to those over the age of 55).

Clearly, the new middle age doesn’t equal stasis. “People may have completed their major home purchases, but many boomers are moving to smaller homes or buying second homes,” Jarratt says. While 3.3 million American households owned vacation homes or time-shares in 1993, according to New York research firm Mediamark, 4.1 million households will do so by 2000-a 24% increase-with most of the growth among married couples ages 35-54 with no children at home.

That’s good news for Bill End, chairman/CEO of Boston-based multititle cataloger International Cornerstone Group. “Our median customer age is 45-55, so we’re right on the baby boom, and generally speaking that’s going to move with us,” says End, whose $200 million-plus company includes home furnishings and accessories titles Ballard Designs and Frontgate. “If they don’t decorate their home, they’re going to be decorating their second home.”

They’re also going to be indulging their grandchildren. Gronbach calls this “the bubbe factor. In adjusted dollars,” he says, “people are spendingfour times as much money on kids today as they did during the baby boom.” A survey by Roper Starch Worldwide shows that in 1995 grandparents spent a median of $407 a year on their grandchildren, up 27% from just three years prior. What’s more, in an article in the July 1996 issue of American Demographics, a spokeswoman for toy manufacturer Fisher-Price noted that grandparents bought more than one-third of all toys for children under the age of five.

And given the size of the echo boom, this trend shows no signs of abating. In 2001, 19 million youngsters will be under the age of 5; another 19.7 million will be 5-9 years old; and 20.4 million will fall between the ages of 10 and 14, making this generation even larger than the baby boom.

Don’t neglect Generation X Judging by catalogers such as The Mark Group and International Cornerstone, many marketers will keep chasing the boomers, modifying their tactics only slightly in the belief that they’ll continue their free-spending ways. This could leave the market wide open for catalogers willing to take the road less traveled.

“Most catalogers will go after those consumers in the top portion of the market,” notes Susan McIntyre, president of Portland, OR, catalog consultancy McIntyre Direct. “I think the savvy cataloger will keep an eye on the bottom”-particularly Generation X, she says.

Although by 2001 the generation born between 1965 and 1980 will be setting up households en masse- Americans start marrying at an average age of 26 and begin investing in big-ticket items in their mid-20s-catalogers so far haven’t rushed to target them. For one thing, they’re a smaller generation than the baby boomers. In 2001, only 17.2 million Americans will fall into the 25- to 29-year-old age group. In comparison, 22.7 million Americans will be 40-44 years old that year. “It’s the bottom of the birth dearth,” Gronbach explains. “The generation is 40% smaller than the comparative group of boomers. They’re not buying as many appliances or bedspreads.”

Not only are members of Gen X fewer in number than the boomers, but even in 2001, many will still be paying off college loans. What’s more, the older members of Gen X entered the employment market in the late 1980s and early 1990s, when jobs were tight, competition fierce, and the nation was suffering the economic hangover after the years of reckless prosperity. This economic hangover precipitated by the stock market crash of 1987 colored the sensibility of Generation X much as the crash of 1929 set the tone for the Depression babies.

As a group, Gen Xers are disenchanted with what they view as the crass consumerism of the boomers. Saving money is a priority: 65% have already started investing for retirement, according to the Employee Benefit Research Institute, and 19% already have more than $50,000 in savings. In comparison, only 18% of the youngest of the baby boomers (ages 33-43) have that much saved, despite having had a decade head start.

And when Generation Xers do buy, “they’re more value-conscious, more function-conscious,” McIntyre says. “In many ways, they have values much more like those of their grandparents, who came out of the Depression and didn’t have much hope for their future. They’re not going to be able to afford as much for themselves. They’re much more practical. Catalogers that offer merchandise to older customers should consider spinning off and marketing to these younger consumers as well.”

But while the members of Gen X may not spend as wildly as the boomers, they’ll still need apparel, home electronics, and by 2005, when the youngest of the Xers hit age 25, household furnishings.

“I see Generation Xers as just another great group of consumers coming up,” Penney’s Bell says. “I think they’re a little more serious as a generation, and they save more money, but I see them working hard and spending money for their homes and themselves. Right now they don’t have the money that their parents do, but they’re coming along nicely.” In fact, those entering the job market this year are facing the lowest rate of unemployment in decades, all but guaranteeing that they’ll be off to a roaring start in terms of earnings.

And it’s important “to begin to serve these consumers relatively early in their buying cycles, so that when they enter their peak earning years they’re loyal,” says George Richards, senior vice president of marketing for Minneapolis-based Damark International, a $594.6 million general merchandiser that specializes in home electronics.

That loyalty may be even more important than it was among the boomers, given that Generation X views computers and other home-tech products as necessities rather than luxuries. According to the 1997 GVU WWW User Survey, 44% of ‘Net surfers are 26-30 years old. And computers and home entertainment equipment become obsolete quickly. “You buy a computer today and in six months there’s a new product,” Richards says. “We want to make sure those consumers come back to Damark when they think about upgrading those products.”

Just as the boomers were the first generation to grow up with television, Generation X is the first group to grow up with computers. And as the lack of leisure time among the boomers gave rise to the boom in catalog shopping, so will the techno-savvy of Gen X result in the growth of Internet shopping, observers predict.

“If you look at the Internet, it’s still a hand-cranked model T,” McIntyre says, “but technologies will continue to develop, and catalogers have to continue to look at the comfort level of the consumers.” Already, younger boomers are more comfortable with the Web than are older boomers; Gen X is more comfortable still; and it’s likely that the echo boom will find online shopping as convenient as leafing through a paper catalog.

An echo or a roaring change? As noted earlier, the echo boom generation is huge: This year, 19.4 million Americans are between the ages of 15 and 19, and in 2001, 20 million Americans will fall into the same age group. And that’s not counting their 59 million-plus younger siblings. In terms of marketing trends, this generation should prove as pivotal as their parents, the baby boomers, were.

For instance, it was the demand of the baby boomers for smaller, faster, better-quality electronics that doomed eight-track tape players. Of course, few pundits suggest that printed catalogs will go the way of the eight-track tape. But most agree that for the echo boomers, online shopping will become a fact of life rather than the novelty it is among the baby boomer segment.

“You’ll need some sort of hybrid publication-a paper catalog and a Web connection-to attract the echo boom,” Jarratt predicts. “Members of the echo boom don’t have anything political to coalesce around, so that tends to push them into the arts and entertainment. You won’t make it with this group unless the catalog has a video or Web component.”

But many of the shoppers of tomorrow are already spending today. Now that families with a stay-at-home parent are the exception rather than the rule (last year, according to Census Bureau figures, only 17% of U.S. households consisted of a stay-at-home mom, a working dad, and at least one child), the teenagers who are the oldest members of the echo boom are used to shopping for their own clothes and accessories. Hence the runaway success of Delia’s, the first catalog to target teen girls exclusively.

As far as Jennifer Jarratt is concerned, it’s not only the size of the echo boom that makes it “an exciting generation” for marketers. She believes that, like the boomers and unlike the more individualistic Generation X, “they follow trends en masse.” She points to the record-breaking success of the film Titanic. Whereas 2% of attendees of the average film are seeing it for a second time, 20% of ticket sales for Titanic were to viewers-overwhelmingly teens-seeing it for a second, third, or fourth time.

But while the echo boom mimics the size and enthusiasm for merchandise of the baby boomers, the generation doesn’t “echo” the boomers in all aspects. Unlike Generation X, the teens of today and 2001 won’t flock to the same brands that theboomers made successful. Just ask jeans manufacturer Levi Strauss. Last year the company’s global sales fell 4%, the company’s first slip in sales in 13 years, due largely to declining demand for its jeans as teens favor newer brands such as JNCO and Bongo.

So if you’re an apparel cataloger hoping to cash in on teens, you need to do more than rent the list of Seventeen magazine. You might want to consider spinning off a catalog of distinctly younger apparel. Or you could follow the example of Abercrombie & Fitch. Faced with slipping sales from its boomer audience, the casual apparel marketer shifted its merchandising focus, notes KGA’s Gronbach. “A&F had to make an enormous leap backward agewise,” he says, replacing its straight-leg jeans with wider-leg denims and using younger, fresh-faced college-age kids as models in its magalog.

Such enormous leaps can be risky, though: Just witness Talbots’ disastrous decision last year to woo younger buyers. The cataloger/retailer offered less of its signature classic women’s apparel in favor of trendier selections it hoped would attract customers in their 20s and early 30s. The move so alienated the core audience-women 35-55 years old-that catalog sales tumbled 11% and total income for 1997 plunged to $5.8 million from $63.6 million the previous year. “You don’t have to turn off boomers or Gen X entirely,” Gronbach says, “but begin an emphasis, perhaps a section of the catalog, devoted to kids.” And don’t leap into any decisions without doing your research first. The Mark Group’s Michael Tiernan says his company “plans to invest in focus groups and surveys, as well as study its database” in preparation for the coming demographic shift. Although the company’s Charles Keath gifts catalog and Mark, Fore & Strike apparel book already target 45- to 60-year-olds, “our plan is to invest in research to really try to understand the differences of the aging baby boomers,” he says.

Above all, don’t forget that age groups are only one facet of demographics. Household income and size, education levels, and other markers determine buying habits as much as age. Chances are that even if you target baby boomers today, you don’t target every single one of them. As the boomers become seniors, as Generation Xers hit their peak earning years, as the echo boomers enter the work force and move out on their own, the generations will be a mosaic of subsets, and determining which groups to target will remain what Tiernan calls “the age-old challenge of specialty cataloging.”

A few gray hairs won’t keep the baby boomers from spending, so you’ll want to continue marketing to them in 2001 and beyond. And in many ways, your catalog creative shouldn’t change too much. “If you try to target your models to your demographic directly-for instance, if the models start looking too old-people will find that less appealing,” says Bill End, chairman/CEO of multititle cataloger International Cornerstone Group.

And don’t even dream of going to a cheaper paper stock. “We recommend very high production values in catalogs,” says Ken Gronbach, president/CEO of KGA Advertising. “The boomer will quickly be turned off by a cheap catalog.”

Your creative will need to make some concessions to boomers’ age, however. The National Mature Media Awards suggests that marketers targeting older customers use matte paper, which is easier to read than glossy, and go no smaller than 12-point type. But Jennifer Jarratt, vice president of Coates & Jarratt, advises against slashing copy: “Boomers are the most schooled generation we have. Catalogs have to contain more information than in the past.”-SC

Between 1996 and 2001, the U.S. Hispanic population is expected to grow 16%, to 32.3 million. In comparison, the total U.S. population is projected to grow only 4% during the same five years. And between 2001 and 2005, Hispanics will increase another 12%, making up nearly 13% of the U.S. population-more than African-Americans, who will make up slightly more than 12% of the population by 2005.

If those figures don’t persuade you to begin targeting the Hispanic market, maybe this one will: A study by marketing firm DraftWorldwide showed that 42% of Hispanics shop via direct mail to avoid what they perceive as the prejudical environment of many stores.

Here a few more facts to help you better reach the Hispanic market, whose buying power is estimated to reach $477 billion before the century’s end:

* According to U.S. Census figures, 8% of the U.S. population-and nearly 80% of the Hispanic population-speaks Spanish at home. And according to DraftWorldwide, 66% of Hispanics surveyed prefer receiving direct mail in Spanish.

* In 2001, the median age of Hispanics will be 27, vs. 36 for the population at large.

* Cuban-American and Puerto Rican women tend to dress more formally than other Hispanics, according to marketing firm Hispanic Market Connection.

* In the DraftWorldwide survey, 60% of the Hispanic participants indicated that they would pay more for a well-known brand.

* In the 1980s, an airline plastered Miami, a city with a large Hispanic community, with billboards translating its English-language ads into Spanish. Included was a literal translation of the airline’s English tagline, “Sit in comfort.” In colloquial Spanish, though, the sentence read, “Sit naked.” ‘Nuff said.

In 2001, African-Americans will number 35.9 million, up nearly 7% from 33.6 million in 1996. Yet although they make up more than 12% of the U.S. population, the $350 billion black market is “underpromoted,” says Andrew Morrison, president of direct marketing agency Nia Direct.

Come the 21st century, though, you won’t be able to afford ignoring the market. The black population will grow 5% between 2001 and 2005-twice the rate of the white population, according to U.S. Census projections. Below, a few more statistics:

* In 2001, the median age of black Americans will be 30, seven years younger than the median age of white Americans.

* Nearly two-thirds of black women wear size 12 or larger, Morrison says.

* As of early 1997, more than 23% of African-Americans owned a computer, and 11% were online, according to Simmons Market Research. And Target Market News, a magazine specializing in the black market, notes that blacks accounted for 25% of Web service provider subscriptions in 1996.

* Last year, according to Target Market News, African-Americans spent more than whites on footwear.-SC

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