The rise of digital technology and the growth of online shopping have opened up opportunities for smaller businesses to develop new markets and reach new customers. Knowing more about the demographics, preferences, and behaviors of today’s American consumer will allow your business to benefit from these opportunities.
Today’s American consumer is more diverse than ever before. This holds true in reference to race and ethnicity [source], as well as other factors such as income, education, geographic location, and more. Millennials represent the most diverse generational cohort in American history, with approximately 44% belonging to ethnic and racial minorities. In contrast, only 25% of baby boomers belong to ethnic and racial minorities. The diversification of the American consumer base will only continue in the future with the rise of the Gen Z cohort.
Overall, incomes are rising for American households. Median adjusted income for a millennial household was $69,000. This is the highest figure for young adults (22-37) in America for the past 50 years. For Gen X: $85,500. For baby boomers: $77,600.
Within each of the core consumer groups that make up the American market, such as millennials, Gen X, or baby boomers, there are increasingly diverse subsets of consumers who have increasingly distinct needs, habits, and socioeconomic situations.
Although the demographic profile of today’s American consumer is very diverse, certain consumer preferences still hold true for all age groups and income levels. A recent study from Deloitte Insights found that consumers consider product price, product availability, and shopping convenience to be the three most important factors influencing purchasing decisions. Getting a great deal on a product’s price is what American consumers value above everything else.
What are the latest trends in consumer purchasing behavior in today’s digital environment?
24/7 consumption: Today’s American consumer is more connected than ever before. 96% of Americans shop online. 81% of Americans own smartphones, nearly 75% own desktop or laptop computers, and roughly 50% own tablets. And consumers are always connected. The ability to make purchasing decisions on any internet-enabled device is a 24/7 experience.
Omnichannel shopping: Consumers prefer to shop across the multitude of available channels, whether that means shopping online from a personal computer or mobile device, via telephone, or in a brick and mortar store. Further, consumers view, compare, and research products across multiple channels and devices before they make their final purchase.
Information sharing: In today’s digital environment, consumers constantly share information about their purchasing decisions across media platforms. For example, they may write a product review on a company website, or post about a product on social media. This information sharing may significantly influence consumer purchasing decisions. 70% of consumers trust online recommendations more than brand statements.
Online retail is expanding: Consumer groups such as millenials and high-income earners are still prominent online purchasers (wallet share of 28% and 27% respectively). However, consumer groups that have been slow to move to online retail in the past, such as African Americans, Hispanics, and low-income earners, are now among the fastest-growing populations of online consumers (CAGRs of 14.7%, 11.5%, and 14.3% respectively).
Strategies for Success
In light of consumer demographics, preferences and behaviors, how can businesses best position themselves for future success?
Understand the diversity of your customers: Due to the diversity of today’s American consumer, the most successful companies will be those that develop a detailed knowledge of their customers’ specific needs and demographic profile. This knowledge will also help you identify new areas of opportunity.
Appeal to enduring consumer preferences: Product price, availability, and convenience are the core preferences of today’s consumers. Offering customers a great deal on your product remains the most effective way to appeal to people across lines of age and income.
Offer multi-channel shopping: Few consumers are loyal to a single shopping channel. Your business can benefit by operating on multiple channels and providing a seamless and consistent customer experience across channels.
Personalize customer service: Today’s consumer has the ability to research, compare and share information about every potential purchasing decision. Information sharing online is a powerful influence on brand reputation and consumer behavior. Customers are three times more likely to recommend a brand after they’ve had a positive interaction with them. This provides an opportunity for businesses to have more personalized interactions with potential customers and deliver superior customer service.