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The leather industry has to look in a lot of directions at once. Its raw material is too expensive and apart from the cream at the top is not worth the price, or is at least very hard to manage with a decent margin. At the same time the consumer market is diverging with huge growth in the new middle classes in the emerging markets while the grey market holds more and more of the spending power in the developed ones.
The industry is right to worry about the younger consumer. They are educated, urbanised and globalised; very different to any group we have sold to before. And it is not a gradual change as the intermediate generation is small and not providing a bridge.
Yet we cannot ignore the older grey generation either. Globally, the number of the over-60s is expected to hit 2 billion by 2050. This is mostly a developed world problem with Japan and Europe leading the pack. Yet there is evidence that we have already past peak teenager worldwide and there is no doubt that even China has to get rich quite quickly in order to pay for retirement before the nation gets old.
This older group will have more money to spend than adults under 40 and most people alive today will live past 70, with the life expectancy of many of those who reach 60 likely to be over 80. Since they hold most of the wealth it is to them that we will be looking to buy the consumer goods and automobiles that use our leather. The younger groups will be vital but the evidence so far is that they like experiences more than “stuff” like automobiles and luxury goods.
Yet the old will not be profligate; they have to budget for the medical cost of difficult final years and will want to ensure their children are secure. Their spending will be careful, searching for value and with it that traditional long lasting quality that comes with a well-crafted leather item. Our job is to make all grades of leather fit these evolving needs.
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