Publisher:
Telstra Wholesale
Name:
The demographic trends shaping your business
Copyright Date:
28/05/2024
Copyrighted By:
Telstra Wholesale
Family Friendly:
Yes
Language:
English
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The demographic trends shaping your business


 

In business, it’s not always easy to look beyond the next week, or the next quarter. The focus on the here and now is vital. Yet there are forces at play now that are changing our society, and your customers.

Simon Kuestenmacher is a demographer who works with some of Australia’s largest brands to help them understand the long-term trends affecting their businesses. Simon spoke at Telstra Wholesale Business Connect about the big picture changes in Australia, and how these will affect businesses over the next decade.

“As a demographer, I’m concerned with the big picture trends that shape our society,” Simon said. “Factors like the age of our population, its growth rate, where we live or how much we spend, all influence our economy. This data helps us predict how the business environment will change.”

Here are three key demographic trends that Simon believes will shape the business environment over the next 10 years.

A growing, but ageing population will affect the availability of skills

Australia’s population is growing, but it is also ageing. “We estimate three and a half million, maybe even 4 million more people will live in Australia by 2032. No matter your industry, there will be more people to sell to,” Simon said. “But growth is not distributed evenly. There is strong growth in the 15-25 bracket, driven by young migrants, and the 85+ segment will double over the next 12 years. There are fewer people being born so the population as a whole is getting older.”

The Millennial generation (people born between 1982 and 1999) will be the largest segment. However, the increasing numbers of older people will continue to exert an influence.

“From a statistical point of view, half of all people aged 85+ will require daily care and assistance. It’s expensive and outrageously labour-intensive.”

Talking of skills shortages, Simon says the data tells the story of a decade of depressed skills availability. “Even though we are growing, even though we will see a record migration intake this year, the force of retiring baby boomers means talent shortages will continue.”

Technology can play a crucial role to fight this skill shortage, according to Simon. “For businesses seeking to grow, the only option is to automate processes where you can. There is no chance you can grow your business without doubling down on technology because the demographics mean you won’t be able to rely on finding the people you need.”

The movement of people away from cities will entrench hybrid working

The second demographic force is the redistribution of the population. Traditionally, the majority of jobs were in the CBDs of cities and towns. This created a star shaped commuting pattern, and people paid a premium to live close to where they worked.

“We are seeing a sustained shift of segments of the population away from cities,” Simon said. “COVID-19 accelerated it, but the same pattern would have occurred even without the pandemic. It’s simple demographics. As millennials start families, they want bigger houses. These are not available in the inner city. And they are not available in the middle suburbs because the baby boomer generation live there and are not giving up their properties any time soon.”

Millennials are moving up to two hours from the CBD, to the urban fringe. Simon said he expects to see more business parks, ‘working near home’ centres and colocation spaces where people can go to work and collaborate, without the long commute.

This creates an opportunity for telco and technology service providers.

“Millennials with families living in the urban fringe will not want to trek into the CBD to work. But they will need connectivity, and they will need the tools to work in different locations.”

Ultimately, Simon believes the hybrid working model will win and CBDs will evolve.

“The more you provide technology solutions to the Australian workforce, and the more we automate routine processes and tasks, the more individual workers will be left with interpersonal tasks. CBDs and office hubs will become the location for interpersonal work – the collaboration, the brainstorms, the team-bonding. Also the young migrants coming in, they will go to CBDs, so the nature of our cities will evolve.”

Simon also pointed out that not all regional Australia will benefit from this redistribution. “You can literally draw a line of two hours’ travel around a city. Any place within that line will see growth, and those towns outside will not.”

The “typical” customer is changing

As the age and location profile of our population changes, so is the education level and class structure.

“We have transitioned to a knowledge-based economy,” Simon said. “Half of 29-year-olds now have a job that requires a university level education. These are increasingly technology heavy jobs. Even jobs that do not demand higher education are increasingly connected in some way.”

The increasing share of jobs requiring a degree or higher, is affecting the class structure of our society, and the overall customer base. “We see Australia as a two-tier market. There is a low-cost end, with small margins but big growth prospects. Then there is the big margin, top end of the market. The middle class is, in fact, the smallest segment.

“It shows the perils of aiming for the centre of the market with a one size fits all service offering. Ideally you have varied services and offers to make sure that you reach all your customers with what they need.”

It’s a good time to be in tech

The demographics show the challenges for businesses around talent acquisition and retention are not likely to go away any time soon. However, Simon also suggests there are a lot of positives for technology service providers.

“If you are in the business of providing technology and assisting businesses overcome their challenges, you can be optimistic. Your customers will need your services and will rely on you. If you understand your customers, their pain points, their context, and their requirements, you'll have a very good decade.”

John Fearn
The Author John Fearn

John is a writer and tech addict with over 15 years’ experience of working for leading technology companies in both Australia and the UK.

See all of John Fearn's posts


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