Unlocking Demographic Patterns To Understand Sales Trends
Bricklin Dwyer of Mastercard studies population waves and other metrics to reveal consumer expenditure trends.
For many people, studying economic and demographic data can quickly lead to glazed eyes. But for Bricklin Dwyer, senior vice president of economic and market insights at Mastercard, studying data can reveal patterns that can inform and help drive retail sales.
During his presentation at the summit, Dwyer showed how various data points can paint a picture of where the retail industry stands and where it is headed. Dwyer said he focuses on “patterns of consumption” and shared notable trends and some trivia data points — such as 2019 being a record year for people celebrating 30th birthdays.
Dwyer shared “population waves” that showed where various demographic cohorts stood over time.
“Understanding where the population is, in terms of total scope, such as where people live, where they move, get their first home and get married and have children, matter because it reveals patterns of consumption.” Coupled with broad trends such as trade wars with China, wage growth and other macroeconomic factors, these show where “consumers are” in regard to spending.
By way of example, Dwyer pointed to a spike in the population chart, “a pop
of 25- to 27-year-olds,” he said, who have some interesting behavioral patterns. Dwyer described these Millennials as the “Basement Generation” that deserves careful scrutiny. “These are Millennials who are part of a multigenerational household” who have graduated college, went out on their own, and then returned home, he said, adding that as a result, “they may have no rent to pay, which means more disposable income.”
That disposable income — despite that these are consumers who are living at home — could be spent on “$ 600 sneakers,” high- priced electronics and other luxury items — “which is a completely different idea of what we normally think of about this generation.” Dwyer also said the number of Millennials who currently live with their parents is increasing, and it is now a “global phenomenon” that has become normalized.
“It’s a dynamic that has become quite pervasive,” he added.
In short, the data shows where people are at various points in their lives. It reveals the nature of the workforce and explains why people are not moving as much as they did. Dwyer pointed to data that showed a decline in people living in cities — but when they do move, it is into the “sub-cities” and suburbs.
“Why is that happening?” he said. “It is because we’ve seen a big increase in the price of housing in cities.” This transition to the suburbs has a lot to do with the “gig economy” where more and more workers are working from home and/or remotely — and in their parents’ basements.
In regard to spending, Dwyer said the “Trump tax cuts” helped boost spending last year. “There was extra cash in people’s pockets, which propped up growth,” he said. “Now the question for this year, is: ‘ What have you done for me lately?’”
Without higher wage growth and other consumer incentives, the bump last year simply shows that relief is temporary and the growth is just short term. “So as we think about 2020, I think we have a feigned momentum,” he said.
Looking at who is buying products, Dwyer pulled up a slide that showed within specialty apparel, Generation X was “an outlier” and doled out more money compared to other demographic cohorts. “They are driving consumption,” he said. Generation X is also outspending Baby Boomers and Millennials in spending on luxury goods. But within women’s apparel,
Dwyer said 71.3 percent is spending by Millennial women.
Dwyer also shared data on the level of uncertainty of industry executives. The line soared to the top of the chart this year. He said the level of uncertainty is “unprecedented” and has much to do with the current trade war with China, which is complex in regard to assessing the impact on business, prices and supply.
With Mastercard’s “Spending Pulse” data, Dwyer said the overall trend is good. “And I’m optimistic, looking ahead,” he said, although there are friction points in regard to tourism spending in the U.S.