60 Seconds. Evolving customer base, the oppressed young…

Pensioners never been so well off but young people can’t afford a house. Or a car…:

The economic background:

• Interest rates were at 0.5% for 9yrs. And then they fell further.
• Picture a person keen to keep a party going.
• He drinks the beer & gin. Then the cooking sherry. Finally the mouthwash etc.
• That’s The Bank of England for you
• Unsurprisingly, asset prices have bubbled but incomes haven’t

Younger consumers:

• ONS reports that the average home in the UK is 7.6x salary.
• Remember when it was 3 times?
• Low interest rates make this ‘affordable’ but even banks aren’t that stupid; they won’t lend
• Home ownership is in decline and rents have spiralled to 40-50% of net income in some cases
• Have you tried to insure a car for an U-25 recently? Well don’t. Say £1,200, £1,500, £2,000
• The young are poor, can’t spend. Ask Luminar, Regent Inns, Po Na Na etc. what this implies

Older people:

• Many have cheap houses, no mortgages & index linked, final salary pension
• Triple Lock (a stupid, stupid idea) raises state pensions at higher of 2.5%, CPI or wage growth
• The Dept. for Work & Pensions says pensioners are 10% better off than they were 10yrs ago
• Hospitality operators should attract them while they last
• Meanwhile workers have seen no rise in income whatsoever on a decade view
• The Bank of England expects a further wage squeeze this year. Pensions will rise regardless

So what?

• Putting to one side the rights and wrongs
• And ignoring the sustainability of the above situation
• It is likely that the grey pound will remain strong whilst Gen Y will struggle
• Workers, families will also underperform their parents’ generation when it comes to spending
• Adapting business models accordingly would not be an altogether foolish thing to do