THE consumer is changing. They are more capricious and less loyal. They have less time but are more conscientious. They shy away from stores and prefer experiences over products. Today’s consumer is an entirely different animal—and unrecognizable from their peer from the good old days. This brand of conventional wisdom has been proliferating in the marketplace for a few years now. It appears as if there has been a seismic shift in the consumer’s mindset—and choices—a shift that has left the market asking: “Who is this brand-new consumer?”

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There are even more clichés surrounding the millennial consumer. They are often branded as being more narcissistic, more idealistic, more socially-conscious, and more experience-oriented than any of their preceding generations. They have even been blamed for ruining everything from movies to marriage! They seem to have broken the mold of their similar-aged cohorts of past eras.

Amid this confusing and fast-changing narrative about the changing consumer, we paused to ask ourselves some hard-hitting questions to cut through the noise and arrive at the truth. Has the consumer fundamentally changed? If yes, in what ways have they changed? Is there a seismic difference in the changes that we are witnessing? More importantly, is the hysteria in the marketplace obscuring a much deeper and more fundamental change in consumer behavior?

It is with these questions in mind that we conducted a year-long study to go beyond the headlines and unearth more profound observations about the consumer that might have been either missed or misunderstood in the midst of the hype.

Our findings debunked many conventional pearls of wisdom about the new-age consumer. What we learned is that the consumer hasn't fundamentally changed, but to the extent, they are changing is because the environment around them is evolving, characterized by economic constraints and new competitive options. They’re changing because of the financial constraints they find themselves in. This, in turn, has been triggered by a rise in nondiscretionary expenses such as health care and education and the growing bifurcation between income groups. They’re also changing in reaction to the abundance of competitive options available to them, made possible by technology.

It’s this swirl of financial and marketplace dynamics that is heavily influencing the behavior of today’s consumer as opposed to a fundamental rewiring.

Understanding the consumer: Our approach

We undertook a yearlong journey to study the consumer. We scoured government data; talked to clients, industry leaders, and analysts; conducted primary interviews; and surveyed a representative sample of more than 4,000 consumers from the United States. Working with Deloitte’s Center for Consumer Insights, we conducted primary research, leveraging 450 billion unique points of location data and more than 200 billion points of credit card transactions. Our goal was to examine the current state of the consumer as well as to study their behavior and underlying attributes to see if there were nuances and intricacies that were being missed.

We adopted a two-pronged approach to our research.

First, we zoomed out to study the macro demographic, cultural, and economic trends related to the US consumer. Our focus here was not on behavior but on broad trends that impact behavior. It’s similar to the approach we took in an earlier study, The great retail bifurcation.2 In that, we looked at the income and expenditure data to examine whether and how the economic situation of consumers had changed and the implications of that change. But this time, we wanted to go deeper: We wanted to dig into other broad categories of demographics and regional changes to see where they live, their ethnicity and race, and how factors such as economic situation and health status are driving changes in consumer behavior.

Second, we examined primary data on the consumer’s changing demographics and economics to understand consumer behavior—not just their overall behavior but their micro-behaviors, which differ, sometimes substantially, within emerging segments. We looked deeply at how they spend their money and time, where they go, and what’s most important to them.

In this report, we have highlighted the most intriguing insights from our study to put together the construct of a consumer who in some ways is changing and in other ways isn’t really changing at all.

The changing consumer: Deconstructing demographic dynamics

A grasp of demographics is critical to understand what makes the world—and the consumer—tick. We are our demographics. This doesn’t mean that the consumer can be reduced to the sum of their individual demographic categories. It means that they’re a creation of the complex interplay of ever-shifting demographic forces that create unique needs, cultural biases, and define consumer behaviors.

To understand how, where, and why the consumer is changing, one must understand their underlying demographics, which include much more than just life span, fertility rate, race, and ethnicity. Health, culture, economics, and education are all critical dimensions of demographics—as are geography, regionalism, and the urban-suburban-rural divide. Understanding these changing demographics helps shine the light on any emerging pockets of opportunity.

Millennials are the most diverse generational cohort in US history.

A diversifying consumer base with diverse needs

There is a seismic shift that has taken place in the United States over the past 50 years. The population has become increasingly heterogeneous: Millennials, now representing 30 percent of the population, are the most diverse generational cohort in US history, with roughly 44 percent consisting of ethnic and racial minorities. In comparison, only 25 percent of baby boomers belong to ethnic and racial minorities.

This increased diversity, while most pronounced in the millennial generation, is not a uniquely millennial attribute. The shift in the ethnic and racial makeup of the United States has been underway for some time now, with the consumer base becoming increasingly diverse. The current racial makeup of the United States (and the consumer) is barely 50 percent white and the number is likely to continue shrinking.4 The non-Hispanic white population is projected to drop from 199 million in 2020 to 179 million in 2060—a decline of 10 percent—even as the US population continues to grow.