A good friend of mine always had on his desk a small wooden plaque with the carvings, "Time is Uncertain: East Dessert First."
The last few years had been tough for all of us, especially for the retiring baby boomers, which are the seventy-six million American children born between 1945 and 1964. Since the downturn in 2007, those who are old enough to start retiring have seen their nest eggs shrink by at least 15% if not 50%. Those who still have a few years before retirement, like many of my friends, might even have lost their jobs.
As a distinct generation, born after World War II, we boomers tend to think of ourselves as special, very different from our parents and grandparents. The boomers are blessed with opportunities, as many of us grew up in a time of significant government investments in infrastructure, housing and education. As a group, we are the wealthiest, most active and most physically fit generation and the first to grow up genuinely expecting the world to improve with time.
I believe the boomers will continue to shape our future. I believe many of us will start to show defiance, that in spite of persistent uncertainties all around us, we are determined to enjoy our desserts. In fact, with eight baby boomers retiring every minute for the next twenty five years, the boomers will be the most important generation ever for anyone interested in selling products and making money.
Studies have shown that the baby boomers are now controlling over 70% of the nation's disposable income and responsible for at least $230 billion in sales of consummer products. This trend will continue and will in fact, accelerate. As we get older, we will have more time to spend and with bitter lessons learned from the recent past, we will be more inclined to spend it earlier than later, and spend it on ourselves rather than on our children.
I believe two major trends will dominate future spending among affluent retiring baby boomers: health and travel.
And this is not an American trend. It is a global trend. Lots of boomers were born outside of North America after World War II and they are ready to taste the desserts as well.
Recently I visited Hong Kong. I was invited to two companies and spend much time with their CEO's. The discussions were interesting, reinforcing what I already know.
The first company is a $100 million no-name manufacturer specializes in small household electric appliances. Their speciality was electric irons which over the years meant steam irons. So their technical expertise, in addition to high volume, low cost manufacturing, is the understanding of small scale steam generation, the interface between electricity and water.
In the last forty years, they have grown from a tiny sweat shop to one of the biggest OEM's, building products for a wide variety of well known American brands. And their business model has also changed from strictly manufacturing to design and manufacturing (from OEM to ODM).
Interestingly, they are currently making a gradual product transition demanded by their Chinese customers for domestic consumption. They are now leveraging their technical know-how's to make electric steamers, basically a steam iron with an open lid. They will continue to sell to the west but they believe bigger market growth would come from China.
As we talked about marketing and brand building, it is clear that as the Chinese population ages (same as their counterparts in America and elsewhere), eating healthy is of paramount importance. And steaming their food is starting to become popular again. But instead of a bamboo steamer which apparently only Americans still use, the Chinese want their own version of George Foreman's electric culinary contraption.
The second company is completely different. It is an apparel company selling its own brand. Forty years ago, the company was also a sweat shop, making ski jackets for the western market. Today, they own their own stores in Hong Kong and outsource their manufacturing to China. In the beginning, their customers are local Chinese (in the former British colony) but now 60% of their business comes from mainland Chinese tourists visiting Hong Kong from across the border.
And interestingly, their products changed as well. They have long since diversified from ski jackets to outer wears of all kinds, always emphasizing qualities such as water-proof, breathability, quick-dry, etc. In the past, their customers are people who are interested in outdoor sports, skiing, hiking, etc.
In the last few years, they have started to notice something interesting. Their customer base has diversified as well. A few still buys their products for outdoor sport but more and more, their customers are buying to prepare for overseas travelling.
As Chinese becomes more affluent, they are interested in exploring the rest of the World and they find that they need new wardrobes. Water-proof, breathability, quick-dry, etc., are important features for tourists as much as they are for athletes.
The name of the company is eikowada.com and their logo is EW. I decided to do some pro bono marketing and suggested that their slogan should be "Explore Our World" as a play on Northface's famous "Never Stop Exploring". I also throw in some free advises on brand building and product differentiation.
Whoever says there ain't no such thing as a free lunch was right. This was an expensive lunch. Come to think of it. It would have been much cheaper if I just keep my mouth shut and charge for the consulting. Fortunately I did have my dessert first.
Have a wonderful Sunday, everyone.