The Incredible Shrinking Consumer Marketplace

As you already know, the last year has been extremely difficult on our economy.  But is the problem solely relegated to the mortgage collapse and lack of oversight and regulation of financial markets?  Or could there be something else lurking that will continue to cause our economy significant challenges?  I believe there is…and that challenge is the pending retirement of Baby Boomers.

You see, modern economies are driven by consumer spending and most consumers spend less after they retire. Collectively, Baby Boomers represent 80 million spenders in a population of 320 million. How they WILL or WON’T spend their money…WILL have a major impact on our economy, and more importantly, the future of local commerce.

Today, most Baby Boomers have acquired their large assets (homes, cars, etc.), no longer have children at home or college and have lost significant portions of their 401k’s and equity in their homes.  As a result, they are moving into an inevitable “savings mode” that will be required to thrive in retirement.

How will the lack of Baby Boomer spending impact the consumer marketplace?

As Baby Boomers retire in the next decade, they will once again radically alter the marketplace by drastically cutting back on spending. However, equally important is they will be handing their vast economic muscle to Gen-X consumers who represent ONLY 65 million spenders…or 15 million less than Baby Boomers.  What does this mean?  It means the consumer marketplace will shrink and many businesses will not survive.  The problem during this inevitable market shakeout is many consumers could be on the short-end of choosing local businesses that won’t be around to service their needs in the future. 

Therefore, it’s more important than ever for consumers to know they are choosing ethical and accountable businesses that will be around for the long haul.  It means consumers will need to be more discriminating when making purchase decisions.  It also means the best local businesses will need to raise the bar and prove through 3^rd-Party recommendations (Customer Satisfaction Ratings) that they are worthy of our business and hard-earned money.