At the Plumb Club Forum last year, a panel of jewelry industry leaders offered their views about the most pressing issues facing this industry. Doug Hucker, executive director of AGTA, raised a point that caught the audience by surprise. There were, he pointed out, very few young people coming into this industry.
This year, Jimmy West, executive director of Leading Jewelers Guild, told me about a book called The Age Curve: How to Profit From the Coming Demographic Storm, by Kenneth Gronbach.
Gronbach explains why sales of various consumer products first rocketed, and then tanked. For example, had either Harley-Davidson or Levi Strauss paid more attention to demographics, they’d have known long ago that the baby boom generation, the core customers for their products, would be maturing out of the market before long, and that the Gen X customers they need to replace them are more than 10 percent smaller than the boomer buyers.
That means any marketer targeting boomers would be prudent to expect a corresponding 10 per-cent reduction in sales as boomers mature out of their product’s core demo-graphic and Gen X is left to pick up the slack. Re-cession aside, can you imagine a 10 percent drop in business for seemingly no reason at all? And that figure assumes Gen X wants a given product as much as the boomers did and that generational tastes and cultural shifts haven’t made their own impact on sales.
Look at motorcycles, one category Gronbach uses to make his point. In the 1970s, super fast Japanese motorcycles, especially Hondas, flew out of dealers’ doors as quickly as they came in. Scads of young boomer men coveted and bought these bikes. Then suddenly the music stopped. Within a year, bikes went begging. Honda and the other Japanese bike makers were mystified. Why did the market stop loving their bikes? They were just as fast, just as exciting. They tinkered with pricing, advertising, the product. Nothing worked.
Fact is, they weren’t doing anything wrong—their market just progressed to the next phase of life wherein super fast motor-cycles had no place.
By the early ’80s, even the youngest boomers were in their twenties, when, according to the U.S. Census Bureau, Americans typically get married. As Gronbach points out, girlfriends tolerate bikes, but young wives, especially young mothers, loathe them. So if the bike didn’t get sold to buy the engagement ring, one can guess it was sold soon after the wedding—and for sure after the first kid came along. At the same time, there were simply not as many Gen X customers entering the prime fast-motorcycle-riding years.
Fast forward a decade or so and enter Harley-Davidson. The boomers who’d sold their super fast bikes years ago didn’t give up the dream of the open road, but now they’re older and ready to take their plea-sure rides a little slower—making them just the right customer for a heavy Harley.
Harley-Davidson did well by the aging boomers. Except now there’s another problem: The youngest boomers are in their late 40s, which means that most of those who wanted a Harley already have one. And the Gen Xers who are entering their prime Harley-buying years are a much smaller group than the boomers. Meanwhile, Gen Y, which is even bigger than the boomers, is hitting the prime years for buying super fast bikes.
What does that mean for jewelers? First, it’s critical now to determine where most of your current customers fall in the demographic continuum, and, if they’re boomers, begin making plans to adjust to a smaller customer base. Consumption in general tends to level off and drop after age 50, and Gen X, while individually able to spend, doesn’t have the numbers to keep up with boomer spending. Meanwhile, Gen Y is only starting to enter its marrying years. That’s good news for engagement ring sales, but reaching them will take a different strategy than what worked for boomers. As for jewelry in general, I’m already hearing jewelers say, “The kids don’t want this kind of stuff. What do I do now?”
More next month.