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The Future Is Female
Women hold up half the sky.
Mao Zedong
The saying âThe future is femaleâ was coined in the early 1970s, as a slogan for New York Cityâs first womenâs bookstore, Labyris, which was opened in Greenwich Village by lesbian feminists. From those radical roots, the slogan has gone massively mainstream: in 2015, Millennial British supermodel Cara Delevingne wore a T-shirt bearing the phrase, and Hillary Clinton used it in her first speech after the Womenâs March of January 21, 2017. The popularity of the sentiment speaks to its wide relevance, including in the luxury space. I cannot think of a better way to describe the upcoming wave of spending that should be expected from female consumers in the luxury space.
When equity investors search for growth potential, they often work at the macro level, making distinctions among developed markets (Western countries, Japan), which are seen as mature if not saturated, and emerging markets (Asia not including Japan, Latin America, Africa), which have room to grow. This obscures the fundamental reality that growth can often be found closer to home. Women, in whatever country they reside, are in my mind the most formidable emerging market for consumer goods in general and luxury in particular.
There are two sets of related reasons to expect womenâs spending to grow. One is essentially linked to âwomenomics,â the name of a book by Claire Shipman and Katty Kay published in 2009 but also a term popularized by Japanese Prime Minister Shinzo Abe in 2013, when he pledged to create a âJapan in which women can shine.â Today, the term is used more broadly to refer to an improving economic reality for many women, one of greater financial means linked to changes in labor, pay, and marriage patterns. The other is more an awakening of consciousness around injustice, especially discrepancies in the way men and women are treated in society, and an increased willingness to speak up and change the world. And women will not just grow the market: their values and preferences will alter the nature of luxury.
Womenomics
In most countries, reports and surveys show that women already influence the majority of spending decisions. Of course, women are purchasing goods and services not only for themselves but also for their entire household, including their spouse, children, and, potentially, elderly parents. Ever see a man choosing prescription eyewear or a suit on his own? Sure, but more often than not, a man will walk into a store, try something out, chat with the sales associate, and say: âThanks a lot. I will come back shortly with my girlfriend/spouse.â Whether men havenât really grown up or just need a second viewpoint, women are clearly trusted for their authority on taste, color coordination, and fit. Beyond a spouse or a partner, women are influential with a broader circle of family and friends.
The anecdotal spending power of women is supported by hard numbers. Since 2015, women have controlled the majority of personal wealth in the U.S. According to the Boston Consulting Group, private wealth globally held by women grew from USD34trn to USD51trn from 2010 to 2015 and was expected to hit USD72trn by 2020, more than doubling over the decade. That influence is likely to become even stronger over the coming decade, thanks to a few widespread trends: more women working, for higher wages, with fewer family members to support.
First, female employment rates are going up across the developed world. This is particularly true in countries facing demographic headwinds, such as Japan and Germany, where shrinking working-age populations have triggered more women to enter the labor force. In Japan in particular, the term âwomenomicsâ entered the vocabulary in 2013. Until recently, Japan was experiencing a pronounced M curve in female employment: women worked until age thirty, then left the workforce to get married and/or give birth, and then returned to work a few years later (data thus drawing an âMâ shape). That is no longer so pronounced, as the government has encouraged female labor participation, through a mixture of lower tax rates for married women, better family-leave policies, and better childcare availability. In June 2019, the Japanese Ministry of Internal Affairs and Communications noted a record of 30 million women in the workforce, including 90% of new workforce entrants that month. With a combination of a shrinking population and very little immigration, the increase in Japanese womenâs participation is very welcome. Even leaving aside such an extreme demographic case as that of Japan, more women than men are entering the labor force. In the U.K., participation rates are moving in opposite directions with men decreasing and women increasing. In the U.S., while participation rates are declining across the board, the decline in female participation rates has been far more muted than the male equivalent.
Second, although OECD data still show a wide gender pay gap in most countries, that gap is slowly closing. According to the U.S. Census Bureau, in 2017, the ratio of womenâs to menâs median annual earnings for full-time workers was slightly above 80%âbut it was twenty points lower in the 1980s. Advocacy groups in many countries observe an Equal Pay Day, which represents the average additional time women would have to work in the new calendar year to earn what men earned the previous year. In 2019, Equal Pay Day in the U.S. was held on Tuesday, April 2, and in 2020, it was moved up to March 31. At the rate of growth that has been observed since 1960, when measurements started, it will take until 2059 to get to parity. Sure, thatâs a long time, and these types of events donât solve the problem, but they do increase awareness of it. As wages inch closer to parity, womenâs discretionary spending grows incrementally as well, which is good for luxury spending.
Finally, families are changing. The share of women who are married has been falling, and the median age of married women has been rising. Even in China, where marriage rates have been steadily rising, the UN estimates that this trend will reverse in the coming years. This lower number of marriages will mean that a greater share of the growing female income pool gets spent on women themselves, rather than on others. In the U.S., womenâs median age at first marriage was close to twenty-eight in 2018, up from about twenty in 1958, as the graph on the next page shows. Similarly, the marriage ages in China and Western Europe have continuously gone up over the recent period. On top of this, women are having children later in life: the average age of a first-time mother in the U.S. rose from twenty-one to twenty-six between 1972 and 2016, and this continues to move even higher. In some developed markets and some U.S. states, the average age for first-time mothers is over thirty-one. Welcome to the new family: married later, fewer kids. Thatâs a reality and a positive one for the luxury sector at least, as women can spend on themselves rather than on a household, children, and other distractions from the sector.
Percentage of U.S. adults aged 18â34 who are married
In the U.S., the proportion of married adults under age thirty-f...