I quite like trend forecasts and the like.
A big part of the job is thinking ahead, and building brands that are fit for the future as well as now, and that means thinking about how things are going to change. Being forced to read and think about the future and consider how much things have changed in recent years challenges me out of my default cynicism, and it also means really bright people write about their areas of expertise in brief, digestible language, which in areas like emerging tech can be difficult to find otherwise.
It’s fair to say though that they can tend towards hyperbole, and while being useful food-for-thought, plenty of the predictions made won’t come to pass, so don’t merit building the future of your brand around.
I’ll leave the tech and science-y stargazing to those better qualified, but it strikes me that most of these forecasts have a bit of a blind spot around some pretty consequential social change which is already baked-in over the next few years, and probably should be informing how you think about the future of your brand.
It’s not massively cheerful I’m afraid, but if it helps I think it makes for a more interesting strategic challenge.
Ageing
Last month the birth rate dropped to its lowest ever level, 1.44 children per woman, almost exactly a third below replacement rate. It wasn’t a surprise, birth rate has been trending down consistently for decades, it’s also not likely to slow down. Fewer babies today means fewer working age adults in the future.
At the same time people are living longer than ever. Right now there are about 3 workers for every pensioner, by 2050 that’s expected to be 1:1.
The consequences of this are the subject of much debate and policy, but it strikes me that a few things are pretty certain:
Retirement age will increase significantly. We simply cannot afford for it not to, and longer, healthier lives make it easier for people to continue working.
The tax burden will increase. Healthcare commands a huge amount of tax revenues, and an ageing population with fewer workers will need each of them to contribute more of their earnings to keep the lights on.
Large scale immigration will continue in some form, to compensate for the shortfall of working-age Brits.
It’s worth thinking through the implications for your brands and businesses -
Who fills all the berths on cruise ships if people are working well into their 70s? Who buys the products you sell if incomes are suppressed by increased taxes? How do people finance their purchases if interest rates stay higher as governments continue to borrow? Does inflation stay higher? If so, how does that affect how people bank/spend/save for retirement?
2. Immigration
In whatever guise, it’s likely that high levels of immigration will continue. The UK will continue to make itself an attractive place to do business, and as such will need to ensure a ready supply of workers. This is likely to impact the culture our brands exist in in a few ways:
Community cohesion will be impacted in all the ways you think; the public are generally opposed to large-scale immigration regardless of whether the economy needs it, there’s likely to be continued tension. But it will also impact in less obvious ways: the trend towards secularity is likely to reverse - there are already more Christians in London than at any point since Thatcher was in power, with the counterintuitive consequence that it’s now the part of the country least likely to support gay marriage. How else will this manifest?
Rhetoric and culture is likely to polarise. The media landscape shows each of us different stuff now. Content is increasingly personalised and radical, the world is turning inward. Can brands participate in culture without being forced into a point of view?
Brand new audiences will keep entering the market. Anyone who’s lived abroad for any length of time is familiar with the overwhelming challenge of navigating a world where nothing is second nature, walking around a supermarket with no mental defaults is exhausting. Newly arrived migrants are a massively valuable and overlooked planning audience, they require different approaches to reach but as a result are much easier to build SOV with.
3. Wage compression
The minimum wage will rise again in April, someone working a 40 hour week at minimum wage will earn around £25,000. Workers earning minimum wage have actually seen a fair amount of pay growth in recent years - median wage for bar workers has grown 26% since 2011 while median salaries have grown less than 2%. This is pretty indisputably a positive change, but it means the gap between the gap between traditional low-income and middle-income jobs is now very small. This will create/has created some real challenges for an industry entirely designed to encourage people to buy non-essential goods.
As low-wage workers see their buying power increase relative to the average earner how will their spending change? Where will they trade up? What opportunities does this offer to broaden your audience base?
The traditional relationship between the social status afforded by a job and the income it provides is no longer valid. What on earth is an ABC1 any more? If further education no longer offers the promise of a significantly better earning power and comes with a massive incremental tax bill (student loans start being paid off at an income of £25k, so even graduates taking on minimum wage work will be paying tax at 37% rate) then what’s the point of it? Segmenting audiences along these lines increasingly feels bonkers.
If learning a trade no longer offers a significant increase in pay relative to non-skilled labour (the average nurse earns £33k, the average HGV driver £26k) then how will people seek to assert or demonstrate their status? How will it affect their purchasing?
Hopefully some interesting food for thought for the new year. As always, I’d love to know what you think.
Merry Christmas
Mystic Greg