Preparing for the demographic change wave

This is an excerpt of the original article. It was written for the January-February 2024 edition of Supply Chain Management Review. The full article is available to current subscribers.

January-February 2024

Back in 2019, we seemed on a consistent path to the future. Then COVID-19 arrived on the global scene, and all predictions went out the window. As 2024 begins, everyone wants to know what the year will look like. I predict continued interest in circular supply chains, cybersecurity, visibility, and digital supply chains, to name a few. But I am not alone. So, I’d like to share five things that I am particularly interested in this year.

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Demographic shifts are reshaping consumer demand, bringing supply chain challenges the industry has barely begun to explore, let alone analyze, to determine what operational models will be needed to support future populations.

Joe Coughlin, director of the MIT Center for Transportation & Logistics’ (MIT CTL) AgeLab, has researched these trends for decades. He summarized the world’s changing demographic profiles and the likely impact on supply chains at the Innovation in Motion: Shaping the Future of Supply Chain conference hosted by MIT CTL and sponsored by GS1 US on Oct. 18, 2023.

Four dimensions of change

The pace at which demographic trends are advancing is underlined by the release in November 2023 of the U.S. Census Bureau’s latest population projections for the United States. The bureau projects the U.S. population to reach 370 million in 2080 before edging downward to 366 million in 2100. By 2100, the total U.S. resident population is expected to increase by only 9.7% from 2022, says the agency.

Estimates of changes in the country’s age profile are equally compelling. In 2029, the number of people in the U.S. aged 65 or older is expected to surpass those under 18. By 2100, the bureau projects that almost twice as many Americans will be in the older age group than under age 18.

Changes like these profoundly affect the demand for goods and services and how they are designed and delivered to consumers. Coughlin grouped the changes into four buckets. “The future is gray; it is delayed, small, and female,” he said.

A grayer future. The aging of populations is a worldwide phenomenon. For example, Coughlin said the 18/65 age crossover point described above will arrive around 2047 globally. Longer life spans will reinforce the aging trend. Studies show that almost half of the children born in the 1990s and 2000s in the industrialized world will live at least 100 years.

Yet companies have been slow to react to these ground-breaking changes. “We all suffer from change blindness,” Coughlin said. For example, in the United States, the population’s 50-plus cohort is responsible for about 70% of total discretionary spend, “yet only gets 2% to 3% of the advertising dollars,” said Coughlin. Globally, the 60-plus age group accounts for about 30% of spending but does not attract commensurate attention from sellers of goods and services.

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