24/7 Wall St. – Insightful Analysis and Commentary for U.S. and Global Equity Investors
Posted: April 19, 2012
Consumer tastes are changing at a greater rate than ever before. Not surprisingly, the purchasing habits of the youngest generation present the most dramatic shifts — a reflection of what they find important. 24/7 Wall St. has identified eight popular products that the “Facebook generation” is not buying.
Generation Y, generally defined as those born between 1980 and 1999, have lost interest in many of the se
rvices and products their parents found important. For example, younger Americans are less interested in cars. In 1998, 64.4% of potential drivers 19-years old and younger had drivers licenses. By 2008, that rate had dropped to 46.3%, according to the Federal Highway Administration.
What young adults care about has shifted. A recent study by Gartner research revealed that, if forced to choose, 46% of all 18-to-24-year-old drivers in the United States would choose access to the Internet over access to a car.
However, many products that have declined in popularity among the youth are more a result of the changing tastes across all ages than a generational shift. Examples include lower sales in traditional cell phones, maps and CDs. In 2002, compact discs had a more than 95% market share of music sales. In 2010, they had less than half. Various reports suggest this decline is the result of all age groups moving away from CD sales toward digital sales.
24/7 Wall St. has identified eight of the country’s most popular products that are losing favor, either solely among young adults or at a significantly higher rate among that group. To demonstrate these products’ waning popularity, 24/7 reviewed data from a number of major research firms and government agencies. We looked at products in every major sector, including transportation, digital electronics, food, beverages and other miscellaneous consumer goods.
In 2010, at the launch of Facebook’s then-new messaging service, Mark Zuckerberg predicted the decline of electronic mail, stating that “Email is too slow … email is too formal.” Time is proving Zuckerberg right. From December 2009 to December 2010, time spent using email by the 12- to 17-years-old age group dropped a tremendous 59%. In comparison, time spent using email by people 55 to 64-years-old has
increased 22%, and it has increased 28% among those 65 years and older.
Light beer has become to the current generation of youth what regular beer was just a few decades ago. In 1990, more Budweiser was sold than the top three light beers combined. Twenty years later, Budweiser has taken a backseat to Bud Light, which sold as much as the top four regular beers combined. The country has taken a major generational shift in favor of light beers, which now account for four of the five most popular beers sold domestically. As reported by St. Louis Today, Budweiser believes four out of 10 people in their mid-20s have never tried regular beer. In 1988, that rate was just 1.5 out of ten. Beer Marketer’s Insights editor Eric Shepard said when asked about young drinkers turning to light beer, “The heaviest beer drinkers are young males and that’s where the market had been going over the last decade or so.”
While readership rates for print newspapers are falling across the board, the country’s younger generation has abandoned the medium the most. As of 2010, only 7% of 18- to 24-year-olds reported having read a print newspaper the day before, according to the Pew Research Center for the People & the Press. This is the first time that figure has reached single digits. This age group also has among the highest rates of people reportedly receiving news through social networking sites or Twitter.
As recently as 1998, 64.4% of potential drivers ages 19 and younger had drivers licenses, according to the Federal Highway Administration. As of 2008, that amount had dropped to 46.3%. Additionally, 46% of drivers aged 18 to 24 report that they would choose Internet access over owning a car, according to research firm Gartner. People are also waiting longer to get their licenses. According to the University of Michigan’s Transportation Research Institute, in 1983 one-third of all licensed drivers in U.S. were under 30. Today, only 22% of drivers are under 30. Companies such as General Motors (NYSE: GM) have reached out to more youth-oriented advertising companies, such as MTV Scratch, to address this widening gap in their sales.
5. Landline phones
Landline phones are losing popularity among Generation Y, who are becoming increasingly content with only having wireless phones. According to a report from the National Center for Health Statistics, 51.3% of Americans aged 25 to 29 lived in households with only wireless phones in the first six months of 2010. This is the first time the number of adults in wireless-only households has been greater than the num
ber of adults in landline households for any age group. When looking at all ages combined, less than one-quarter of adults lived in households with only wireless phones.
Smoking rates among young people have historically exceeded those of the general population. Now that group is dropping the habit quicker than anyone. According to the Centers for Disease Control and Prevention, the share of people 18 to 24 years of age who were current cigarette smokers decreased by 17.6% from 2005 to 2010 — the largest decrease among any age group. The share among 45- to 64-year-olds dropped only 3.6%. The amount of Americans 65 and older who smoke actually increased 10.5%.
7. Desktop computers
Millennials are the only generational group to be more likely to own a laptop computer than a desktop. According to data from Pew Research Center, 70% own a laptop, while 57% own a desktop. By contrast, 64% of those aged 57-65 own a desktop, while only 43% own a laptop. Ranjit Atwal, research director at Gartner, states in LAPTOP Magazine that those in Generation Y simply “are not buying PCs as their first, or necessarily main, device.”
Adults aged 18 to 24 watch less traditional television than any other age group in the country, according to Nielsen’s most recent Cross Platform Report. That group, on average, watches just under 24 hours per week. The national average is approximately 32.5 hours. One of the leading reasons for this difference is Generation Y’s relationship with the Internet. According to a report published in April 2010 by electronics review/research company Retrevo, 23% of those under 25 watch “most” of their television online, compared to 8% for everyone.
–Charles B. Stockdale and Michael B. Sauter