NEWSWIRE: 8/26/19

  • The secondhand merchandise market is booming, with sales expected to more than double to $51 billion by 2023. Sales of secondhand apparel and accessories are on track to outpace those of fast fashion within a decade, as more consumers chase quality and variety without a hefty price tag. (The Wall Street Journal)
    • NH: Three generations ago, Barbra Streisand sang "Secondhand Rose," a plaintive ditty about a girl who never gets "a single thing that's new." Today, that's becoming a way of life for many younger Americans--and they seem pretty satisfied with it. At the pricey end, the rise of companies like The RealReal offers young professionals the chance to buy luxury brands they otherwise couldn't afford. At the cheap end, teens are turning "to thrift" into a verb--as in, "let's go thrifting today."
    • This is, above all, a generational trend, spearheaded by Millennials. It started to take shape back in the worst years of the Great Recession when a new crop of rising adults began to attract attention by buying or borrowing or renting items from each other rather than buying them new in the store. One obvious motivation was unemployment and empty bank accounts.
    • But there have been other, specifically generational drivers as well. Millennials don't mind being dependent on others for their needs (why "own" when there will always be someone else around who will "share"?). They are more into storing up and curating experiences than things (we've got an app for that). They want to unburden the environment from landfills overflowing with yuppie trophies (thanks, mom and dad). And, most importantly, they don't mind buying items that are time-tested and traditional. Which is to say... secondhand. (Yes, Millennials are a good target for heritage marketing.)
    • In 2012, the young Seattle rapper Macklemore keynoted the new trend. His song and video "Thrift Shop," which has attracted well over a billion views, didn't just pull the rug out from under every Gen-X hip-hop trope you can think of. It introduced America to the emerging Millennial concept of the "circular economy."
    • Around the same time, my team began writing about it. That same year we published "Why Own What You Can Rent?" and "Millennials Embrace the Thrift Ethic."  Other stories followed. For example, "The Sharing Economy Grows Up." Or "Everything Must Go." Or "What's in Store for Moving and Storage?" Or "The Great Xer-Millennial Thrift-Off."
    • To be sure, it's not always easy to persuade people--even Millennials--to buy used what they're accustomed to buying new. It took many years for car dealers to introduce status-anxious professionals to the idea of buying a "pre-used" luxury automobile, for example. But now it's commonplace. Much the same shift has been happening for furniture, tools, toys, clothes, shoes, and personal accessories. And, in most categories, it has happened in the same way.
    • The shift started at the low end (thrift stores, consignment shops, Craig's List, and E-Bay) and gradually worked its way up to the high end. Poshmark and ThredUP have made big businesses out of peer-to-peer marketing. And with Rent-the-Runway and The RealReal (REAL, which IPO'd in June and has a market cap of nearly $1.3 billion, larger than ANF), "recommercing" now deals in "gently used" luxury items. If you want to get a real Gucci or Fendi handbag for half the price, you may want to check them out.
    • A true sign of success is how so many retail brands are now launching or expanding a "resale" offering, including Macy's and Levi Strauss. It may be no surprise that Patagonia, which has long branded itself as the ultimate "slow fashion" brand, is launching a preowned website. It's a bit more remarkable that H&M, the ultimate in throwaway fast fashion, is doing the same. By offering to buy back its clothes, either to resell or to recycle, even H&M seeks to brand itself as "sustainable fashion." (See also "Fashion, Fast and Slow.")
    • There are few reliable statistics on recommerce sales. According to a study (for ThredUP) by Globaldata, secondhand apparel amounted to $24 billion in 2018 and is likely to exceed fast-fashion sales within the decade. Boston Consulting Group says that used good will make up 9% of the global luxury market by 2021, up from 7% last year. Everyone agrees that used sales are growing much faster than traditional retail. To quote again from the Globaldata report: 56 million U.S. women bought secondhand products in 2018, up from 44 million who did so in 2017. And shoppers ages 18 to 37 are driving the shift. A third of "Generation Z" and more than a quarter of Millennials are expected to make secondhand purchases this year.

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart2

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart3

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart4 

  • New figures indicate the birthrate in England and Wales has fallen to a record low, and the fertility rate is down for the sixth year in a row. Birthrates have decreased in all age groups except for women age 40 and older, and the average age of first-time mothers has ticked up to 30.6. (Office for National Statistics)
    • NH: This report pretty much speaks for itself. The total fertility rate (TFR) in England and Wales has been dropping fairly steadily since 2012 and has now hit 1.70, another all-time low. This is similar to the TFR trend in the United States, although here the decline has been steeper. The U.S. TFR used to be significantly higher than the TFR in both England and in the whole U.K. But after sizable annual declines over the last decade, the U.S. TFR (at 1.73 in 2018) is now just about the same as the U.K.'s.
    • Like the United States, England-Wales has recently been experiencing a birth rate decline in most age groups. Last year, remarkably, the rate fell in every age bracket under age 40. (See chart below.) Also like the United States, England-Wales has recently seen a sharp drop in the fertility rates of immigrants--mainly located in London and the East and Southeast regions.
    • One persistent difference between the United States and England-Wales is the younger age of the first child in America. Under age 30, birth rates are higher in the U.S. Over age 30, they are higher in Britain. The U.K., Ireland, and Australia, in fact, have some of the highest average ages at first birth anywhere in the world. Could that mean that the recent U.S. TFR decline is just a "tempo" decline until we reach the higher average ages of our British cousins? As I've argued elsewhere, the data don't currently support this conclusion (see "U.S. Fertility Passes Another (Ominous) Milestone.")
    • In recent decades, the relatively high fertility rates of major English-speaking countries (United States, U.K., Ireland, Canada, and Australia) have always posed something of a puzzle to demographers. The puzzle is that these countries' high incomes and stingy family benefits--which raise the opportunity cost of having children--should result in lower fertility rates than we see (say) in the generous social democracies of northern Europe.
    • So what makes the"Anglo" world exceptional? Theories abound. Maybe it's higher immigration rates since immigrants tend to have higher fertility. Maybe it's greater religiosity, since (today) religiosity is directly correlated with fertility in the high-income world. Maybe it's greater income inequality, since being very poor may encourage births more than being very rich discourages them. Maybe it's more flexible attitudes about mixing families and work (as per my discussion in "Bold New Policies to Encourage More Births.")
    • As time goes by, this puzzle may be of declining importance. If "Anglo" TFRs continue to fall as they have been over the past decade, there soon may be little "Anglo" exceptionalism left to talk about. 

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart5

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart6 

  • The latest Foreign Affairs reviews two recent books on population change: Empty Planet and The Human Tide. Writer Zachary Karabell argues that governments worldwide are woefully unprepared for the devastating consequences of global population decline, which will strain capitalist systems like never before. (Foreign Affairs)
    • NH: The two books are Empty Planet: The Shock of Global Population Decline, by Darrell Bricker and John Ibbitson, and The Human Tide: How Population Shaped the Modern World, by Paul Moreland. Bricker and Ibbitson, both journalists, write with a racier style and a more combative edge.  You'll prefer Moreland, a demographer at the University of London if you prefer a more careful, numerate, and academic approach.
    • After looking over these books when they first appeared, my first instinct was not to comment on them since I thought their basic thesis--that global population is decelerating and may start dropping in the 21st century--is pretty well understood. But Bricker and Ibbitson may have convinced me otherwise by noting that in the recent Dan Brown novel Inferno (made into a bad film with Tom Hanks in 2016), the plot revolves around a mad billionaire scientist who wants to let loose a deadly virus in order to save the world from the dire threat of overpopulation. Which made me wonder: Perhaps many readers, especially older ones, haven't kept us with the news since the publication of Paul Ehrich's The Population Bomb in 1968 or the movie Soylent Green (with Charlton Heston) in 1973. So maybe these books do serve a purpose after all.
    • The basic argument of both books builds on the Demographic Transition Model invented by Warren Thompson back in the 1920s. The idea is that societies, as they become more affluent and modern, pass through stages. Stage One is high fertility and high morality (stasis). Stage Two is high fertility and falling mortality (accelerating population growth). Stage Three is falling fertility and low mortality (decelerating population growth). Stage Four is low fertility and low mortality (stasis).
    • If you think of "low fertility" as roughly equal to the replacement rate (of 2.1), then Stage Four generates an end of history is which population growth simply stops. That's about as far as Thompson took it. But many demographers now believe there is another stage, Stage Five corresponds to low mortality and super-low fertility--which means fertility well below the replacement rate. In Stage Five, population is not stationary. It shrinks.
    • So is there a Stage Five? And if so, have we entered it? And if so, is it proceeding faster than the experts anticipate? These three questions lie at the center of both books.
    • Moreland says yes to the first two questions. He points out, for example, that roughly half of the world's population already live in countries with below-replacement fertility rates. On the last question, he equivocates.
    • Bricker and Ibbitson argue vigorously in the affirmative to all three questions. They point out that the United Nations' "official" projections (which are something like the gold standard in this field) seem unaccountably biased toward population growth. (Why does the UN assume that the fertility in most low-fertility societies will actually rise during the rest of the 21st century?) And they describe at length all of the forces that will continue to push fertility rates lower throughout the world in the decades to come.
    • Those forces include greater affluence, growing urbanization, rising educational levels (especially for women), and growing secularism--that is, declining religiosity. Good progressives, both authors want to reassure readers that these are all welcome trends which may (for example) save the earth's climate. Good Canadians, they also want to recommend "the Canadian solution" (a high immigration rate) to other affluent countries threatened by near-term population decline. And like so many progressives today, they seem to have lost much sense of economic solidarity with the native-born working class. We all benefit from the labor of undocumented immigrants, they say at one point. "They cut your grass or clean your house or make the bed in your hotel room." Italics added: These authors at least have a pretty good idea who their readers are.
    • My take? I agree with all these authors on the first two questions. The data clearly indicate that there is a Phase Five and that most of the world is either in it or entering it. But on the third question, I'm a lot less certain (like Moreland) about where history is heading. I agree with the Canadians about the UN. I too believe the UN is underestimating the current trend toward depopulation.
    • But longer-term, I don't subscribe to the Canadians' optimistic certitude. Come on, guys, use your historical imagination! What about the impact of nationalism, war, depression, advanced technologies, civil conflict, novel forms of political organization, and new social and religious movements? Hard as it is to say, it is not falling fertility that will cap population growth in sub-Saharan Africa. Rather, it is the Malthusian limit to extreme population density in one of the poorest regions on earth. (See "Africa Expected to Carry World Population Growth.")
    • "Progress only heads in one direction" is one of Bricker's and Ibbitson's more fatuous declarations. As I have often pointed out (see "Nations Labor to Raise Their Birthrates"), low fertility tends to extinguish--by extinction--the very attitudes that give rise to low fertility. Which is why most demographers (contrary to most progressives) foresee a rise, not a decline, in the religiously affiliated share of the world's population over the next century. "Progress" is much easier to summarize once it's behind us than to forecast when it's still ahead of us.
  • A new app from Weight Watchers is drawing fire for its target audience: 8- to 17-year-olds. The app, which tracks what users eat, has won praise from some professionals who say it’s an accessible way to address childhood obesity—but many pediatricians argue that it doesn’t promote a healthy relationship with food. (CNBC)
    • NH: Rising childhood obesity is a genuine national problem. Obese children are setting themselves up, later in life, for poorer health and shorter life expectancy. How many kids today qualify as "obese," according to the CDC? Roughly one in five: 18.5% of children age 2 to 19. (That's up from 13.9% in 1.) Among blacks, the prevalence is now 22.0%.  Among Hispanics, it is 25.8%.
    • The issue here is whether the WW app will help remedy the problem. Many pediatricians are understandably sensitive about apps that invade kids' privacy and that may reinforce a sense of shame about their bodies. On the other hand, until doctors come up with something more effective themselves, there is nothing wrong with parents and kids trying out such programs so long as they are based on sound nutritional science.
  • Emerging markets are tempering their expectations as all signs point to slowing convergence. Though markets like India arguably still have room to grow, the spectacular growth they saw in the 2000s is a thing of the past as countries increasingly pull back on global trade. (The Economist)
    • NH: Back in the early '00s--between the dot-com bubble and the GFC--there was a lot of triumphalist talk about BRICs and emerging markets worldwide all racing to catch up with U.S. levels of per-capita GDP. In retrospect, we now see that this wasn't a one-way march of progress after all. It was a single decade of unusual relative prosperity for less developed economies. And it was caused by three main developments: high and rising commodity prices; rising global capital flows triggered by declining real interest rates; and a robust expansion in global trade and global supply chains.
    • Over the last decade, as all these developments have reversed, so too has the convergence trend. While East Asia and India have continued to do well, the rest of the less-developed world--especially Latin America, the Mideast, and Africa--have again dropped beneath the growth rate of the developed world.

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart9

  • The CEOs of nearly 200 companies, including Apple, Walmart, and Pepsi, now say that maximizing shareholder value is longer their top priority. In a shift away from long-held corporate orthodoxy, the executives released a statement announcing their commitment to balancing the needs of shareholders with those of employees, suppliers, and the environment. (Business Roundtable)
    • NH: This mindless list of platitudes deserves every bit of ridicule that critics on both the left and the right are certain to pour on it.
    • There are, after all, only two possibilities. One possibility is that the CEOs understand that the best way to serve shareholders is to serve, in some enlightened fashion, the needs of their firms' various constituencies--like communities, workers, consumers, nation. etc.
    • If that's true, then you could view this statement as just another bit of harmless PR fluff. America's CEO elite--led by the likes of Chase's Jamie Dimon (current the Business Roundtable's Chairman) along with Jeff Bezos (Amazon), Greg Case (Aon), Larry Fink (Blackrock), and many others--love this kind of thing. (A full list of the 181 signatories is available here.) These CEOs sense that the zeitgeist winds are shifting. Back when neoliberal economics and Milton Friedman were the rage, they were happy to support the doctrine of "shareholder sovereignty." Now that the Democratic Party is moving decisively to the left and now that even President Trump--head of a more "populist" GOP--can attack CEOs as "un-American," these CEOs know they need to sing from a new hymnal: "social responsibility."
    • As such, the statement is a branding document, pure and simple. Millennial-driven cause marketing is all the rage. Every firm, it seems, needs to invoke a higher social purpose. Unilever is even crafting a separate social-purpose message to suit each of its products (Lifebuoy Soap teaches children to wash their hands, thereby avoiding millions of deaths worldwide due to infections...) Similarly, the Roundtable is trying to evoke good feelings. It's similar to "greenwashing." Unilever's CEO calls it "woke-washing."
    • What's disingenuous about all this is that the CEOs know full well that enlightened self-interest includes hardly any of what their critics really want from them--like better wages and benefits, slashed executive pay, an end to buybacks and tax avoidance, "buying American," and giving up personalized pricing, just for starters. CEOs know that such changes would require resource-shifting through explicit public policies. No CEO could do it on their own without dis-serving the shareholders and the firms they run. If the Roundtable CEOs were honest, they would be up-front about this. But none of them are. For this reason, they invite the contempt of their critics.
    • There is perhaps a another, more disturbing possibility. Maybe some Roundtable CEOs believe they could dis-serve their shareholders without consequence. But in this case, of course, everything their critics say about them is doubly vindicated: It really would be true that they don't face competitive markets for capital, that they experience no discipline from investors, that they are indeed price makers, not price takers. In which case, they really ought to hand their keys over to Bernie Sanders' or Elizabeth Warren's regulators.
    • Don't hold your breath waiting for the Roundtable to think any of this through.
  • The 50th anniversary of Woodstock has inspired a slew of nostalgic essays, including the cover story in the Christian Science Monitor. The piece covers both the event and what came next, with the Boomers holding on to their desire for spiritual fulfillment even as they’ve also sought material comforts. (Christian Science Monitor)
    • NH: Boomers, apparently, have an endless appetite for these long nostalgic essays on Woodstock. On how honest and real and authentic and idealistic the world was back then. All the mud and naked bodies and groovy music... you just had to be there, man! By the late 1980s, young Gen-Xers were already formulating their comeback, something like, "Die, Yuppie Scum!" Today's Millennials are more polite. They just nod, smile, say they love the music--and then quickly change the topic.
    • As this reporter points out, Boomers lament the fact that "the idea of music as a counterculture movement doesn’t resonate with a younger generation." More fundamentally, Boomers wonder why young adults today don't "push back" against the system. But maybe that's because you need a system that pushes before you can get youth to push back. And in Boomer hands, the system doesn't do much of anything. There's nothing to push back against, and that--to Millennials--is the problem.
  • Move over, man cave: Make room for the “she shed.” The outdoor spaces are growing in popularity as more women seek an affordable place to unwind and pursue their hobbies away from spouses and kids. (Next Avenue)
  • About 1 in 10 adults age 65 and over are current binge drinkers, according to a new study. Alcohol abuse has surged among older adults over the past 15 years, at the same time that drinking has trended down among younger adults. (Journal of the American Geriatrics Society)
    • NH: We recently reported on the divergent age trend in alcohol use: The old are using more alcohol as Boomers move past age 65. And young adults are using less alcohol as Millennials move into the the 20-45 age bracket. (See "Sober Curious? Millennials Aren't the Only Ones Cutting Back on Booze.")
    • If you want some more detail on senior drinking trends, check out this summary of recent findings from JAMA and the journal Drug and Alcohol Dependence. Here I will quote from the article's opening paragraph: "Alcohol use is increasing among older adults, with concomitant increases in unhealthy alcohol use. From 2001 to 2013, there was a 22.4% increase in past-year alcohol use, a 65.2% increase in high-risk drinking, and a 106.7% increase in alcohol use disorder among adults aged 65 years and older. Another study among adults aged 50 years and older found a 19.2% relative increase in current binge alcohol use from 2005 to 2014."
    • Senior binge drinkers are more likely to be male, nonwhite, low income, and noncollege. They are more likely to be never-married, separated, or divorced (but not widowed). They are more likely to use tobacco or cannabis. Yet whatever the demo and the level, binge drinking among seniors is a rising trend over time.
  • According to a new survey about homebuying preferences, Millennials care more about community well-being than older adults. Gen Xers care more about school quality and Boomers being close to family and friends; while these results surely reflect phase-of-life differences, they also speak to key generational traits. (Clovered)
    • NH: Some of the results of this survey seem obvious. Others less so. Millennials care most about employment opportunities and community well-being; Boomers least. Boomers care most about affordability, home values, crime rates, and proximity to family and friends; Millennials least. Gen Xers care most about quality of education.
    • The list of favorite cities by generation is revealing. Some cities (Denver, San Diego, Seattle) show up on every generation's list. But San Francisco, New York, Miami, and Los Angeles only show up on the Millennials' list. And places like Raleigh, Charlotte, and Virginia Beach only on the Xers' and Boomers' lists.

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart7

"Let's Go Thrifting"... the New Millennial Pastime. NewsWire - Aug 26 chart8

DID YOU KNOW?

Pass the Flavored Water, Mom. The juice box has long been a staple of school lunches. But according to The Wall Street Journal, it may soon be a casualty of the war on sugar (see: “Sugar: Unsafe at Any Dose?”). In recent years, concerns about sugar among pediatricians and parents have escalated: Fully 60% of parents with children ages 3 to 11 say they’re actively trying to reduce sugar in their households, and 38% say they’re buying less juice than last year. Only 22% say they include some kind of fruit juice in their child’s lunches. The spurning of traditional juice boxes has opened up a new market for watered-down substitutes, which are similarly packaged but contain less juice or use another sweetener. There’s only one problem: getting children raised on sugar to drink the substitute. When flavored water maker Rethink Brands launched a drink for kids with no calories or sugar, the reception led the company to later release a 5-calorie alternative as a “bridge product.”

NOTEThe NewsWire will be on a break for one week. We'll be back on September 9th!