By Harrell Kerkhoff,
Maintenance Sales News Magazine Editor
Understanding the size, movements and desires of different generations can help business owners better prepare for upcoming changes within their specific companies, industries and marketplaces.
This was the message presented by demographer Ken Gronbach, a guest speaker during the All-Attendee General Session at the 101st American Brush Manufacturers Association (ABMA) Annual Convention, in Scottsdale, AZ. His presentation was titled: “Demographics, Big Data and Millennials Change Everything.”
Gronbach, president of KGC Direct, LLC (www.kgcdirect.com), is a nationally recognized author, expert and futurist in the field of demography (the statistical study of human populations) and generational marketing. During his presentation, Gronbach discussed shifting demographic trends prevalent in today’s culture and business climate. In other words, he provided a clearer understanding of “what’s next.”
Changes in population within specific countries, as well as globally, can have a profound influence on future generations. For example, just as the large baby boomer generation, those born from 1945 to 1964, influenced the number of schools being built and cars sold, so did members of the smaller Generation X, those born from 1965 to 1984, who required fewer schools and cars, etc.
“My goal is to show a different perspective on what is happening in our world today, and hopefully give you, as business owners and managers, some inspiration to improve the future of your companies,” Gronbach said.
He explained that the words “uncertainty” and “certainty” are similar in sound, but miles apart in meaning.
“If someone can improve your certainty, confidence, conviction and clarity about the future, will this help your business? I think so,” Gronbach said.
As a business owner or manager, it’s important to understand the difference between “symptoms” and “causes.” According to Gronbach, a person who is making business decisions based on money alone, is simply dealing with a symptom. People are the causes. Money is simply a symptom or an idea.
“If you don’t agree, take $40,000 and travel to a deserted island and see how much that $40,000 will buy you — nothing. You can’t even eat it. Maybe you can light it on fire,” Gronbach said. “People are the ‘cause.’ People purchase your products, and people work in your industries. It’s important to make your business decisions based on your understanding of people. This is part of demographics.”
THERE IS PLENTY OF ROOM FOR MORE
As a demographer, Gronbach said he regularly hears from people about their concerns over Earth’s supposed human overpopulation. Even with 7 billion people currently living on the planet, Gronbach said there is room for more, and plenty of resources to support greater numbers.
“I recently heard on TV that we are going to overpopulate the world. We are going to run out of food, air and space,” Gronbach said. “Let me explain why I’m not concerned. If you invited 7 billion of your closest friends to a party in your state, and you gave them 4 square feet so they could dance, what state could you hold that party? The answer is, ‘Rhode Island.’
“We don’t have a space issue. There is plenty of room. If you wanted to have 7 billion of your closest friends live near you, with the same population density as Manhattan, in New York City, you could put everyone in Texas. There is currently plenty of room in Manhattan, and there would be plenty of room in Texas.”
He noted that currently, 1 billion people live in the Americas (North, Central and South America), 1 billion people live in Africa, and 1 billion people live in Europe/eastern Russia. The remaining 4 billion people live in Asia.
“Do you know what is happening in different parts of Asia? The concept is called ‘replacement level fertility,’ which is simply the number of children that couples have — and this level is falling like a stone.”
This drop in births is happening in such places as Japan, South Korea and, although not officially in Asia, the country of Australia.
“I keep warning my South Korean friends, ‘You are not replacing yourselves, and if you don’t replace yourselves, you will lose your culture and you will lose your country. You need to have more babies,’” Gronbach said.
He added the opposite is currently taking place in Africa. There are currently six babies born per couple in Africa, although there is a high infant mortality rate in many parts of the continent. Future advances in education, technology and health care should improve the mortality rate. When this takes place, Gronbach said, Africa’s population could very well increase by 300 percent by 2050, to approximately 4 billion people.
“As a business owner and/or manufacturer, could this increase in population benefit your company? Are you considering what it could mean in the future as far as developing new products? Will there be new opportunities for you?” he asked.
Gronbach discussed a United Nations’ chart that showed the projected world population between today and 2100.
“There are currently an approximate 7 billion people living on our planet. Some demographers project the world population could go as high as 16 billion by 2100. Most demographers, however, are saying there will be 10 to 12 billion people living on the planet by 2050 to 2060, and then Earth’s population will start to recede,” Gronbach said.
Although human population on Earth continues to increase, the same is not true when looking at human population growth rates.
Gronbach explained: “The world’s population growth rate is actually falling. It hit a peak around 1964 and 1965 and has since declined. You won’t read about this in any history books, but 1965 was the year that half the women in the world started having only two children.”
He noted that in the United States, the current fertility rate is greatest in such states as Texas, Oklahoma and California, while it’s the lowest in the Northeast.
“In the future, the southern and western parts of our country will see greater population growth, while the Midwest and Northeast are projected to remain stable. Both of these things are good,” Gronbach said. “Currently, 25 percent of the babies born in the United States are born in either Texas or California.”
One reason for a growing U.S. population is the availability of food. Those living in the United States spend, on average, just 7 percent of their income on food.
“How does this percentage compare with the rest of the world? It doesn’t. This (the United States) is the best place on Earth for food and feeding its population. We live in a wonderful country,” Gronbach said. “Millennials (born from 1985 to 2004) are making a big difference on what food we consume in this country. It’s all about nutrition with them. We are now eating better, smarter and reading labels. We are also living longer.”
Today, the total percentage of U.S. households with children is 39 percent. The breakdown by race is: Hispanic, 56 percent; Asian, 48 percent; African American, 43 percent; and Non-Hispanic White, 35 percent, according to Gronbach.
“Do the math. The complexion of the United States is radically changing,” Gronbach said. “In 2015, 62 percent of the U.S. population was white. By 2045, the U.S. white population will be a minority.”
Currently, Latinos represent 17 percent of the U.S. population, which Gronbach said has provided great stability to the country’s overall population numbers.
“Latinos are family oriented, assimilate quickly into the U.S. culture, and have filled in the population deficit left by Generation X,” he said. “As a business owner, it’s important to ask yourself, 'Do I understand this growing consumer market?' Latinos represent a huge part of many market segments that could predict your company’s future.”
The same can be said for African Americans and Asians.
“African Americans make up 13 percent of the total U.S. population. As African Americans advance socioeconomically, so will their influence. Does your business understand this complex market? There are currently 40 million African Americans living in the United States,” Gronbach said. “Meanwhile, Asians make up about 5 percent of our total population, but this percentage is expected to grow as more Asians move to North America, mostly from China.”
KNOW YOUR U.S. GENERATIONS —
IT’S GOOD FOR BUSINESS
As someone who has studied many population characteristics over the years, Gronbach said one thing has always been clear — large groups of people are very predictable. A lot of this has to do with “supply and demand.”
Demographers can look at large groups of people and know what they are going to do based on their age. For example, the number of babies born in a country during a generation will influence the number of maternity wards. The number of children will influence the number of toy stores. The number of men between 18 and 25 will influence the number of motorcycles being sold.
“As we get older, we influence different things that are needed, such as cars, houses, and eventually coffins,” Gronbach said. “All you have to do is the math. A large generation has a different impact on business than a smaller generation. It’s that simple.”
Between 1905 and 2004, five basic generations have influenced the United States in different ways. According to Gronbach, they are:
■ The GI Generation, with 56.6 million live births from 1905 to 1924;
■ The Silent Generation, with 52.5 million live births from 1925 to 1944;
■ The Baby Boomer Generation, with 78.2 million live births from 1945 to 1964;
■ Generation X, with 69.5 million live births from 1965 to 1984; and,
■ Generation Y (the millennials), with 86 million live births from 1985 to 2004.
“The size of these generations goes from bigger to smaller to bigger to smaller to bigger. If you are part of Generation X, born from 1965 to 1984, you are part of a smaller generation. You are missing 9 million people, compared to the previous baby boomer generation. That is a lot of people who were never born — and thus, purchased neither products nor paid taxes to help support other people,” Gronbach said.
“Demographic dominos,” he added, is a term that is used when birth rates dip. It basically translates to, “Fewer babies mean fewer adults, fewer consumers, fewer workers and fewer taxpayers.”
“Look at the one-child-only policy that took place for a long time in China. The country went from couples who were having six babies to couples who were told to have only one baby. What does that do for future generations?” Gronbach said. “China is eradicating its labor force. Since 1979, the country has prevented 500 million births from taking place with its one-child policy. The great majority of the babies who were born were male. There are 90 million Chinese males under the age of 40 who have no prospects for marrying. That is almost the population of Mexico.”
He added that China introduced its two-child policy approximately three years ago, but the damage has already been done as there are fewer people now to support the country’s economy, employment demands and tax structure. This has been compounded by a lack of significant immigration into China over the years.
“It’s not that hard to figure out. If a country needs future income, it needs future children,” Gronbach said.
He added problems with low birth rates are being experienced in other parts of the world besides Asia. This includes Russia and Italy.
“Do you know who runs a country? It’s people who are 45 to 55 years old. Your average peak earner is 50 years old. If a country doesn’t have a critical mass of people who are the heavy lifters in paying taxes, then that country has a serious problem,” Gronbach said. “The United States has a bit of an issue with its current generation of heavy lifters. These are people from Generation X, currently 34 to 53 years of age. It’s a smaller generation, but has been augmented by the influx of Latinos coming into this country. They have made the generation larger.”
According to Gronbach, there is also a direct correlation between the size of middle aged residents in a country and the size of that country’s middle class.
“It’s vital to pay attention to the population at hand, and which group makes up your market of interest,” he said.
As an example, Gronbach told of his past work in advertising with the U.S. motorcycle industry in the 1980s, and how the motorcycle market greatly slowed when baby boomers became older and started to move away from purchasing these vehicles.
“As a business owner, you cannot fall asleep concerning what is ahead,” he said. “You need to understand what is next for your business as it relates to the influence of past and future generations.”
Gronbach gave another prime example of why being prepared for what is ahead is so important when it comes to future population demands.
“I recently received a call from a reporter in Florida who asked me when the baby boomer influence will begin to fade as it relates to that state’s real estate market. I responded, ‘It hasn’t started yet. Do you know when it’s going to stop, about 2035. Baby boomers aren’t even in Florida yet in large numbers. You don’t have any idea about what Florida is going to need,’” he said. “I added, ‘Not only is the state going to need more housing units for the baby boomers, it’s going to need more housing units for the people who are going to support the baby boomers. What is going to happen in Florida, in the near future with baby boomers, will be off the charts.’
“Again, it’s all about being prepared. Your business is no different.”
HERE COME THE MILLENNIALS
A lot has been made over the years about the sheer size of the baby boomer generation, and for good reason. As stated earlier, from 1945 to 1964, 78.2 million live births took place in the country. The best year for babies in this generation was 1957, when 4.3 million people were born in the United States.
“If you were born in 1957, you probably had to share a desk in grade school. You didn’t just waltz into college, and you weren’t offered every job that came along. You probably had to work a little harder for what you achieved, as there were so many of you,” Gronbach said.
However, after the smaller Generation X that represented “just” 69.5 million live births came along, members of a much larger Generation Y (the millennials) were born, and overtook the baby boomers.
“(Generation Y/millennials) is the generation that the rest of the world does not have. It’s the largest generation ever born in the United States, with 86 million live births from 1985 to 2004,” Gronbach said.
Members of this generation, he added, are more likely to favor environmental issues, are much more savvy toward technology, are far less bigoted toward other people and are starting to marry and have children.
“They are increasing the demand for housing and influencing the consumption of many types of products — in ways we can’t imagine. Is your company ready?” Gronbach said. “The United States is 25 million housing units short of its expected needs. How will this influence the purchase of all types of products? As a manufacturer, the demand for these products is going to go up. Will your current production handle this demand?”
He added that members of Generation Y also come with their own workplace requirements. This includes purpose and flexibility, transparency and integrity, fairness and empathy, and are most certainly focused on using greater technology.
“They also won’t work for mean people,” Gronbach added.
OTHER DEMOGRAPHIC TRENDS
Change is part of life. Several demographic changes will have a profound influence on not only everyday life in the near future, but overall business as well. It’s therefore best to prepare as early as possible for these changes. Such examples, according to Gronbach, are:
■ The baby boomer retirement and “brain drain” is beginning — “Are you ready for up to 25 percent of your top level leaders and older staff members to retire within the next five years? Make sure you take advantage of the proprietary information they currently possess before they leave,” he said. “Also, pay attention to the future of health care and elder care. There is currently not enough space to bury people right now. There are also not enough funeral homes. The growth of death care is going to be huge.”
■ The glass ceiling for women is shattering — For every 100 people enrolled in U.S. colleges, 60 are women; for every 100 people enrolled in law schools, 70 are women.
“Women are becoming more educated, and they are going to run things. Is your business and industry ready and participating in this change?” Gronbach asked.
■ Many good candidates for employment have served time — “There are currently two million men in prison in the United States. There are approximately 20 million men, aged 25 to 55, who are either not looking for work or can’t work because they are felons,” Gronbach said. “These people need a chance to re-enter mainstream life. ”
■ Soon, marijuana will be legal everywhere — “Once legalized, marijuana will be heavily taxed and become a bigger crop than wheat. It will also present a real problem for the trades and manufacturing as it pertains to productivity,” he added.
■ Problems with computer hacking will only grow: “Invest in information technology. Hire the best IT talent you can find. When these people say, ‘We need to upgrade our system to prevent theft,’ write that check,” Gronbach said. “As business owners, you will always need to stay one step ahead of the hackers.”
■ The best days are ahead for the United States — “The United States represents 5 percent of the world’s population but 35 percent of the world’s economy. We are the world’s economy. That is our future,” according to Gronbach. “The best days of this country, and many of its industries, are ahead. Believe it.
“The real question is, will you and your company be ready? Are you going to be able to meet greater demands for products? Do you have the financing in place to meet these demands? Do you have the equipment?
“As business owners and managers, successfully answering these important questions can mean the difference between future ‘certainty’ and ‘uncertainty.’”
To drive home his point on the importance of readiness and always looking for new ideas, Gronbach referred to the fast-food giant McDonalds.
“If you went to McDonalds in 1957 and pulled on the front door at 9 a.m., what would happen? Nothing, because McDonalds didn’t serve breakfast. What did McDonalds have to do to get into the breakfast business? Did it have to build more restaurants?” Gronbach asked. “No, all McDonalds had to do was open in the morning, hire another crew and start purchasing eggs. For McDonalds, breakfast was a multi-billion dollar idea.
“I have to ask, what is your next big idea? What are you missing right now? Get the top people in your company together and find your ‘Egg McMuffin.’”