The Gen X Factor

Written by:



We can gain some perspective on economic and retail success over the coming years by looking at how the generations have weathered the Great Recession and how they are recovering. Gen X, those born between 1965 and 1980, often gets ignored, sandwiched between the massive influence of the Boomers and the emerging power of the younger millennials. While Gen X may be smaller in numbers than either Boomers or millennials – they number at around 66 million, compared to 70-plus million Boomers and millennials-they may be in a better position to be big spenders over the next decade. Retailers should take another look at this often-ignored generation.

Gen X has one big thing going for it. According to Pew Research Center, \”Gen Xers are the only generation of households to recover the wealth they lost during the Great Recession.\”

According to the Pew study released this year, Gen Xers, ages 27 to 42 when the recession hit, had the majority of their wealth, about half of the assets they owned, invested in their primary residences. Because of timing-the recession hit just as they were starting their households and families-they bought nearer the pre-recession real estate price peak than other generations. As a result, when the real estate market collapsed, they lost more home value than other generations. This compared with Boomers, who for the most part, already owned their homes and had a greater share of their assets in financial and investment accounts, including 401K accounts. Millennials, just beginning to enter adulthood at the time, had not yet begun to establish homes or to build financial investments and thus had less wealth to lose.

Gen X Recovery and Rebound

According to Pew, the median net worth of Gen X households declined by 38 percent from 2007 to 2010 (the bottom of the decline), falling from an annual average of $63,400 to $39,200. Boomers realized a net wealth loss of 26 percent during the same time period. By 2016, the median net worth of Gen Xers had climbed to $71,900, exceeding its loss. By contrast, Boomers\’ median net worth in 2016 was $73,200, well below their $84,900 net worth in 2007. (Pew data is based on 2016 dollars and scaled to three-person households.) The average nationwide decline in home prices, from the price peak in 2006, was an average of around 30 percent. In most parts of the country, home prices have returned to peak valuations, and in many areas, prices have shown significant increases beyond that.

From 2010 to 2016, Gen X median net worth per household increased by 115 percent. Additionally, the median income for Gen Xers increased by more than 20 percent during the period, surpassing income increases for all other generations.

Older Gen Xers are now entering their 50s and enjoying their peak income earning years. As they move into top management positions, they will make substantially more money. The youngest Gen Xers may still have kids in school or college, but older Gen Xers are becoming empty-nesters. They are focused on living well and still have time to build up retirement savings. According to a Met Life study, 82 percent of Gen Xers own homes now, and many are trading up to better homes. They are moving into a chapter of their lives where they have more discretionary dollars to spend on housing, consumables, travel and entertainment.

Gen X: A Refresher Course

While most marketers are familiar with trends triggered by Boomers and millennials, data on Gen X is fuzzier. Gen Xers, were born between 1965 and 1980, and they experienced a significant heyday in the early 1990s when they were emerging adults. Here are some Gen X hacks:

  • Gen Xers were the first generation where as a majority both parents worked and were out of the house most of the day.
  • They came along at a time when the divorce rate was dramatically rising, leading to more single-parent households.
  • They practically raised themselves. Called \”latchkey kids,\” they came home from school and were on their own until their parents came home from work.
  • This encouraged independent decision making and social organization into groups of like-minded youths, with a lot of free time on their hands.
  • Never before had an American generation had so much unsupervised time and so much independence at such an early age.

Their geographic soul center was Seattle and they invented Seattle Style, which had a major impact on the rest of the country. The layoffs and cut- backs during the recession of the early 90s, triggered a back to nature movement, into the woods and wilderness and away from responsibilities and workplace commitments. The dress uniform-called Seattle grunge-was composed of hiking boots, rugged wear jackets, Lumber Jack plaid shirts, vintage leathers and fur trimmed caps-the grungier the better. Popular TV sit-coms featuring life in outback Alaska became the norm, and before long, the moniker \”slackers\” was applied. The more radical urban Gen Xers, joined the Goth movement, dressing in black, accented with nose rings and tattoos, boosting tattoos into the mainstream and the popularity they have today.

Gen X was nothing if not adventurous, they invented and/or were the main force behind the popularization of skateboarding, snowboarding, mountain biking, adventure hiking, and off-roading in Jeeps and ATVs. Rock-climbing walls started springing up everywhere. They invented the X-Games, where extreme risks and bravado counted above all else.

In a national survey at the time, the human trait that Gen Xers valued the most was, \”a sense of humor,\” and they brought the concept of having fun into the workplace with them, often at odds with the attitudes of their older, more serious workaholic boomer managers.

If the musical touchstone for the Boomers was the Beatles, then the nexus of the Gen X music scene was the Seattle music culture developed around Kurt Cobain of alternative rock band Nirvana. The shocking suicide death of Cobain, in 1994, rocked the generation, and the Seattle scene morphed from music and counterculture into the new digitized world of technology, run from Microsoft\’s Redmond headquarters and San Francisco\’s Silicon Valley. Gen Xers signed up for the digital revolution and absorbed technology full tilt. Today, Gen Xers spend more time on video games, shopping online, and using social media than any other generation. According to Nielsen research, Gen X is the \”most connected generation,\” using social media 40 more minutes per week than millennials.

As the generation matured, they rejected their earlier bucolic leanings and embraced jobs and high-energy urban environments. Delaying marriage, compared to prior generations, allowed them to enjoy an extended period of being single. Indeed, the colossally-popular \”Sex in The City\” became the generation\’s mantra.

As Gen Xers started families, they became helicopter parents, hovering over and protecting their children in a way unseen before in history and splurging on them with every consumer product imaginable-perhaps in part because they felt so ignored when they were young.

Opportunities and Optimism

After hanging out somewhat below the radar for years, Gen X is now primed to step into a starring role. On a global basis, Gen X now dominates workplace leadership, already accounting for 51 percent of business management roles. Sixty-eight percent of the CEOs of Fortune 500 corporations are currently Gen Xers, and that number will only grow in coming years.

Due to a fluke of timing, they avoided the worst of the recessionary layoffs, which devastated the ranks of older Boomers. As Boomers were laid off en masse, Gen Xers stayed around, offering hard work for lower pay, helping companies make up the deficit left by the departing older workers. And many of them stayed put-25 percent of Gen Xers have been with the same company for 15 or more years. They experienced promotions and good pay and the perks of long-term employment. Their work diligence has paid off in the long run, giving them a higher level of both job security and financial security. Now that they are reaching their peak earning years, they have money to spend, and they have the potential to have a significant impact on the economy.

Two Traumatized Generations

For most consumers, images of the Great Recession are rapidly fading in the rear-view mirror. Consumer confidence is up, more jobs are available, wages are on the rise, home values and investment portfolios have regained losses, with third-quarter 2018 earnings at S&P 500 companies up 26 percent, compared to last year. Retail sales seem poised to show healthy gains, both in stores and online.

A better understanding of consumer segments can help retailers reach their goals. While Gen X appears to be set for financial optimism and an increasing ability to spend, the economy is not seeing the spending levels expected from either Boomers or millennials. Post-recession, we are seeing that shoppers overall have become thriftier, shop around more for the best deals, and are less attracted to expensive, status-seeking luxury goods. But for some Boomers and millennials, the reasons run deep.

From a psychological perspective, one could say that portions of the Boomer and millennial generations-primarily older Boomers and older millennials-have been traumatized to some degree by their experiences during the Great Recession, much in the same way the parents of Boomers, who were children during the Great Depression were conservative and nervous about spending for the remainder of their lives.

There is no way to measure how years of mass layoffs, often followed by sustained periods of unemployment, and two financial downturns in less than a decade (the Dot-com crash, 2000-2002; and the Credit and Real Estate collapse, 2007-2009) have affected people. Boomers over age 50, caught up in the Great Recession, were left with little if any time to rebuild financial assets before retirement, so it is no wonder that they may be overly cautious. Scars from financial losses run deep and fear of another dire financial event is a constant concern.

A recent Bloomberg article, \”Rich Retirees are Hoarding Cash Out of Fear,\” describes the dilemma. Author Ben Steverman says, \”Older Americans sit atop unprecedented piles of assets built through stock market and real estate booms.\” The article goes on to say that today\’s retirees are hesitant to spend, even if they have the resources to do so. In the past, retirees\’ spending down their life savings have traditionally given a lift to the economy. Indeed, Wall Street investment houses confirm that retirees are not drawing down saving accounts to the degree expected, based on prior retiree generations. Many retirees are simply moving required distribution funds from IRAs and 401Ks to other savings or investment accounts. Today, fear of another major downturn, fear that their money will run out before they die (especially in light of rising medical and long-term care costs), and concern about leaving a respectable estate for descendants, are curtailing spending by many retirees.

According to a recent report from the Congressional Budget Offices (CBO), Americans nearing retirement were hit harder by the Great Recession than other age cohorts and are taking longer to recover. A recent AARP article said that \”the Recession hit 50- to 64-year-olds the hardest\” of any age group.

We can also attribute much of the hesitancy on the part of millennials to spend and their lack of confidence in getting married, buying homes and starting families, to emotional trauma caused by the Great Recession. As children, they observed their parents experiencing layoffs and suffering financial losses. In many cases, they or their friends were evicted from homes due to foreclosures. Just as older millennials started graduating from college, the job market dried up. Many millennials had to take jobs in fast food, retail, hospitality and the like-jobs that did not give weight to college diplomas, career ambitions, or the size of student loans. No wonder so many millennials-estimates range from 34 percent to as high as 40 percent-are still living at home with Mom and Dad. And even though the economy has improved, many millennials, now with good jobs and accumulated savings, continue to live with their parents, fearful or not yet ready to become independent adults.

Headlines say we are in the midst of an economic boom, but while the boom may have been good for Wall Street, technology companies and large corporate businesses, its benefits have been less dramatic for the retail industry. Some retailers are doing well, but many others are struggling. Mall vacancy rates hit a seven-year high in the third quarter of 2018, at 9.1 percent. By mid-year 2018, according to Coresight Research, more than 4,000 store units had closed (yes, many new stores are opening, but most of them are retailers like Dollar Stores and C-stores, with units of 8,000 sq. ft. or less). Bankruptcies have claimed some favorite brands including Toys R Us, with 881 doors shuttered by liquidation. Sears\’ bankruptcy and planned restructuring, may result in 182 more units being closed by year-end, though options are still being pursued (the retailer has already closed more than 1,000 Sears and Kmart stores in recent years and currently operates around 700 units). As brick-and-mortar stores have struggled to meet sales goals, it has become easy to blame the problem on Amazon and online shopping.

Cultural Impact on Retail

But the systemic changes we are experiencing in the retail industry cannot be blamed on any one thing. Shopping patterns are shifting, but so are consumer sentiments. In a culture where the majority of purchasing decisions are based on wants rather than needs (most Americans\’ basic needs have already been met), emotions play a leading role. And right now, large segments of two key consumer generations are struggling to heal from deeply personal traumatic experiences that came along at key junctures of their lives, when they were extremely vulnerable: millennial teens transforming into adults, and older Boomers transitioning into retirement. Transitions such as these require more personal and financial independence, just at the time when the economy rendered that impossible for many.

One could argue that everyone has suffered from recent traumas: from 9/11 and other bombings; to catastrophic weather events, from Katrina to Hurricane Michael; from the Las Vegas massacre to \”active shooter\” events at neighborhood schools, movie theaters, and even churches and synagogues; and [accidental] police shootings. More headlines seem to come daily, and for those directly involved in these tragedies, the world is forever changed. But those watching at a distance as terrible events play-out on television are deeply affected as well. Add the stress of losing your own job; or one-third of your hard-earned savings; or your home; or your best friend, who was shot in a school bathroom; and the anxiety adds up. It is especially difficult for young people, who often do not fully understand what is happening and are unsure how it will affect them.

All of that plays out against a wallpaper of catastrophic events impacting the nation: wars, from the Boomers Vietnam War to the Persian Gulf War and ongoing military involvement in Afghanistan and the Middle East; the assassinations of politicians, from President Kennedy and Martin Luther King, to the recent attempted assassination of Senator Steve Scalise, shot while playing baseball; millions of California acres and homes consumed by forest fires; health scares about disease outbreaks, from AIDs to Ebola; nuclear threats, from Chernobyl to Fukushima, and citizens terrified of North Korean nuclear bomb threats, crowding into civil defense shelters in Hawaii (false alarm or not). All of today\’s generations have a lot to deal with. Certainly, we should not lose sight of the good things that also happen, but it seems like the bad things are becoming more horrific, affecting larger numbers of people, and are happening more often.

Traumatic experiences bring emotions into play, including fear, considered by many psychologists to be the most powerful of all emotions. Due to fear, victims of trauma often become less social and may tend to withdraw or voluntarily isolate themselves, a condition that today is greatly enabled by the internet and social media. Someone may have hundreds of \”friends\” online, but communications are mostly in one or two sentence texts, and most people are lucky to have a handful of real friends, with whom they can actually confide. Jean M. Twenge, professor of psychology at San Diego State University and author of the book, \”iGen,\” who conducts detailed annual surveys and research on teens, found that \”Teens are now lonelier than at any time since the survey began in 1991.\”

According to the Centers for Disease Control and Prevention (CDC), suicide rates among young people between the ages of 10 and 17 increased 70 percent from 2006 to 2016, and suicide is the third leading cause of death in young people, ages 10 to 24. The suicide rate has also increased at an alarming rate among Boomers. The CDC says that for the United States, suicide rates increased in the total population by 30 percent from 2000 to 2016.

Sometimes, fear transmutes into anger, hostility and resentment-blaming others-a possible explanation for some of the confrontational mood that we see in America society today. According to the FBI, hate crimes rose by 17 percent in 2017, an alarming increase.

Retail Touch Points

And as retailers talk about engaging shoppers with emotional connections and entertaining experiences, perhaps many Americans are just burned out emotionally: they want it simple, safe, satisfying and less stressful. They do not want to have an encounter with a rude salesperson or have to stand in a long line. If they are at the store, they do not want to find that the item they want is out of stock and be told to \”order it online.\” In some cases, they do not even want to have to drive to the mall-especially millennials, many of whom who do not even own cars. For some, it may just be easier to sit at home in their pajamas and order stuff online than to deal with the great big, scary world out there.

For all victims of trauma, recovery takes time. Confidence, trust and security have to be rebuilt. Support from family, friends, employers and society is essential. Some people may find ways to help themselves. For example, it comes as little surprise that Pet Supplies and Services was one of the few merchandise categories that did not suffer a huge sales decline during the Great Recession, and the category continues to grow. Comfort Animals or Comfort Pets have become a lifeline for many Americans struggling with the after-effects of trauma and other mental health issues, including soldiers with PTSD. Airlines are challenged to find room to accommodate the increasing numbers of comfort pets traveling with their owners. Some college dorms bring in comfort animals to interact with students and to smooth fears after upsetting events, or even before finals. And comfort foods, popular items in restaurants in the years following the recession, continue to be best-selling items at many restaurants.

Retailers and Consumer Psychographics

Retail is a dynamic, constantly changing industry: merchandise, customers, marketing, delivery systems and shopping environments are in a state of constant flux. Stores must compete with Amazon and other online sellers, who can push prices to the bottom because they have low overhead. Goods from China, ultra-cheap for many years, are becoming costlier as foreign wages increase and the threat of trade tariffs loom. Customers are becoming disenchanted with the sea of sameness in style offerings and the serious deterioration of quality in imported goods, as millennials begin to desire more serious, better-quality fashions. As inflationary price increases begin to sting consumers\’ pocketbooks, it is becoming more difficult to Induce customers to buy and to continue buying.

While it is important to know the demographics of customer segments, today, it is also important to understand the psychographics of those segments. While some millennials and Boomers are doing just fine, significant portions of these generations are dealing with emotional traumas. They will heal in time, but they need support. The best support is stability, something not easy to find today. The world is becoming more and more unstable and divided; filled with criticism, anger, bullying, hostility and discrimination; much of it fostered or enflamed by politicians, pursuing their own agendas; and Internet trolls waiting to pounce when they spy any individual\’s perceived defects or transgressions, from being overweight to any utterance perceived of as being politically incorrect, especially any racial- or gender-biased remark. The new normal has become the newer normal, and few businesses or individuals understand the dynamics at play.

Retail Solutions

So, what can retailers do? Retailers should look for ways to mitigate negative emotions and to enforce positive emotions among customers. Providing calming, safe environments that encourage relaxation, friendliness and social interaction is important-much more important than loading up on technology. Engagement and unique experiences can create a much-needed respite from stress, a healthy outlet for emotions and a sense of escape. One-on-one in-store contacts must align with customer expectations of respect and accommodation (these days, one rude comment from a sales associate, and the customer is out the door). Think about creating a Comfort Store, an environment that is the equivalent of a comfort animal. Make the store a destination for happiness and self-fulfillment-a safe space, where shoppers will want to return time and again. That is something that Online cannot deliver.

And take another look at Gen X. \”Finished at Forty\” is fake news. Gen X represents a huge underappreciated consumer segment, and they have money to spend, now and in the future. The Gen X Factor could make a big difference for many businesses.



Scroll to Top
the Daily Report

Insights + Interviews right to your inbox.