Consumer optimism is on the rise and, along with it, consumer spending. This year, spending is projected to increase by 3.6%, according to Mintel’s annual American Lifestyles report. But what are they spending on?
Pent-up demand from the Great Recession and its aftermath are driving the four categories projected to grow the most by 2018:
- Nonessentials such as leisure and entertainment (projected 28.5% growth)
- Vacations and tourism (projected 27.3% growth)
- Technology and communications (projected 25.2% growth)
- Alcohol on premises (projected 23.7% growth)
A record number of Baby Boomer reaching retirement, combined with Millennials’ tendency to value experiences more than possessions, is behind the increased spending on dining out, alcohol, vacations and leisure activities.
Vacations and tourism: In the past year alone, the percentage of consumers spending more on vacations almost doubled—a strong sign of improved optimism that the economy is finally on the rebound. In contrast, only 30% of Americans say they’ll be spending less on vacations this year.
Leisure and entertainment: Young adults (18-34) are the most likely to be spending a greater percentage of their income on this category, even though they spend less on it dollar-wise than other age groups. However, the Baby Boomers’ retirement is expected to power the category even more.
Consumer electronics: Because this market is becoming saturated, its growth rate has slowed. Six in 10 consumers already have smartphones and four in 10 have tablets, so a large part of future growth will come from electronics-related services (such as video on-demand) as opposed to purchasing hardware.
Self-improvement: Americans are spending on making themselves better this year. Asked what their goals were, they said:
- Increased family time (88%)
- Healthier diet (88%)
- Exercising more (87%)
- Getting household finances in order (84%)
- Achieving a better work/life balance (82%)
- Taking care of personal appearance (81%)
How can you get your share of these growing markets?
- Emphasize how your product or service helps consumers do something better—whether that’s looking better, spending more time with their family or managing their time and money more effectively.
- Focus on aftermarket products and services for consumer electronics.
- With consumers opening their wallets, now is the time to open or expand a restaurant, bar, nightclub or other entertainment venue.
- Research your market and know the difference between what young single Millennials want, what Millennial families want and what Baby Boomer retirees and near-retirees want. This way, you’ll be able to effectively target the biggest markets for these growing categories.
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Karen Axelton is Chief Content Officer of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her company’s blog at SmallBizDaily.com.