Shifting demography is telling a dynamic, captivating story, and every company would be wise to pay attention

June 1, 2014
In 1998, Kenneth Gronbach received a phone call from a Levi Strauss marketing executive. Gronbach, who was president of an advertising company and handled the marketing for...

HOW important is it to understand demographics?

In 1998, Kenneth Gronbach received a phone call from a Levi Strauss marketing executive.

Gronbach, who was president of an advertising company and handled the marketing for a retail jean store called Bob’s Stores, had told a Bob’s executive of his research into shifting demography, which showed that the company needed to rethink its merchandising strategy, including the type of jeans it would sell to the new Generation Y market. Apparently the Levi Strauss people had heard about this.

“Our sales are flat,” the Levi Strauss executive told Gronbach. “We were spiking straight up and suddenly sales flattened. Is that due to a change in demography?”

“Yes,” Gronbach said, “Baby Boomers can’t fit in your jeans anymore because they’re getting fat. And the generation right behind is too small. You can go after the very young.”

“We can’t do that. We only sell to 18- to 34-year-olds.”

“I’m sorry to say this, but you’re going to have serious problems.”

Levi Strauss’ sales went from $8 billion to $2 billion.

“That’s what happens when you don’t pay attention,” Gronbach said. “This is very serious stuff.”

But here’s the good news: He believes the best days for the United States and the trucking industry are ahead of us, not behind us.

He believes housing and the economy will recover within the next three years; millions of Boomers will retire and move to warm climates; the biggest generation in the history of the US, Gen Y, will start to marry, enter the workforce, and consume; manufacturing will return to the US; wealthy immigrants will flood into the US and the Americas; and one-third of our population, Latinos and African-Americans, will advance socio-economically as never before.

“I don’t know where the bad news is,” he said. “I see nothing but good news.”

As long as we pay attention to demographics. 

“This is the Land of the Free, Home of the Brave,” he said. “Brave people make things happen because they are not afraid to take chances. Fear and uncertainty prevents us from taking chances, making decisions. Fear and uncertainty are often products of bad information. Trucking in the US did not get to be where it is today based on fear-based decisions. So you don’t ever want to make fear-based decisions. You want to make factual decisions.”

He said there are seven billion people in the world. When countries get rich and have food and medical care, their people live longer.

“Nothing increases the size of a population quicker than a population that lives a long time,” he said. “When you don’t have babies, you don’t have adults. You don’t have future consumers, future labor, future anything.”

Demography class is in session

His Demography 101 lesson: There are two similar groups of people. One has 1000 people and one has 500 people. If we prepare the same amount of food for both groups, and the group of 500 doesn’t finish, can we assume they were not hungry or didn’t like the food?

“No, it’s a smaller group,” he said.

His Demography 201 lesson: More is more.

“Groups of people are predictable,” he said. “There is good information out there that we already paid for with our tax dollars. When you’re born, there are certain things you consume and things you need along the way: automobiles, bicycles, schools, retirement homes. It’s very predictable. So if you see big populations, head toward them. You know sales are going to go up because big groups of people consume more than small groups.”

His Demography 301 lesson: If you want to predict the future, do the math!

“People born between 1965 and 1984 are Generation X, and they currently are 30 to 49 years old,” he said. “They crippled the toy industry. Toys R Us could not figure out why it wasn’t working. Because Generation X was smaller. You can’t sell the same number to Generation X because they’re smaller. You need to understand population size. It’s that simple.

“Time ages humans. You can’t slow it down. You can’t speed it up. You can’t pretend it doesn’t happen. The smallest generation of the last century is currently 70 to 89 years old. The infirm and dying years. The largest generation of the previous century, the Baby Boomers, is 50 to 69 years old. Starting now and over the next 20 years, the number of elderly will increase by 40%. It’s going to be huge. Want to get into an elderly business? Do you transport elderly people in trucks? I don’t know.”

Generation Y was born between 1985 and 2004, and is bigger than the Baby Boomers (about 83 million). Generation Y is trucking’s biggest labor source ever.

“It is a monstrous group,” he said. “We’re the only Western culture and industrialized nation that has a Generation Y. It’s a generation that was precipitated by higher-than-replacement-level fertility—replacement level being two kids. We have the biggest labor force heading toward you that the US has ever seen.

“They are very green, humanitarian, and do not see race or color. They understand nutrition and will demand transparency. They are flooding the labor market and will face 50% unemployment. They will open a sea of small businesses because they need to eat. They will speak cyber as a first language.”

He said Generation Y men are flooding technical schools in a huge paradigm shift.

“We have Boomers exiting,” he said. “Boomers were the technicians and heating and air conditioning people. Generation X did not take technical jobs. But Generation Y men are flooding technical schools. Technical schools are filled up with the best and the brightest, seeking high-paying, in-demand jobs. Today, a good mechanic can earn more than an attorney.

“Generation Y will start to marry, set up households, and have children. They will buy clothing, cosmetics, and hygienic products as they seek to attract mates. They will inhale electronics and entertainment. They will buy and build houses, rent apartments, and buy cars. They will change the way food is bought and consumed. And almost everything they consume will be shipped by truck.”

He said Boomers will redefine retirement, dying, and funerals, and will eventually flood into Florida, and the South in general.

“As the current housing market corrects, watch out!” he said.

The biggest worker retirement in the history of the United States is about to happen. He said the US could easily lose 10-15 million Boomer workers in the next two or three years to retirement, or about 10% of our labor. This will tax human resources departments to the limits.

“These people are scared to death about what’s to happen,” Gronbach said. “Small businesses will be forced to deal with succession. They are not prepared. The Golden Age of the recruiter will be the next 10-15 years.

“Look for women to lead. The glass ceiling will shatter.
Women outnumber men in college at a 60/40 ratio. They will run things. On average, women make about 75% of what men make for the same job.  Is that fair? Seriously, we will have to deal with that.”

Immigrants and their effects

A breakdown on the minority influence:

•  Latinos make up 17%. “Latinos are spiritual Catholics. Latinos are very family-oriented and take responsibility for their elderly. They are aspiring and assimilate into US culture within 20 years. The United States economy will benefit dramatically from the contribution of the Latino culture as they advance socio-economically. Latinos will drive trucks.”

•  Asian-Americans make up 5%. “But that will change as Asians begin to flood this continent, especially from China. Asians will drive trucks.”

•  African-Americans make up 13%. “The symbolic impact of the Obama family in the White House has had a profound, positive influence on African-American culture. As African-Americans advance socio-economically, so will their contribution to the overall culture and strength of the nation. This is huge.

“Did Dr. Martin Luther King ask for a hand-out?
No. He asked for a hand–up. He said, ‘We want to be productive citizens. So please give us a hand-up so we can participate.’ Here we are, 50 years later, and the change is coming. It’s going to change our culture and so many things about us.

“Bigotry is an enemy to prosperity. Oppression is expensive. The United States needs to cultivate as many heavy-lifter taxpayers as possible, especially in the Generation X age range. How quickly can we advance the Latinos and other immigrants?” 

He said the employee’s market of the last 20 years has been replaced by the employer’s market, until further notice.

“This is your opportunity to hire the best workforce you have ever had,” he said.

Will manufacturing return to the United States? He said it will, because of a declining China.

In 1979, China instituted the one-child policy in order to alleviate social, economic, and environmental problems. The goal was to reduce fertility by 75%, it was successful: The number of prevented births is estimated at 500 million between 1979 and 2014.

“There are 30 million young Chinese men who have no prospect of marrying,” he said. “What happened to the women? China’s policy is the biggest demographic, economic, and humanitarian blunder in the history of the world.

“China has serious issues. In 2016, China’s labor force will begin to decline in number. China’s elderly population will mushroom. China produces but does not consume because they do not adequately pay their labor force. China’s currency will continue to increase in value. China’s management structure, the family, has been decimated. China needs water. Shipping costs will continue to rise. China’s quality will inevitably decline.

“Per capita contribution to GDP is $50,000 in the United States and $5000 in China. The United States has not been at China’s level of productivity since 1865! And we’re worried about China?”” ♦