The America we live in today will look vastly different when compared to the America experienced by future generations. Furthermore, the America conceptualized by one of our nation’s defining generations, the Baby Boomers, may be outright unrecognizable in the not too distant future. What does this mean for clubs and how should they respond?The factor that promises to set successful clubs apart from the pack is a concerted effort to predict trends and nimbly adapt as they become mainstream. Those clubs that take a more reactionary approach will find themselves in an exhaustive game of catch up.
Clubs should invest the time and resources to understand trends related to the habits, preferences and lifestyle choices of the next generation, as well as the shifting demographics and the economic landscape. With this very goal of empowering clubs to prepare for the future, the National Club Association launched an ongoing trends initiative.
As a part of the initiative, NCA commissioned a comprehensive two-phase Delphi Study that utilized focus groups, interactive forecasting, surveys and interviews, which produced a vivid picture of the private club industry for the next 5–10 years and beyond. NCA also closely monitors macro trends impacting private clubs throughout the year. Sources range from government reports and industry journals to newspaper articles and research papers.
The findings and analysis are available in NCA’s new publication Navigating the Future: The Outlook for Private Clubs, which goes beyond the task of reporting results to offer tangible directives for club managers and leaders to act on.
More specifically, each chapter of Navigating the Future: The Outlook for Private Clubs concludes with “Top 5 Takeaways,” offering guidance in the following areas: Private Club Industry Makeup, Lifestyle & Membership, Facilities, Golf & Other Recreation, Food & Beverage, Technology, Governance, Legislation & Regulation, Club Workforce and Club Finances.
This article, exploring the next generation of club members, includes and expounds upon findings from the Lifestyle & Membership chapter by asking four questions:
- What are the implications of a multicultural America?
- What will be the impact of the generational changing of the guard?
- Which lifestyle changes are likely to have the biggest impact on clubs?
- How are the spending habits of affluent segments of the population changing?
THE CHANGING FACE OF AMERICA
“The multicultural future we knew would eventually come is already here,” said Senator Robert Menendez (D-N.J.) at a Washington, D.C., National Journal event in November 2013.
Visit any kindergarten in America and you’ll likely find that ethnic minorities make up half of the class. According to 2012 U.S. Census Bureau numbers, the population under the age of 5 stands at 49.9 percent minority. This statistic means that America will be a minority-majority country by 2043. However, this is already the reality for 13 states and the District of Columbia.
The diversification of the U.S. population is a demographic trend likely to have a seismic effect on education, the workplace, public policy, politics, family life, entertainment and more. Clubs are no different.
It may take time for first-generation immigrants to make private clubs a part of their lives, given the stresses associated with moving to a new country and getting established in a community. Second-generation Americans, on the other hand, are substantially better off socioeconomically, according to the Pew Research Center. Specifically, they have higher incomes, college degrees and own their homes. They’re also more likely to speak English, have friends and spouses outside their ethnic or racial group, and think of themselves as “typical Americans.”
Pew Research Center projections show the adult second-generation population growing 126 percent from 2012 to 2050, a trend that will prove to be huge. Naturally then, these second-generation Americans are still coming of age, so it will take time for them to reach their peak earning years when they have disposable income that could be used to purchase a private club membership.
Asian Americans and “upscale Latinos” are two groups likely to be teeing up on the course or otherwise enjoying club life. According to Nielson and the Association of Hispanic Advertising Agencies (AHAA), 15 million “upscale Latinos” accounted for 29 percent of the U.S. Hispanic population in 2012 and 37 percent of the group’s total spending power. This “upscale Latino” segment, defined as Hispanic households earning $50,000-$100,000 in annual income, is expected to double by 2050.
The Asian American population is approximately 18.2 million and has increased by 50 percent since 2000, according to Nielson’s “State of the Asian American Consumer” report. This demographic is expected to reach 20.9 million in the next five years, marking the highest growth rate of any multicultural population.
The questions that will rise to the top for clubs include whether or not to change barriers to membership, such as adjusting initiation fees, in order to make club membership more accessible for segments of the population that are just beginning to come into their own.
NCA’s 2013 Delphi Study found that a strong majority (89%) agrees or strongly agrees that lowering barriers to membership is a good idea.
On willingness to diversify, one industry expert questioned as a part of the study shared the following sentiment: “I believe that clubs not offering diversity will be at a disadvantage.” Most respondents, in fact, see a readiness on the part of clubs to respond appropriately to changing circumstances.
The diversification of the U.S. population and transition to a majority-minority nation is not the only trend destined to shake up what has been thought of as the norm for decades. The America of tomorrow will also be drastically redefined by Baby Boomers moving into retirement and the rise of Millennials.
Conclusion: In the next couple of decades more minorities will join the ranks of the affluent and may become interested in the lifestyle that private clubs have to offer. Clubs open to diversity will have unparalleled opportunities to grow their membership, especially if barriers to membership are lowered, even a little.
THE GENERATIONAL CHANGING OF THE GUARDS
Two major movements are converging in the U.S. population. First, the number of Americans who are 65 and older is expected to more than double from 43.1 million in 2012 to 92 million in 2060, according to U.S. Census Bureau projections. This officially deems America as an aging society, which has a unique set of challenges. The most notable being the tsunami-sized wave of Baby Boomers moving into retirement and looking to find meaningful ways to remain active and engaged in society.
At the same time, it feels as though the 79 million Millennials, also known as Generation Y, are taking society and the work- place by the reigns with their unique set of values and preferences. These Millennials, or those ages 18–31, are being touted as the future’s most important and largest consumer generation with more potential spending power than any other generation in history according to Social Chorus, a leading brand-marketing firm. Multiple sources estimate the purchasing power of Millennials to be $170 billion, a number that businesses, organizations and clubs can’t ignore.
These two major movements are bound to cause some friction. There are a host of stereotypes about each generation being aired, contributing to miscommunications and missed opportunities. This fall, a Forbes article dispelled five of the most common Millennial vs. Baby Boomer misconceptions:
1. Millennials are lazy, entitled and think they know everything. “Millennials are far more likely than Boomers to seek out training and career development, to tout their technology proficiency to employers, and to work collaboratively with and learn from tech support.”
2. Boomers don’t get new tech. “Boomers are just as tech-savvy as their Millennial counterparts, but they just don’t think they are.”
3. Millennials waste time at work on their phones and social websites. “Millennials blend the lines between work and personal life with their technology, using Facebook, Twitter, instant messaging and their own smartphones to communicate at work, much more so than Boomers.”
4. Baby Boomers stubbornly won’t switch over to the latest tech tools and are getting left behind. “Microsoft tools such as Word, Excel and PowerPoint are still very much the predominant tools used in the workplace by far, so Boomers can keep on using them with confidence. Millennials use them, too, along with bringing more out-of-the-box things to the table.”
5. Millennials would rather talk to a screen than a person, while Baby Boomers waste time with endless meetings. “Millennials prefer to use multiple tools to communicate with coworkers: text, instant messaging, social media and other virtual tools. Boomers prefer traditional meetings or phone calls.”
There are, however, some descriptors that ring true that will make decision making more difficult at private clubs. Millennials lead in-a-hurry lives, dependent on speed and convenience. Club life doesn’t always move at light speed. Additionally, they’re device-driven and have come to expect technology to be integrated into every facet of life. Clubs are seldom early adopters of technology.
Making adjustments to meet the needs of the next generation of club members is a necessary next step for successful clubs. There is growing concern about this very issue—64 percent of respondents in NCA’s 2013 Delphi Study reported feeling that private club membership is losing its luster with the younger generation.
The good news? Millennials are deeply social creatures, and the main benefit of club membership—the opportunity to connect with like-minded individuals—plays right into their desire to build relationships and spend meaningful time with loved ones. Here, Millennials and Baby Boomers can find middle ground.
Conclusion: There will be a certain art to balancing club traditions with the latest trends in order to appeal to Baby Boomers, Generation X and Millennials without losing a club’s culture. The answer that remains to be seen is how clubs will reconcile situations when Baby Boomer and Millennial preferences and values don’t align. It can make for a long day around the board table and a lot of pressure put on club management. Then there’s the issue of appealing to Generation X, who is caught in the tides.
EVOLVING LIFESTYLES
The popularity of the ABC TV series “Modern Family,” is not a coincidence or sheer luck. The evolving roles of men and women as well as the broadening of the definition of the typical American “household” are two trends impacting society, and club life, in major ways. In fact, 92 percent of respondents to NCA’s 2013 Delphi Study agreed that clubs would become more diverse and open to lifestyle choices as compared with the present.
Two other conclusive statistics from NCA’s 2013 Delphi Study in this area are the fact that 90 percent of respondents feel clubs will design programs to increase their appeal to women and secondly, that 83 percent of respondents agreed that clubs will need to provide for same-sex couples and significant others.
SIGNIFICANT OTHERS & CLUBS
Significant-other policies are gaining traction in private clubs, not only to reflect state and national rulings legalizing same-sex marriage, but also because many adults are entering “encore” relationships—choosing a new partner after being widowed or divorced, but not necessarily remarrying. This is a tricky area for clubs, because it is imperative that all members receive the same treatment when it comes to enforcing the significant-other policy.
THE EVOLVING ROLE OF MEN AND WOMEN
As noted, most clubs see themselves adjusting their offerings to appeal to more women. As women rise in the professional sphere, they become naturally drawn to the benefits of club membership and are enjoying serving in club leadership roles. The fall issue of Club Director examined the role of women in clubs, and in society, in great depth.
Most markedly, women today are earning 60 percent of Master’s degrees and at home, more than 40 percent of women are their families’ main breadwinners. Wives out earn their husbands 28 percent of the time when both work, up 16 percent from 25 years ago, according to the Bureau of Labor Statistics and the Department of Education. This can put women in the driver’s seat when it comes to decision making.
A survey of nearly 2,500 moms and dads conducted by The NPD Group and Child’s Play Communications found that “mom” remains, by far, the number one decision maker when buying for home and family. However, the survey also picked up on “dad’s” desire to play a larger role in decision making when it comes to children and family—a sign that the roles of men and women at home are converging.
MODERN & FUTURE FAMILIES
What implications does this have for American families? As women rise professionally and in the community, they’re also beginning to share the load at home. Men too are discovering that they value work/life balance and are taking on greater roles in child rearing.
What both moms and dads are suffering from is a lack of time. Hence, why one NCA 2013 Delphi Study expert predicted that: “Members of private clubs will be affluent, family-focused and energetic—in-a-hurry people, resistant to restraint.”
In a significant shift from the past, 53 percent of working parents with children under 18 say it’s difficult to balance work and family, with no significant gap in attitudes between mothers and fathers, according to a Pew Research Center survey. Fifty-six percent of mothers and 50 percent of fathers say juggling work and family is challenging.
Families are shifting in other ways too. The movie “Failure to Launch” is the story of a thirty-something slacker who suspects his parents of setting him up with a dream girl so he’ll finally vacate their home. This movie likely resonated with many families across America because adult children are moving back in with mom and dad at high rates. In fact, U.S. Census Bureau data shows that, in 2012, 36 percent of Millennials (those 18–31 years old) were living in their parents’ home—the highest rate in four decades.
Why is this happening? Pew Research cites declining employment opportunities; rising college enrollment where the students live at home; and a declining marriage rate.
If club members truly think of the club as a second home, they may expect that their adult children should be granted full access to club life. Which, like the significant-other policy, gives clubs something to think about. The silver lining? When they do manage to “launch,” perhaps they’ll take their affinity for private club life with them.
Clubs may also see a rise in single memberships, due to a declining marriage rate and other factors. A report from the Bowling Green State University’s National Center for Marriage and Family Research found that the U.S. marriage rate is currently 31 marriages per 1,000 unmarried women. The national marriage rate in 1920 was 92 marriages per 1,000 unmarried women.
In addition to marrying less, men and women are marrying later. The same study found that the average age of a woman when she takes her first walk down the aisle is 27, the highest age in more than 100 years.
Conclusion: The families and individuals being invited to join private clubs now and in the future will expand far beyond what was once considered the typical family unit. From single women who recognize the professional perks of club life and young busy families to nontraditional households, membership will adapt to mirror the evolving lifestyle trends of the America of tomorrow.
DEFINING AND CHARACTERIZING AFFLUENTS
Making up the majority of private club members, “affluents” are those defined as making $100,000 or more in annual house-hold income. They currently constitute 20 percent of the population, and hold nearly 70 percent of the net worth, according to MediaPost. So who are they? What do they worry about? What are they looking for?
The 2013 Survey of Affluence and Wealth in America presented at the American Express Publishing Luxury Summit in April 2013 found that 46 percent of affluents say their household financial situation has improved relative to a year ago but remain unsure if a true national economic recovery is taking place. They are most concerned about the national debt (75%), the quality of public schools (71%), taxes (66%) and gun control (62%).
When it comes to clubs, one theme that rises to the surface related to the above concerns is a desire for safety and security. One expert from NCA’s 2013 Delphi Study says, “The primary appeal to join the club will move to a secured (safe) environment to escape and be recognized with VIP service. Members will focus more on doing business with each other (known parties).” A strong majority of survey respondents would agree.
To put the affluent category in context, Pew Research Center data shows that median household income has stagnated for the longest period since 1967. In 2012, the median household income was $51,017, still below the pre-recession 2007 level ($55,627) and also below the all-time peak level reached in 1999 ($56,080). Therefore, the typical American household had 9 percent less income in 2012 than it did 13 years earlier (with all figures adjusted for inflation).
The gap between affluents and other segments continues to widen. The nation’s higher income households have received a growing share of a mounting aggregate household income pie, also according to the Pew Research Center. In 1967 the top 5 percent received 17 percent of the income pie, compared to 22 percent in 2012.
One segment within the affluent category that will prove to be key for private clubs are known as High Earners Not Rich Yet (HENRYs). Pam Danziger, president of Unity Marketing, expounds on this very topic in an interview with Marketplace’s Sally Herships. Danziger defines HENRYs as the 20 percent of the U.S. population making $100,000 to $250,000 a year. She says they “account for more than 40 percent of all total U.S. consumer spending. So they’re the heavy lifters in the economy.”
As the middle class and the poor grapple with not having enough spending power and the rich continue to scale back post Great Recession, it’s the HENRYs that are spending and the HENRYs that will be making their way into clubs. This is especially true given the trend that affluents are spending more of their money on experiences like travel and recreation, rather than on goods and products.
Conclusion: Despite the fact that the sting of the Great Recession has yet to fully wear off, top earners like affluents and HENRYs are still making luxury purchases, but they’re being more strategic about where to spend, and that’s where clubs must demonstrate their value.
Accurately predicting who will become the club members of the future is increasingly difficult. Unfortunately, there isn’t a crystal ball to see the future, so successful clubs will need to closely monitor today’s trends in anticipation of the America of tomorrow. Additionally, successful clubs must deftly adapt to lifestyle and membership changes in order to truly thrive.
NCA will continue to study and interpret trends as they relate to private clubs. Navigating the Future: The Outlook for Private Clubs discusses trends that will prove relevant, new and noteworthy over the next 5–10 years, thanks to the insight of hundreds of industry experts. This comprehensive research project serves as a marker in time for present day and future club membership. From assembling the best board and the best workforce to deciding which technologies, recreational pro- grams and facilities are worth the investment, and everything in between, we’re confident this publication will serve as a comprehensive tool to guide and empower private club leaders to make savvy and forward-looking decisions.
The publication is available on the NCA online store.
Laura Hayes is NCA’s communications manager and a principal author of Navigating the Future: The Outlook for Private Clubs.