According to new data released
by Visa USA, an overwhelming majority of both Baby Boomers (79 percent) and
Echo Boomers (74 percent) believe that our society will one day operate without
cash and checks and will conduct all payment transactions electronically. Visa’s
study of generational spending preferences debunks stereotypes and highlights
the impact and consequences of one generation passing the mantle of economic
influence to the next.
Visa USA estimates by the
year 2015, Echo Boomers and Baby Boomers will account for more than 50 percent
of total consumer spending, $2.45 trillion and $4.6 trillion respectively. Currently,
industry estimates show that Echo Boomers are responsible for $0.4 trillion
in annual spending compared to $3.8 trillion by Baby Boomers.
“These
two generations are the powerhouses of U.S. consumer spending,”
said Wayne Best, Visa’s chief economist. “The
shift in economic power from the Baby Boomer generation to the Echo Boomer generation
will have significant implications across all retail categories. While Baby
Boomers will remain a force even into their golden years, the rate at which
Echo Boomer’s spending will increase is a testament
to their future economic impact.”
To better understand this
generational shift in spending influence and what that will mean to the future
of the U.S. economy, Visa USA commissioned a survey of Echo Boomers (18 to 28
years old; born 1979 to 1989), and Baby Boomers (43 to 61 years old; born 1946
to 1964), entitled “How America Spends.”
Generational Stereotypes
Do Not Apply To Spending
Previous installments of
Visa’s “How
America Spends” study have revealed unique
insights into the spending attitudes and behaviors of America’s
largest and most influential generations - Echo Boomers and Baby Boomers.
Findings reveal that younger
consumers between the age of 18 to 28 are defying conventional wisdom when it
comes to stereotypes often associated with their generation. According to the
study, Echo Boomers are demonstrating a more practical and mature approach to
spending beyond their years, they view spending as a way to give back to others,
they prefer retail categories that help relieve feeling time-stretched and look
to older generations for buying cues.
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Nearly half of Echo Boomers (48 percent) describe themselves as savers.
-
Even at their young age, more than 70 percent of Echo Boomers are concerned
about having enough money for retirement, a degree of concern similar to the
about-to-retire Baby Boomers (78 percent).
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88 percent of Echo Boomers like to buy things for others more often than buying
things just for themselves.
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Echo Boomers cited dining out at restaurants as their second largest expense
(45 percent), after housing costs (69 percent) in a given month.
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Echo Boomers said their spouses (70 percent), children (63 percent) and parents
(48 percent) had the most influence on their spending.
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37 percent of Echo Boomers believe older generations have an influence on
their spending behavior.
Baby Boomers, on the other
hand, have largely negative views of Echo Boomers, they tend to misunderstand
their younger counterparts and as they leave the workforce and age, are beginning
to spend according to their life stage.
-
Only 25 percent of Baby Boomers describe the Echo Boomers as an admirable
generation compared to 68 percent of Echo Boomers who admire Baby Boomers.
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Approximately 68 percent of Baby Boomers believe Echo Boomers are too self-centered
and focused upon themselves
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Baby Boomers cited medical and dental costs and going out to restaurants as
their largest expenses (45 percent and 42 percent respectively), after housing
(75 percent).
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When it comes to splurging, Baby Boomers most often spend on their children
or grandchildren (34 percent) and on vacations (16 percent).
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Baby Boomer’s spending is primarily influenced
by their spouses (63 percent), rather than their children (36 percent) or
parents (34 percent).
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Only 15 percent of Baby Boomers believe the younger generation is capable
of influencing their buying cues.
The Migration to
a Cashless Society
More and more, consumers
are relying on their payment cards for purchases that were once only possible
using cash, checks or coins. Innovations in technologies and products are facilitating
the transition to a cashless society. Evidence of the migration away from cash
and checks includes:
- Debit:
More than three-quarters of adults in the U.S. have a debit card, according
to The Nilson Report, a leading industry analyst publication, and the Federal
Reserve Bank reports that debit cards are the fastest-growing payments type
at retailers nationwide.
- Government
Migration: More than 30 states, including California and Texas, are saving
millions of taxpayer dollars by switching from cash to Visa reloadable prepaid
cards to disburse child care, unemployment, and other social benefits.
- Contactless
and Mobile Payments: Visa implemented a contactless platform that has
the flexibility to accommodate a wide range of products, including credit,
debit and prepaid, as well as a nontraditional forms of payment such as mobile
phones and handheld devices.
Marketing the Migration
Prior to the introduction
of the Visa Check Card, less than two percent of Americans used a debit card.
In 2006, Visa debit products1 generated more than $600
billion in consumer spending.
To help communicate the
benefits of paying with plastic, Visa has aired four national television commercials
in the past six months, including “Lunch,”
“Lawn & Garden,”
“Morning in Manhattan”
and “Food Court,”
that illustrate the convenience and efficiency of paying with a Visa card. In
each spot, one consumer attempts to pay with cash or a check and ultimately
disrupts the harmony of life.
“Consumers’
payment preferences have evolved. Recognizing this growing opportunity, our
advertising campaign highlights the shortcomings of cash and checks,”
said Kevin Burke, head of marketing, Visa USA. “As
consumers look for payment options that enhance their everyday life, we’ll
continue to use a variety of channels and techniques to reinforce the benefits
of Visa payment options that empower cardholders.”
How America Spends
How America Spends was
conducted by The Segmentation Company (TSC), a division of Yankelovich, between
February 22, 2007 – March 12, 2007. The study
included 1,000 interviews (500 Echo Boomers; 500 Baby Boomers) via telephone
using random digit dialing (RDD). Survey results are nationally representative,
and the margin of error for each generation group is ±
4.5 percent.
To review the “How
America Spends” survey, please visit www.visa.com.
About
Visa USA
Visa USA is a leading payments
brand and the nation's largest payments system, enabling banks to provide their
consumer and business customers with a wide variety of payment alternatives
tailored to meet their evolving needs. Visa USA is committed to increasing the
choice, convenience, acceptance and security of Visa payments for all stakeholders
– financial institutions, cardholders and merchants.
As of March 31, 2007, in the United States, more than 521 million Visa-branded
cards have been issued by more than 13,000 financial institution customers.
Visa products generated $1.8 trillion in total volume in the United States during
the four quarters ended March 31, 2007. Visa enjoys unsurpassed acceptance around
the globe. For more information, visit www.visa.com
About
The Segmentation Company
The Segmentation Company
(TSC), a division of Yankelovich, is a full-service custom research division
conducting research for business, the media, associations, and government. It
specializes in studies conducted for media release as well as in segmentation
research, positioning studies, brand equity, and market sizing.
Yankelovich, Inc. (www.yankelovich.com)
delivers measurable breakthroughs in marketing productivity for it clients.
For more than 30 years, the Yankelovich MONITOR has tracked and forecasted consumer
value and lifestyle trends. Yankelovich is headquartered in Chapel Hill, NC.
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