Millennials, Baby Boomers and Implications for Clubs
This fall, NCA is releasing a comprehensive trends report based on a two-phase Delphi study of club industry experts and professionals. The report, “Navigating the Future: The Outlook for Private Clubs,” covers internal and external forces that will shape the future for clubs over the next decade and beyond, including potential changes in the industry makeup, changes in club membership, and ways in which the club of the future will differ from today.
Ten topics, including food and beverage, technology, workforce, and finance, are explored in the report, which contains findings from both qualitative and quantitative research conducted with the support of The McMahon Group in addition to extensive NCA research on big picture trends. Below is an excerpt from the Lifestyle and Membership chapter that discusses the preferences of two key generations and what their desires and habits could mean for private clubs.
In the second wave of our Delphi study, 64 percent of respondents reported concern over club membership losing its luster with the younger generation. Here, we interpret the younger generation to mean the 79 million Millennials (also known as Generation Y) born between 1980 and 2000. They’re being touted as the future’s most important and largest consumer generation with more spending power than any other generation in history according to Social Chorus, who surveyed more than 400 Millennials (ages 18-24). Multiple sources estimate the purchasing power of Millennials to be $170 billion, a number that companies, businesses, organizations and clubs can’t ignore. Millennials are the next frontier and tuning in to their priorities and preferences will be key.
So who are they and what do they want? Millennials …
- Are more likely than Gen Xers or Baby Boomers to interact with people who have a different ethnic or cultural background. Two in five say their social circle has become more diverse in the past two years and most Millennials (59%) say it matters to them that their social circle is diverse. (MediaPost)
- Are the most ethnically diverse adult generation—58 percent Caucasian, compared to 72 percent of Baby Boomers and 62 percent of Gen Xers. (Media Post)
- Take an approach to consuming news that reflects how they differ from Gen Xers: They perceive the “power of the pack” (or Facebook updates, tweets, and trending topics as we know them) as more valuable than a formal report from a journalist. (MediaPost)
- Grew up in a completely digital age and have the highest social networking penetration of any generation and the highest corresponding Facebook and Twitter use rates. (Social Chorus)
- Were raised in an era of economic instability, so they lack confidence in the economy. (Social Chorus)
- Spend 82 percent of their income and face massive student loan repayment, with the average loan for the graduating class of 2011 set at $26,600. (Nielson)
- Expect timeliness across all sectors, especially when it comes to customer service. They also look for customer service experiences to be less formal, varied and more authentic. (Restaurant Hospitality)
- Trust friends’ recommendations above all else. In fact, 96 percent of Millennials say friends are the most credible source of product information and 92 percent would consider purchasing a product if a friend recommended it. (Social Chorus)
Bright Spots for Clubs
A few of these bode particularly well for the club industry. Since private clubs depend on member referrals for growth, it’s encouraging that the next generation of club members is already accustomed to giving and receiving trusted recommendations. They are highly connected, social creatures on and offline and will likely look for new outlets, like clubs, to convene at once the bar scene is no longer appealing and other recreational pursuits take precedence.
Possible Rough Patches for Clubs
On the other hand, clubs are rarely early adopters of technology and technology is what enables customer service to function at light speed. Millennials may be frustrated with the pace of club life if they’re used to instant gratification at the touch of a button. Emphasizing the true authenticity and personalization of the club experience may help. Additionally, while Millennials will eventually be the biggest and most powerful consumer segment, at the moment they’re still getting established in their professions and paying off student loans. Junior memberships may be a way to introduce these young professionals to club life.
While Millennials may be the new frontier, Baby Boomers are currently in the driver’s seat. They’re the wealthiest generation, controlling 70 percent of disposable income in this country, and boasting $3.4 trillion annual buying power.
The youngest Baby Boomers turn 49 in 2013, while the oldest representatives of the generation will turn 67. There are vast differences between a 49-year-old coming into the prime of his or her career and a 67-year-old contemplating retirement. With this caveat in mind, according to a Spokesman-Review article, Baby Boomers …
- Are choosing to spend money on experiences, while shedding their belongings.
- Aren’t afraid of living alone once widowed, and Boomer dating is on the rise. Dating sites for people age 50 and older are exploding.
- Are downsizing to condos and migrating to cities to be close to the latest amenities and urban offerings.
- Are embracing preventative care and alternative medicine.
- Feel torn between their busy lives, enjoying their empty nests and caring for aging parents.
Bright Spots for Clubs
According to research company Ipsos, about every seven seconds a Baby Boomer hits 50 and starts to think about retirement. This means making decisions about free time, disposable income, travel and leisure. It could also mean the time has come to join a club. It’s already good news that they’re prioritizing experiences over belongings.
Furthermore, MediaPost reports that Baby Boomers have three hopes for 2013 and beyond: Becoming financially secure and living within their means; developing a better outlook and becoming more fulfilled; and maintaining and improving health. They also list travel and vacationing, philanthropy and volunteering, and sports-related physical pursuits as how they’d ideally like to spend their time. These are voids that club membership can fill.
Rough Patches Ahead
If Boomers delay retirement to continue working, it could mean less time to spend at the club, or a sign that economic times are still tough. Neither is good news for clubs. Additionally, if Baby Boomers do in fact opt to trade in suburbia for urban living, country clubs and golf clubs may suffer. However, perhaps this is good news for city clubs and country clubs located just outside major metropolises.
Watch for the full report, which will be available through the National Club Association’s online store this fall.
Laura Hayes is NCA’s communications manager.