Aging boomers may shift the apparel empire

Bobbin,  Jan, 1999  by Dorothy U. Behling

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The aging of America is slowly sneaking up on the apparel industry, and the shift is likely to cause drastic changes in consumer priorities and buying habits.

When U.S. apparel sales are in decline, analysts typically proclaim an economic cycle that is certain to improve. However, in the long run, this assumption may prove to be nothing more than wishful thinking for those companies not prepared to handle the aging of America and the long-range effects it will have on consumer buying patterns.

The United States currently is home to the oldest population of this century. Canada and Japan, as well as Western Europe, also are faced with similar demographics. One defining characteristic of these countries' economies is affluence, which has fed continuous growth in the consumption of clothing and accessories. Consider that in less than three decades U.S. sales of apparel have grown by more than 1 billion dollars. This impressive increase is due to a number of factors, including a healthy economy and widespread discretionary income. More importantly, U.S. growth has been linked to the spending patterns of a young, fashion-conscious baby boomer generation.

However, times are changing. The aging of America is slowly sneaking up on the apparel industry, and the purse strings are beginning to tighten as the boomers age. For example, between 1992 and 1997 public companies' apparel sales have been relatively stagnant and average net profits have decreased from 6.1 percent to 5.0 percent. Moreover, in studies of consumer priorities it has been noted, not surprisingly, that as people age they have different needs and desires. According to one demographer's predictions, food, transportation, insurance and retirement - not clothing - are the categories in which baby boomers will continue to spend their money.

Overall, studies have shown that a dramatic drop in spending occurs when household members reach age 55, and an even more dramatic decrease takes place at age 65. On the other hand, the real purchasing power lies with individuals between 35 and 44. They outspend every other demographic group on apparel (see Table 1) - typically it's during these years when incomes approach their peak and it's necessary to maintain a wardrobe for the workplace.

TABLE 1

Total U.S. Expenditures on Apparel and Apparel Services by Age Group

$ millions of U.S. dollars

Age      25-34     35-44     45-54     55-64     65-74     75+

1988    $33,072   $40,124   $28,727   $17,001   $11,056   $3,735
1995    $29,976   $48,195   $38,092   $16,577   $11,727   $4,452
2000    $27,083   $51,063   $45,628   $18,840   $11,249   $5,016

Data compiled by M. Ambry.

As the boomers progress into middle age, Americans between the ages of 45 and 54 are expected to increase more than one-third (see Table 2). The numbers will jump from more than 18 million in 1995 to a projected 26.6 million in the year 2000. The trends also show that there will not be as many people to step up and fill their shoes. For example, the number of people in the 25 to 35 age group is expected to shrink approximately 18 percent between 1988 and 2000.

SURVIVING DEMOGRAPHIC CHANGE

Research conducted on this topic shows that as America ages, fashion interest and the desire to exhibit fashion leadership (meaning to be one of the first to wear a new style) will decrease significantly. Given this scenario, manufacturers must take steps to address demographic changes, including a short-term refocusing and the development of a long-term plan. Looking at the short-term, the following approaches will be beneficial:

TABLE 2 Number of U.S. Households

thousands

Age     25-34    35-44    45-54    55-64    65-74      75+

1995    19,927   23,916   18,035   12,233   12,006    9,876
2000    18,004   25,339   26,603   13,903   11,516   11,126

Data compiled by M. Ambry.

Short-Term Refocusing Strategy

* Recognize that the U.S. population is rapidly aging and there is no boomer-size group of young people on the horizon.

* Consider placing more emphasis on designing and manufacturing clothing lines for a mature market rather than for the 20-something generation. This includes developing patterns that are designed specifically for older generations. However, it's important to note that while their bodies have changed, aging boomers have not changed their preferences and how they see themselves.

* When catering to boomers, particularly men, focus on offering comfortable garments that reflect today's casual lifestyle and the growing importance of casual Fridays.

* Recognize that service and convenience are particularly important to older consumers and quality often is more important than the latest style.

* Begin looking to diversify sales and develop an international approach as part of a long-term solution.

Long-Term Leverage

As the U.S. apparel market starts to feel the age squeeze, a global outlook and the development of strong brand awareness will become increasingly important as companies look to expand and grow. From a demographic perspective, there are several markets that offer future promise and others that companies may want to avoid: