17 Jul 2015 08:47am

A singles economy

Among the many social demographics targeted by retailers and service suppliers, the solo consumer is one of the most powerful, yet overlooked. Xenia Taliotis investigates the potential of the single shilling

Over the past 100 years or so human beings, that most sociable of species, have started, in increasingly large numbers, to set up home alone. Partly because women got the vote, lost their men in wars, burnt their bras, found their financial freedom through work, and partly because men realised they could look after themselves, the number of single people living alone has increased beyond all expectation to become one of the fastest growing demographics, not only in Western Europe and North America – where the rise is particularly marked – but also in emerging economies.

If the latest forecasts from Euromonitor are accurate, more than 331m people in the developed world, from Sydney to Shanghai, and Oslo to Osaka, will be living alone by 2020. That may not sound like too big a deal until you consider that what that figure represents is an increase of nearly 20% in less than a decade (up from 277m in 2011). More interesting still are the stats coming out of individual countries: 27% of households in the US are occupied by singles, 28% in Canada, 30% in Japan, 34% in the UK, 40% in Norway, 42% in Finland and 47% in Sweden. And the relentless march of the solo army is at its most advanced in cities: 40% of households in San Francisco, Seattle and Minneapolis are single occupancy, as are 50% in Manhattan, Washington and London, more than 50% in Paris and a staggering 60% in Stockholm.

According to the Institute of Public Policy Research (IPPR), this rapidly-expanding group will have an impact on every community and every person, and will dramatically change consumption patterns. IPPR some years ago described the increase of single households as “one of the most significant changes to take place in British society in decades”. Dr Eric Klinenberg, author of Going Solo, the Extraordinary Rise and Surprising Appeal of Living Alone, professor of sociology and director of the Institute of Knowledge, New York University and a member of the Solo Living Network, a research organisation, recently took the issue global, saying: “The incredible rise of living alone is the biggest social change that we have failed to name and identify.”

Klinenberg’s got a point. The humble solo shilling has for too long been considered shrapnel, overlooked by all but the most savvy marketers in their stampede to get at the pink and grey pounds. But it’s payback time because that single shekel is now adding up to billions of pounds, sitting in a deep, abundant and largely untapped well.

“Certainly businesses need to become more sophisticated in their marketing,” says Jane Frost, chief executive at the Market Research Society (MRS), “and to redirect their attention away from couples and families and onto single people. I suspect that what they’re finding problematic is the sheer diversity of the group, though my argument would be that you could say that about all demographics, whether you’re looking to provide for gay people, or older people or families. Not one of them is truly homogenous so, in my opinion, the argument about disparity is easy to challenge. I would be more inclined to say that the lack of focused marketing is more down to the single economy still being nascent.”

That’s undoubtedly true, though some companies have been quick to capitalise. Alibaba, China’s online retail giant, saw the potential in a low-key event single students at Nanjing University were holding as an antidote to Valentine’s Day, for which they would buy themselves a gift. Alibaba took their humble idea, commercialised it and sold it to the world. Last year the company’s Singles’ Day became the biggest retail day in the world, exceeding sales of $9.3bn – a 60% increase on the previous year.

So perhaps businesses looking for advice on the single economy should look to companies that have been targeting singles for years. Leaving aside dating, the other industry that has long profited from the solo market is travel. “Marketers have at best been blinkered and at worst, totally blind in their perception of single people,” says Andy Fairburn, marketing manager, Solos Holidays. “They’ve been stuck in a time warp, still seeing singletons as ‘lonely hearts’ – a label the dating industry dumped years ago. Our customers are more likely to be free-spirited, independent, empowered people who feel liberated by their singledom – they are not the sort of people you can shove into a sub-standard, over-priced room and hope for the best.”

Fairburn says that an estimated 29.9m holidays will be taken by single people in the UK in 2015, generating a total spend of £11.7bn in the process. “It’s a huge and hugely lucrative market: the number of people travelling solo has increased by 60% since 2009 and that number is growing.”

Even companies that aren’t solo specialists have witnessed an upturn. John Boulding, CEO of luxury coach tour operator Insight Vacations, says the company has seen a 25% increase in business from singletons over the past five years, from both its UK and international markets.

“We’re not a solo holidays operator but we’re seeing dramatic growth nonetheless because our tours are perfect for single people,” he says. “They offer the convenience of included travel, hotels, most meals and local experiences, the safety of being part of a group and company if and when wanted. Our turnover from solo travellers increased by £4.5m last year, which is great, but our growth is still inhibited by the single supplements imposed by accommodation suppliers.

“We’re doing our utmost to attract more single customers – we’ve absorbed these charges on several itineraries, and our website carries solo offers – but we need hotels to recognise the power of this demographic and to contribute further. We’d love to remove the single supplement from all our tours. If we could do that, our share of this market would rocket.”

It’s not just travel that does well out of the singletons. They’re also a veritable gold mine for those making and providing home entertainment equipment and associated industries, including online film and music providers. And, says Klinenberg, they also “play an essential yet unappreciated role in revitalising cities and animating public spaces” because “they’re more likely to eat out, exercise in gyms, take classes, attend public events and volunteer than married people”. Single people, he says, “fuel the economy and spend more discretionary dollars than those who live with a partner or have children”. Indeed, the Bureau of Labor Statistics estimates that consumption by US singles contributes $1.9trn to the economy per year, while forecasters in Korea expect the spending power of single-person households to hit $113bn by 2020.

In the UK, a survey by Mintel showed that 37% of single consumers had been to the cinema in December 2014 compared to an average of 30%; 15% had been to a concert or festival, compared to 11%, and 20% had been to a club, compared to 13%. Of course these are easy enough interests to pursue solo. What’s more interesting is the fact that more singletons are conquering the final frontier – dining out alone, often considered one of the more challenging aspects of single life.

Global restaurant consultant Aaron Allen has advised many restaurateurs on the changes they need to make to attract solo diners: “Restaurants need to pay more attention to this segment. There are more singles in the marketplace and many of them spend big on food and living expenses, so they’re a very important group of consumers.” Smarter restaurateurs have taken note and are offering smaller sampling menus, fitting single-friendly bar and communal seating and training their staff to help make single diners feel at ease. One restaurateur, though, has gone beyond that – Marina van Goor opened the first (and only) exclusively-for-singles restaurant last year. Her pop-up, Eenmaal, launched in Amsterdam and has since had sell-out temporary openings in Antwerp and London, with more planned in other European cities this year.

If singles “spend big” on dining out, then they spend massive on convenience food. In Brazil annual sales have doubled in the past five years to $1.2bn, while Kandar Worldpanel, a world leader in researching and analysing consumer behaviour, puts the UK market for single-portion ready meals at an almighty £16.9bn – and rising. At UK supermarket Waitrose, meals for one make up 80% of sales for the entire range of ready meals and demand is growing – up by 8% from last year.

Government figures show we need to be building around 230,000 new houses per year, but last year we only managed around 130,000

Steve Turner

Jon Firth, Kantar Worldpanel’s director, says supermarkets will need to understand this consumer group and “work hard to accommodate the shift from household to individual needs”, not only in relation to food, but also other items they bulk sell through three-for-two, or two-for-one offers. In other words, single shoppers are having a worldwide impact on consumer spending patterns, forcing supermarkets to change how they sell.

Singletons are also posing an as-yet unanswered question to house builders, urban planners and government, which is this – how are they hoping to deal with the increased demand for welfare and housing? The repercussions of having more single people in the system are huge. For instance, says Frost, there still remains a reliance on unpaid carers – spouses and children mainly – throughout the world to look after the elderly and frail, but millions of people will be entering old age without that support, thereby increasing the burden on the state. And then there’s housing, a potato so hot that no one seems to want to handle it.

The main problem in the UK, says Steve Turner, head of communications for the Home Builders Federation, is a shortage of land approved for building on, which in turn restricts the supply of new builds. “Government figures show we need to be building around 230,000 new houses per year to address need, but last year for example we only managed around 130,000. We estimate we’ve already got a shortfall of over one million houses. The problem is much bigger than finding homes for single people: it’s finding houses for everyone – whether they’re young, old, in a couple, have a family. The only way around it is to build more, and central government needs to put pressure on, or incentivise, local authorities to release enough of their green and brown field land to build the number of homes their communities need. And they are doing, but negotiating the laws and bylaws of planning permission is a notoriously slow and unresponsive process.”

Jan Crosby, head of housing, KPMG, agrees but puts the emphasis on age-appropriate housing. “We have growing numbers of elderly, widowed people living alone in the three- or four-bedroom houses they bought when they were raising their families,” he says, “who don’t want to move into sheltered or assisted accommodation. House builders need to consider this demographic and find a way of providing them with suitable housing. Some have started looking at bungalows again so that could be one way forward.”

It’s possible that the rest of Europe will follow in Sweden’s footsteps and accept communal living into the mainstream, or that shared ownership will become the norm. Or perhaps, says Crosby, the UK will give greater rights to tenants, taking the instability of short-term lets and ever-increasing rents out of the equation and giving tenants the confidence to put down roots in their rented accommodation.

“The government is moving in the right direction and has started looking at private rent as an alternative sector for housing, which can appeal to single person households and especially to young professionals,” he says. “With this in mind, the government has been supporting the private rented sector with big incentives and looks to be aiming for a system more akin to the US, where people have longer leases on their property, but with the ability to be more flexible and move within the same block as their circumstances change.”

In other words, it’s all up for grabs. As Klinenberg says: “Ultimately, it’s too early to say how any particular society will respond to either the problems or the opportunities generated by this extraordinary social transformation. After all, our experiment with living alone is still in its earliest stages, and we are just beginning to understand how it affects our own lives, as well as those of our families, communities and cities.”

Xenia Taliotis

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