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For longer than most of us can remember the success of U.S. business has been driven by the homogeneity of the population – either how it looked (mainly Caucasian) or what it wanted (similar aspirations). However, as we look ahead that will not be the future.

“The American populace no longer looks like and lives like it did in the 1950s and ’60s when most of today’s major retailers and brands were born.”

Not so long ago, the U.S. was predominantly a country of white, Anglo Saxon, Protestant, middle class, suburban households, with two adults, two children and a pet. That configuration drove the growth of many of today’s most iconic retailers and brands. Everyone aspired to basically the same thing. “One size fits all” enabled the growth of big retailers and big brands selling to large, singular segments of the population.

Now, we are different. The American populace no longer looks like and lives like it did in the 1950s and ’60s when most of today’s major retailers and brands were born.

As we move into the 15th year of the 21st century, it’s time to face that reality: the face of the U.S. consumer and household has changed. In 2015, as the economy continues to improve and technology cements its role, the time is ripe for all to understand and take advantage of how the populace is changing.

Thus, the reason behind our latest How America Shops® study, “Population Shakeup – Reshaping Retail”. This national quantified survey takes an in-depth look at the shakeup: the influence of generations (including the emerg-ing iGeneration), income levels, household configuration, ethnicity, urban, suburban and rural communities, and more. The study provides a nuanced look at the changing landscape, the challenges that exist right now and the prospects tomorrow (which, by the way, is now).

What follows are some highlights.

TRENDS FROM THEVOLUME 23 ISSUE 01 • 2015

POPULATION SHAKEUPRESHAPES RETAIL

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NEW PROTOTYPICAL AMERICAN HOUSEHOLDPerhaps the biggest shakeup of all is the changing configuration of the average American household. That alone should be of interest and concern to each and every company.

Consider what it means when only one-third of U.S. households have children under 18 in them. Or when one-quarter of households comprise only a single person. Think about the implications for the weekly grocery trip or for big box retailers who depend on fami-lies to drive sales in so many aisles.

While the total U.S. population is growing, in 2010, the U.S. Census noted a continuing decline in the percent of households with children under 18 and an increase in households comprised of adults-only (7/10 households now have only adults in them). If ever there was a sign that the shopping world had changed it was then, five years ago.

The prototypical American family of adults and kids still exists but it is less important -- and it is different. While the overall number of children under 18 (75 million today) will continue to increase in actual numbers, it represents a smaller and declining percent of the population (23% today, down from 26% in 2000). And the prototypical house-hold is now more likely to be a Hispanic family (25% today, 28% by 2025).

TIME FOR HISPANICS IS NOWThis is not a political statement, it is an economic one. Hispanics bring much opportunity but only if we stop procras-tinating and recognize their power and value. In addition to the growing importance of Hispanic households with children, today, one-quarter of Millennials are Hispanic, which further anticipates their influence on retail.

Hispanics make more shopping trips in a week (3.6 vs. 3.1 for the total population), shop in more stores (9.5 chan-nels in three months vs. 8.7), are more likely to browse (56% vs. 46%), and see shopping as a social outing with others (50% vs. 38%). They work harder than any other ethnic group at finding the lowest prices. That translates to them choosing retailers who carry private label products they trust (71% vs. 61%). More shop online to get better promotions (52% vs. 40%), and more use mobile phones in store to get information and discounts (40% vs. 32%). They have higher expectations for a wider selection of healthier products (68% vs. 58%), and more demand infor-mation to help them choose (58% vs. 48%). (This is only some of what the study reveals. ) Retailers and brands take note. Fast.

YOUTH IS NO LONGER RETAIL’S “GOLDEN GOOSE” I’ve said it before, we can no longer depend on younger shoppers with lots of disposable income to bolster retail. Today’s younger shoppers have many financial burdens, a frugal mindset, and technology at their fingertips that enables them to be smarter and more circumspect about where and when they shop, and brands they buy.

In this new research, we studied the new, youngest generation of shoppers, iGen (some call them Generation Z).

1/3of U.S. Households have children under 18

Only

1/4of U.S. Households aremade up of a Single Adult

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The first wave of shoppers in this generation, aged 16-19, learned to take photos on an iPhone, the alphabet on Leap Frog, and change movies with the swipe of their hand.

Most are still students, but the shopping habits they’re forming are worrisome for brands and retailers. In some ways they are like their Millennial (19-34 years old) counterparts, for example, where they shop. In other ways they’re quite different: they’re significantly more attached to their technology, in general, and as a facilitator of their shopping. More use technology to find the lowest prices (57% vs. 41% of Millennials), most browse online before they go to the store (53% vs. 43%). They’re price conscious and, as other data in the study indicates, less loyal to a single brand. They will be a challenge for retailers and brands in their shopping years ahead.

U.S. business so often loves to focus on the young. However, it’s important to note that more than four in 10 Ameri-cans are now 45 or older. That’s the generational squeeze companies will have to live with in the future because older shoppers simply shop less and younger shoppers look at bargain hunting as another form of gaming.

SUBURBAN SPRAWL MAKES A U-TURN Remember the days when the suburbs were crowded with retail – the mall, the strip center, big box retailers of all kinds, and the local Main Street with easy-to-access specialty, drug and grocery stores. The suburbs were where families and retailers went to grow. Not today.

“...retailers have been way too slow acknowledging the shift to urban-esque shopping.”

While many of the retailers remain in the suburbs, many consumers do not. Three-quarters of the 381 U.S. urban metro markets have seen increased population in the last 3 years, according to the Census Bureau. Contrary to stereotype, urban areas have more families with children than those in the suburbs (44% of households in urban areas vs. 36% in the suburbs).

While some retailers are experimenting with smaller, urban formats (e.g., Target, Home Depot and Whole Foods), in general, retailers have been way too slow acknowledging the shift to urban-esque shopping.

The opportunity is that urbanites want stores they loved in the suburbs. But for many retailers city stores are filled with contradictions. Smaller spaces offer less variety for shoppers who want more. Retailers are expert at adding one more thing to the basket but shoppers who are walking or busing to the store buy less. Fortunately, technology can help retailers manage this by of-fering online ordering in store and home delivery for bigger orders. But they need to get moving. Especially as online retailers like Amazon and Fresh Direct, and delivery services like Instacart, make it easier for urban shoppers to get what they need within hours of ordering.

57% 53%of iGen use technology to �nd the lowest prices,

browse online beforethey go to the store.

Target, Chicago

Whole Foods, Detroit

Instacart

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We recognized a long time ago (since 1986) that understanding shoppers and their "shopping life" is the path to successfully building the future of retail. We consult with retailers and manufacturers around the world to help them do just that -- build retail strategies that drive shoppers to stores (real or virtual) to buy today and tomorrow.

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INCOME IS LESS OF A DIFFERENTIATORThe majority of consumers (two-thirds) shop with a “middle income mindset”. Today, households with annual in-come from $50,000 to $150,000 are more similar than different, watching prices on everything, passing up a favor-ite brand in favor of an okay one, pre-shopping to choose where they will shop – usually based on what’s on sale.

The fact that those with mid-six figure incomes think and act like middle income households is, in itself, a wake up call for all. As is the price consciousness of all, especially younger shoppers (including iGen). It means that even as the economy improves, the perpetual search for low prices or “good enough” brands will continue because it is now the accepted “middle class” mindset.

BEWARE THE “BIG PICTURE”U.S. companies need to quickly look beyond the mythology of the mid-20th century when many of our current retailers and brands made their mark. Shopping and shoppers today may appear comfortably familiar to those of days gone by. They are not. Caucasian Moms, households with two parents and two children, twenty-somethings and the affluent are no longer as relevant -- or worse opportunistic -- and will certainly not be five years from now.

For all the reasons covered in our new study, future opportunities lie with the big middle class of shoppers, including those with up to low six-figure incomes who behave as if their income is half that; shoppers aged 45+ who are 40% of the population, have the most money to spend and are most brand loyal; Millennials and iGen who will challenge you on price every day, and Hispanics, especially Hispanic Moms.

What you can count on is that all of them will shop a little bit differently. As one of our dear retail clients and friends said recently, “Localization by store, customization by individual is becoming more essential. But the complexity of that is a real challenge to retailers.”

Now, we are different. Are you ready?

See you from the EDGE,

WENDY LIEBMANN, CEO & CHIEF SHOPPER

NEW REPORT RELEASE!

HOW AMERICA SHOPS®

POPULATION SHAKEUPContact us for more info: 212.924.7780

RETAIL CONFERENCES & SPEECHES

Wendy Liebmann will speak at:

03.17.15PATH TO PURCHASE INSTITUTE

SHOPPER MARKETING SUMMIT 2015“How Shopper Insights Are Transforming U.S. Health Care Retailing”

LOCATION: Schaumburg, IL

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