Spending Power of Young Adults - US

Published by: Mintel International Group Ltd.

Published: Oct. 1, 2008

Table of Contents

Scope and Themes

What you need to know

Definition

Data sources

Consumer survey data

Consumer spend data

Abbreviations and terms

Abbreviations

Terms

Executive Summary

Market background—Demographics and cohabitation

Young adults, money and income

Spending patterns

Common life events and popular leisure activities

Shopping attitudes and behavior

Where they shop: A channel analysis

Young adults and the internet

Apparel preferences and purchase patterns

Race and ethnicity

Market Background—Population by Race/Hispanic Origin and Living Arrangements

Key points

More than 30% of the adult U.S. population are between ages 18 and 34

Figure 1: Population aged 18 or older, by age group, 2003-13

Young adults are ethnically and racially diverse

Figure 2: 15-34 year olds, by race/Hispanic origin, 2003-13

Figure 3: 15-34 year olds, by race/Hispanic origin, share of population, 2003-13

Most growth amongst whites in older age groups

Figure 4: U.S. white population, by age, 2003-13

Hispanic population growing fastest

Figure 5: U.S. Hispanic population, by age, 2003-13

Blacks have a high proportion of young adults

Figure 6: U.S. black population, by age, 2003-13

Asians have higher proportion of young adults than whites but lower than Hispanics and blacks

Figure 7: U.S. Asian population, by age, 2003-13

The incidence of marriage spikes in the mid-twenties

Figure 8: Marital status, by age, 2006

Many 18-24s are living in a period of transition

Figure 9: Living situation of 18-35 year olds, by age group, August 2008

Figure 10: Living situation of 18-35 yer olds, by gender, August 2008

Young Adults, Money and Income

Key points

Young adults have not reached peak earning years

Figure 11: Median household income, by age of householder, 2007

Young adults are more confident than older Americans

Most young adults have a credit and debit card

Figure 13: Incidence of owning checking account, debit and credit card, by age, August 2008

Most have some savings but not higher-yield CDs or a college savings plan

Figure 14: Types of savings accounts held by 18-34 year olds, by age group, August 2008

Spending Patterns

Key points

Expenditures of 18-24s fall as spending in the 25-34 segment rises

Figure 15: Trended total aggregate spending of all consumer units, by age, 2002-06

Figure 16: Trended index of total spending, by age, 2002-06

Under-25s reduce spending at restaurants as the 25-34 age segment increases food spending

Figure 17: Trended aggregate food spending, by age, 2002-06

Figure 18: Trended index of food spending, by age, 2002-06

Average housing expenditures increased between 2005 and 2006

Figure 20: Trended index of housing spending, by age, 2002-06

Young adults over-index on alcohol expenditures

Figure 21: Trended aggregate alcoholic beverage spending, by age, 2002-06

Figure 22: Trended index of alcoholic beverage spending, by age, 2002-06

25-34 year-olds over-index on apparel expenditures

Figure 23: Trended aggregate apparel and services spending, by age, 2002-06

Figure 24: Trended index of apparel and services spending, by age, 2002-06

Common Life Events and Popular Leisure Activities

Key points

Listening to music, dining out, or reading are the most popular leisure activities

Figure 25: Participation in leisure activities/hobbies in the past year, by age, February 2007-March 2008

Affinity for music drives MP3 purchase

Figure 26: Ownership of MP3 players and music-playing phones among 18-34 year olds, by race and gender, April 2008

Shopping Attitudes and Behavior

Key points

Young adults, like Hispanics, have a high affinity for shopping

Figure 27: General group shopping attitudes, by age, February 2007-March 2008

18-24 year-olds somewhat more impulsive and less discerning

Figure 28: Attitudes towards impulse shopping, bargains and unknown brands, by age, February 2007-March 2008

18-24s more influenced by unique retail environment and more willing to travel

Figure 29: Attitudes about shopping environment and habits, by age, February 2007-March 2008

Where They Shop: A Channel Analysis

Key points

Most have visited a shopping mall in the last four weeks

Figure 30: Incidence and frequency of visiting shopping malls, by age, February 2007-March 2008

Figure 31: Incidence and frequency of visiting strip malls, by age, February 2007-March 2008

Grocery, mass and warehouse channels most popular for food purchases

Figure 32: Incidence of shopping specific channels for food, by age, August 2008

Wal-Mart dominates grocery channel

Figure 33: Food stores shopped at in previous four weeks, by age, February 2007-March 2008

Mass, department and mall channels most popular for non-food purchases

Figure 34: Incidence of shopping specific channels for non-food items, by age, August 2008

Wal-Mart and Target shopped at far more frequently than club and dollar stores for non-food items

Figure 35: Mass merchandisers, discount and club stores shopped at in previous three months, by age, February 2007-March 2008

Walgreens and CVS capture the biggest share of drug store share

Figure 36: Drug stores shopped at in previous four weeks, by age, February 2007-March 2008

More than half shopped electronics stores in the previous three months

Figure 37: Home electronics stores shopped at in previous three months, by age, February 2007-March 2008

Macy’s, JCPenney and Kohl’s among most popular department stores

Figure 38: Department stores shopped at in previous three months, by age, February 2007-March 2008

Home improvement popular with many; Home Depot and Lowe’s dominate channel

Figure 39: Home improvement stores shopped at in previous three months, by age, February 2007-March 2008

Old Navy and Victoria’s Secret among most popular apparel stores

Figure 40: Apparel stores shopped at in previous three months, by age, February 2007-March 2008

Young Adults and the Internet

Key points

25-34 year-olds drive online retail sales

Figure 41: Internet shopping, by age, February 2007-March 2008

Convenience and price are the most important drivers of online purchase

Figure 42: Reasons for shopping online, by age, August 2008

Figure 43: Offers through which merchandise or services were ordered in the last 12 months over the internet by age, February 2007-March 2008

Lack of a credit card may be discouraging purchase among 18-24 year-olds

Figure 44: Method of purchase for internet shopping, by age, February 2007-March 2008

Apparel, books, music and technology commonly purchased online

Figure 45: Items purchased on the internet in the last 12 months, by age, February 2007-March 2008

Apparel Preferences and Purchase Patterns

Key points

18-24 year-olds value fashion while 25-34s are more focused on function

Figure 46: Attitudes about apparel, by age, February 2007-March 2008

Women tend to buy more frequently than men

Figure 47: Female apparel purchase, by age, February 2007-March 2008

Figure 48: Women’s apparel/accessory items purchased in the last 12 months, by age, February 2007-March 2008

25-34 males more likely to report purchasing clothing in the last year

Figure 49: Male apparel purchase, by age, February 2007-March 2008

Figure 50: Men’s apparel/accessory items purchased in the last 12 months, by age, February 2007-March 2008

More than six in 10 25-34s purchased children’s clothing in the last year

Figure 51: Children’s clothing purchased, by age, February 2007-March 2008

Figure 52: Age of children clothing bought for, by age, February 2007-March 2008

Advertising and Promotion to Young Adults

Analysis of television advertisements

Liquor and beer companies focus messaging on young adults

Vodka ads appeal to blacks and the hip-hop crowd

Figure 53: Absolut vodka ad, 2007

Figure 54: Ciroc ad, 2007

Domestic beer ads target broader segment, but remain focused on men

Figure 55: Bud Light Lime ad, 2007

Figure 56: Miller Chill ad, 2007

Companies target young adults with integrated campaigns designed to pitch new age and energy drinks

Figure 57: SoBe Life water, 2007

Figure 58: Red Bull Wiiings, 2007

Figure 59: Mountain Dew AMP Energy drink, 2007

Preference for social media tools shifts during young adulthood

Twitter.com

Flickr.com

Race and Hispanic Origin

Key points

Consistent with average HH incomes, Asians have the highest saving balance and blacks have the lowest

Figure 60: Current account balance, by race/Hispanic origin, August 2008

Figure 61: Investing accounts, by race/Hispanic origin, August 2008

Figure 62: Savings accounts, by race/Hispanic origin, August 2008

Distinct purchase patterns of Asians and blacks reflect some lifestyle differences, but both groups have a high affinity for cooking

Figure 63: Frequency of purchase of selected products in a year, by race/Hispanic origin, August 2008

Acculturated Hispanics tend to exhibit attitudes and behaviors similar to whites, while Spanish speakers are distinct

Figure 64: Hispanic shopping patterns, by language preferred when reading, January 2007-November 2007

Less acculturated Hispanics tend to be more influenced by retail location than the shopping experience

Figure 65: Hispanic influences on retail channel choice, by language preferred when reading, January 2007-November 2007

Figure 66: Retailers shopped at by Hispanics in the last 3 months, by language preferred when reading, January 2007-November 2007

Deeper Analysis—Young Affluents, Minimalists, Scholastics

Young Affluents (19%)

Minimalists (66%)

Scholastics (15%)

Figure 67: Clusters, August 2008

Figure 68: Current living situation, by clusters, August 2008

Figure 69: Type of accounts, by clusters, August 2008

Figure 70: Average savings balance, by cluster, August 2008

Figure 71: Average checking balance, by clusters, August 2008

Figure 72: Average credit card balance, by clusters, August 2008

Figure 73: College enrollment status, by clusters, August 2008

Figure 74: Frequency of category purchase, by clusters, August 2008

Figure 75: Incidence of category purchase on the internet, by clusters, August 2008

Figure 76: Proportion of total spending done in retail stores, by clusters, August 2008

Figure 77: Clusters by gender, August 2008

Figure 78: Clusters by age groups, August 2008

Figure 79: Clusters by income group, August 2008

Figure 80: Clusters by ethnicity, August 2008

Figure 81: Clusters by Hispanic origin, August 2008

Methodology

Appendix—Additional Expenditure by Category Tables

Food at home and away from home

Food at home

Figure 83: Trended aggregate food at home spending, by age, 2002-06

Figure 84: Trended index of food at home spending, by age, 2002-06

Food away from home

Figure 85: Trended aggregate food away from home spending, by age, 2002-06

Figure 86: Trended index of food away from home spending, by age, 2002-06

Spending categories where young adults tend to under-index

Healthcare

Figure 87: Trended aggregate healthcare spending, by age, 2002-06

Figure 88: Trended index of healthcare spending, by age, 2002-06

Entertainment

Figure 89: Trended aggregate entertainment spending, by age, 2002-06

Figure 90: Trended index of entertainment spending, by age, 2002-06

Personal care and services

Figure 91: Trended aggregate personal care products and services spending, by age, 2002-06

Figure 92: Trended index of personal care products and services spending, by age, 2002-06

Reading

Figure 93: Trended aggregate reading spending, by age, 2002-06

Figure 94: Trended index of reading spending, by age, 2002-06

Cash contributions

Figure 95: Trended aggregate cash contributions, by age, 2002-06

Figure 96: Trended index of cash contributions, by age, 2002-06

Personal insurance and pensions

Figure 97: Trended aggregate personal insurance and pension spending, by age, 2002-06

Figure 98: Trended index of personal insurance and pension spending, by age, 2002-06

Appendix—Additional Hispanic Acculturation Tables

Figure 99: Hispanic attitudes about shopping and family/children, by language preferred when reading, January 2007-November 2007

Figure 100: Hispanic attitudes about apparel, by language preferred when reading, January 2007-November 2007

Figure 101: Female Hispanic women’s apparel/accessories bought in the last 12 months, by language preferred when reading, January 2007-November 2007

Figure 102: Male Hispanic men’s apparel/accessories bought in the last 12 months, by language preferred when reading, January 2007-November 2007

Figure 103: Hispanic consumer confidence and purchasing propensity, by language preferred when reading, January 2007-November 2007

Appendix—Additional Consumer Tables

Figure 104: Event expected to experience in the next 12 months 5% or greater, by age, February 2007-March 2008

Figure 105: Incidence of shopping specific channels for food, by household income, August 2008

Figure 106: Incidence of shopping specific channels for non-food items, by household income, August 2008

Figure 107: Share of shopping at key food channels, by age, August 2008

Figure 108: Share of non-food shopping at key channels, by age, August 2008

Figure 109: Convenience stores shopped at in previous four weeks, by age, February 2007-March 2008

Figure 110: Home furnishing stores shopped at in previous three months, by age, February 2007-March 2008

Figure 111: Office supply stores shopped at in previous three months, by age, February 2007-March 2008

Figure 112: Specialty stores shopped at in previous three months, by age, February 2007-March 2008

Figure 113: Frequency of purchase of selected products in a year, by age, August 2008

Figure 114: Frequency of purchase of selected products in a year, by household income, August 2008

Figure 115: Frequency of internet purchase in a year, by household income, August 2008

Figure 116: Current account balance, by household income, August 2008

Figure 117: Everyday accounts, by race/Hispanic origin, August 2008

Figure 118: Attitudes about shopping and kids, by age, February 2007-March 2008

Figure 119: Living situation, by race/Hispanic origin, August 2008

Figure 120: Frequency of internet purchase in a year, by race/Hispanic origin, August 2008

Appendix: Trade Associations

Abstract

Young adults-those between 18 and 34-represent 30.9% of all adults in the US and over 70 million customers. The segment is among the most ethnically diverse in the US, comprising 26% of the white population, but 33.9% of all Hispanics and large portions of the black and Asian segments of the US population. This generation is on the leading edge of the trend toward multiculturalism.

While this segment is a potentially lucrative target for many companies, it is also complex and must be examined carefully. As such, this report addresses a variety of questions regarding large-scale product development, brand building and communications efforts:

• What are the typical living arrangements of young adults?
• What type of lifestyles do young adults lead, and what leisure activities do they prefer?
• What are the average checking and savings account balances of young adults?
• What proportion has a credit card, and how much credit card debt do young adults typically have?
• What are the annual expenditures of young adults in various product categories?
• Where do young adults prefer to shop?
• How are 18-24s distinct from 25-34s?
• How do the spending patterns of various race and ethnic groups differ?
• How are advertising firms currently pitching to the segment?

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