It seems as though many iconic brands of the seventies and eighties are on their heels:
- Radio Shack declared bankruptcy and is planning to close 1,100 stores by the end of the month
- McDonalds’ January same-store sales decreased by 1.8%; in order to better handle the headwinds of 2014’s sales declines, they are replacing CEO Don Thompson with Steve Easterbrook
- Budweiser has seen a decline in barrel sales of its namesake premium beer from 50M in 1988 to 16MM in 2013, with a staggering 44% of 21-27 year olds telling the Company that they have never tried Budweiser
What do these three companies have in common? Millennials are not buying their products! According to the latestCensus Bureau data, the average age of a boomer is 58 and a millennial is 24, and, although 25% of boomers claim they will “never retire,” current demographics, combined with the ubiquity of technology, leads us to believe that business drivers over the next 10 years (when the average age of boomers is 68 and millennials is 34) will definitively shift to the millennials. We are seeing tremendous innovation in old and new brands designed to serve millennials (think Uber, TOMS, Apple), who are difficult customers given their coming of age during a recession and stronger feelings towards technology, ease of use, and social and environmental issues.
How is an investor to make sense of this dynamic consumer space? We believe that the following will be important in order to win:
- A strategy and implementable tactics developed (in part) by and designed specifically for millennials
- Multi-channel offerings for both branded products and services, including in-store, apps, social media, web, etc.
- Leadership that combines boomers, Gen X, and millennials of all backgrounds and has the dexterity of mind and experience to comprehend the convergence of consumer behavior, segment marketing, operations, and financial modelling, while maintaining the composure to lead a team
- Cogent, focused talent function optimized for recruiting, developing, and retaining the A-level talent that will be required to navigate the changes over the coming complex and dynamic decade
The changes occurring today feel a lot like the changes that took place within technology during the 90’s before the crash – significant new business models focused on paying for “eyeballs,” activated by funding from angels and professional money within the context of a battle for talent in an overall environment where incumbent large companies seem frozen or in slow motion.
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