US Insights

Retailing to the New Working Class

Maurice Nicholson

Senior Vice president and Managing Director

Brands 03.05.2018 / 08:00

kt_com_Takeaway 4

A wave of demographic change in America will have profound effects on our cultural center.

By now, you’ve probably heard ad nauseam about the changing face of America, in particular, how America is becoming a minority-majority nation that will profoundly impact businesses and social institutions. Retailers are especially affected by these changes because they are on the front lines every day. But it’s worth asking why these changes mean something special. After all, aren’t people just people?

To put some numbers to these demographic shifts, the mid-decade population growth estimates of the U.S. Census projected that non-whites would account for 92 percent of U.S. population growth from 2015 to 2020. Hispanics were projected to account for a little over half this growth. Although Hispanic population growth has slackened off recently due to a slowdown in immigration from Mexico, Hispanics will still account for the bulk of near-term U.S. population growth.

This wave of demographic change in America will have profound effects on our cultural center.

Understanding the ripple effects of these demographic shifts will be key to unlocking tomorrow’s opportunities.

However, examining these changes through the lens of traditional multicultural demographics is limiting and blinds us to bigger opportunities. Brands that properly tap into the larger cultural shifts resulting from these demographic shifts will be better able to win in tomorrow’s marketplace. Two things, in particular, are occurring, one related to education and the other to urban metro areas.

Educational attainment among African Americans and Hispanics is increasing. Data from the 2014 National Center for Educational Statistics show a growing percentage of African Americans and Hispanics obtaining a high school diploma as well as earning a bachelor’s degree or higher.

But these percentages of educational attainment remain lower than those for non-Hispanic whites (and Asian Americans, too). So, while African Americans and Hispanics will dominate the demographics of the population as a whole, they will be slower in ascending to the upper and upper-middle classes. Instead, they will be a growing part of the working class. While yesterday’s working class mass market was overwhelmingly white (and rural), tomorrow’s mass market will be much more multicultural.

Urban areas are also becoming more multicultural. By overwhelming margins, African Americans and Hispanics live in major urban metro areas. In 2010, Hispanics were 16 percent of the total population (18 percent today), but nearly half lived in 10 large urban metro areas. While three-quarters of African-American population growth from 2000 to 2010 occurred in the south, it was mostly in major urban metro areas like Atlanta, Houston and Dallas. Only a few urban metro areas nationwide, like Provo, Boise, Nashville, and Charleston, WV saw more growth among non-Hispanic whites than among minorities. The driver of urban population growth is multicultural.

Whereas in years past, racial and ethnic minorities were to a certain extent isolated minorities, now they have reached a tipping point in major urban metro areas. They are large enough and successful enough to the point where they feel empowered to interpret the American Dream for themselves, infusing it with cultural and contextual relevance that reflects their reality.

Instead, they live in an increasingly urban and connected world, with preferences and aspirations shaped by role models found in their own communities and by exposure to what’s hot and trendy around the world in places like London or Seoul, even if they may not have the financial means to get there in person. These consumers may be working class but their tastes are often very urbane and cultivated.

In this environment, culturally relevant products, messaging and brands matter to retail. Regional variations in culture have become a big part of the American retail landscape. Major metros are creating their own multi-hued, multicultural American identity, while smaller metros are becoming increasingly white, with a different set of choices reflecting a different cultural identity. Retailers that acknowledge and embrace these emerging and evolving American identities, with their differing sets of local and regional cultures, values, expressions, needs, wants and aspirations, will be the ones that win.

Source: Kantar

Editor's Notes

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