Rise in Single-person Households and Their Consumption Traits

[Daniel]

Economic Report

Economic reports, briefs and video-clips issued by Samsung Economic Research Institute

Rise in Single-person Households and Their Consumption Traits

Aug. 13, 2012

I. Rise in Single-person Households

Just 50 years ago, most Americans thought of people who wanted to stay single as "strange," "immoral" or "neurotic." At a time when more than 70% of adults were married, it is no surprise that most people had a negative opinion of single people.¹

Things have now changed and being single no longer carries the stigma it once did. In 2011, the number of single-person households worldwide reached 242 million, accounting for 13% of total households. In Sweden, which places a high value on individualism, 47.1% of all households consist of just one person, while the figure is 31.5% in Japan, where the population is aging faster than anywhere else.² Korea has one of the world's highest rates of growth for single households, with the number increasing from 1.02 million in 1990 to 4.36 million in 2011, a 4.3-fold increase. This means one out of every four households is a single-person household.

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The rapid rise of people living alone reflects economic, cultural and social changes. One of the key factors is increased financial independence due to higher levels of income and education, and a growing culture of individualism that prioritizes personal achievement and value.³ Other factors are delayed age of marriage, population aging and a widening gap in life expectancy between men and women. In Korea, the average age of first marriage has increased from 24.8 in 1990 to 29.1 in 2011 for women, and from age 27.8 to 31.9 for men.⁴ In 2011, average life expectancy for men was 77.2 years, while women lived an average 84.1 years.⁵

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The increased number of single-person households is driving one of the greatest changes in the consumer market since the retirement of the baby boom generation.⁶ In 2011, annual consumption expenditures by single households in Korea reached 50 trillion won, accounting for 12% of all household consumption. Spending per capita by singles comes in at a monthly 950,000 won compared to 730,000 won for households with two or more members. In particular, those living alone from their 20s to 50s are the biggest potential consumers, due to their large population share and income and spending.

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II. Four Consumption Trends of Single Households

Due to smaller accommodations and more limited time and income, single-person households place high value on efficiency. They also pursue physical and emotional stability, and with less family responsibility, are able to make more investments in self development. Against this background, businesses will have to adapt to changes in consumer trends in the following four categories.

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1. Small and compact

Single-person households have higher demand for compact housing, and space-saving home appliances and household goods. In Korea, demand is surging for "officetels"⁷ equipped with furniture and home electronics, and small-scale multistory housing.⁸ Partially reflecting this trend, share for housing of 60 square meters or less accounted for 40% of newly built homes in 2011.⁹

Going small, however, cannot by itself satisfy the needs of singletons. The key is to maintain high performance. For example, in 2011, Japan's Panasonic released "Petit Drum," a compact drum washer and dryer that provides the same performance as existing drum washers and dryers. The new product became a hit, boosting Panasonic's total sales of drum washers by 30% year-on-year amid an overall recession in the home appliances market. In 2012, it launched a small desktop-type dishwasher, the "Shokusen," and "Petit" styled itself as a compact home appliances brand for Panasonic.

The compact trend among single households is also influencing the food industry. Japan's soy sauce maker Kikkoman replaced its 40-year long family-size soy sauce bottle from 1 liter to 700 milliliters, aimed at people living alone. It also changed the design of the bottle to fit in refrigerator shelves for efficient use of refrigerator space. Meanwhile, Korea's largest retailer E-mart released packaged vegetables and processed food at 990 won (0.87 cents).

2. Efficiency

A higher share of single households suggests more demand for flexible furniture styles. This demand for "efficiency" is enlarging the market for built-in home appliances, folding furniture and customized systems furniture. Reflecting this trend, Korea's major furniture makers including Hanssem, Casamia, Livart, Borneo International Furniture and Emons Furniture have introduced customized furniture for one-person households.

More single-person households also mean more demand for multi-functional products with added value. Kyowon L&C, Korea's household products and services firm, introduced its "Wells Series I," a compact water purifier equipped with smartphone battery recharging and hot pot functions, aimed at people living alone.

The retort pouch¹⁰ food market can also gain opportunities, as single consumers have high demand for convenience and ready-made meals. Korea's market for retort pouch food grew 37.5% on annual average between 2008 and 2011.¹¹ At the same time, this packaged food market is going more nutritious and premium in line with Korea's well-being trend.

3. Physical safety and emotional stability

People who live alone prioritize safety above all. Against this background, security services for single-person households are becoming popular, along with everyday life support services that go beyond household tasks. Pension finance products to prepare for old age, and social network services and online communities that provide emotional intimacy are expanding in all age groups.

In Japan, homecare service firm Duskin has opened its "Home Instead" service that provides safe and convenient living services for seniors living alone. This service not only helps with cleaning and laundry, but also assists seniors in overall daily life, including accompanying seniors on hospital visits, nursing care and outings. In Korea as well, daily life support services have appeared to provide assistance to people who need help with myriad tasks, including things like hammering nails or lifting heavy objects, and even removing unpleasant vermin.

Economic and emotional stability is as important as physical safety. Financial products that can convert assets to lifetime monthly "salaries" are a leading example. Social networking and messaging services like Facebook and KakaoTalk (Korea's mobile messaging application for smartphones) maintain human relations for single-person households, and play an important role as a channel for communications. Dating services, which were once the exclusive province of young people, are expanding to the middle-aged and older generations. A leading example of this is Ai Senior in Japan, which provides marriage counseling services targeted to middle-aged and elderly people.

4. Self-oriented values

Single-person households place higher priority on self management and development, as they have comparatively fewer obligations to support their families. They favor investment in themselves and promoting the value of their brand. In particular, they have higher expenditures on fashion, grooming and hobbies. When comparing working women in their 20s and 30s, single women spent 2.8 times the amount spent by married women without children on health and beauty, and 2.3 times as much on clothes and shoes.¹² It is also not hard to find singles who freely invest in high-end cameras, bicycles and musical instruments.

The adult education market, including instruction in foreign languages, sports and culture is also expanding. Household expenses for adult education among single women in their 20s and 30s are 1.8 times those for households of two or more persons.¹³ Special cultural products have also appeared to allow enjoyment of free time for those living on their own. Club Tourism International in Japan runs groups for "solo travel," and also runs "solo travel in groups" packages at a discount.

Single-person households seeking a better quality of life can find guidance on the Internet, with US-based "Single Edition" being a leading example of a site providing advice to singles.¹⁴ In contrast to existing websites that are limited to dating services, Single Edition includes services to promote general quality of life. It provides expert advice and Q&A on housing, jobs, personal finance, fashion, leisure, cooking and law.

III. Implications

In 2020, there will be 5.88 million single people living alone, accounting for nearly 30% of all households, in Korea. Accordingly, companies need to seek out new business opportunities in products and services appropriate to the lifestyles of single-person households. Moreover, as consumer orientations and patterns vary in accordance with the age of single-people, research on these demographic needs to be updated continuously. The values and tastes of single-person households develop differently in accordance with the environment and trajectory of generations.

Companies must also review the business practices that they have pursued in the past, and their existing concepts about customers. In housing, for example, "all-in-one" housing that includes home appliances and furniture is growing in popularity. Against this backdrop, the household durables industry (including home electronics, etc.) can find greater opportunities in the B2B market than in the B2C.

In addition to seasonal, back-to-school and graduation sales targeted toward conventional households, distributors and retailers will need to seek out new ways to stimulate sales targeted to the lifestyles of single-person households. If consumers with similar tastes are formed into a network, focused social networking service marketing can be highly effective.

Single-person households present a significant risk for rapidly increasing social costs in the future, and the government needs to establish long-term policies to adapt to the rise of this group.

Single-person households can have irregular eating habits, and can become socially isolated, making them vulnerable to mental and physical diseases. This means that prevention-focused health management is necessary. One study showed that adults living alone have an 80% higher risk of developing depression than people who are not living alone.¹⁵ Accordingly, it is desirable to provide funds and expertise that support regional communities so they can build social networks for single households to prevent social isolation and promote mental health.¹⁶

Above all, not only businesses and the government but also members of society must move beyond traditional concepts about family, and become aware of the existence of new kinds of neighbors.

Note

1. Klinberg, E. (January 25, 2012). "Solo nation: American consumers stay single." CNN Money.

2. Euromonitor.

3.Government of Canada (2010). Global Consumer Trends: Individualism.

4. Statistics Korea.

5. Statistics Korea.

6. Klinberg, E. (January 25, 2012). "Solo nation: American consumers stay single." CNN Money.

7. "Officetels" are small studio apartments intended for use by one person, and subject to different regulations from "apartments" under Korean law. The word is a portmanteau of "office" and "hotel."

8. Housing targeted towards low-income people and single people including one-room, dormitory-style and other housing.

9. Ministry of Land, Transport and Maritime Affairs (January 25, 2012). "Housing Supply Trends in 2011." press release.

10. A "retort pouch" is an aseptic plastic package for food.

11. Woori I&S Research Center (May 22, 2012). Food and beverage industry analysis.

12. Expenditures for health and beauty: single 42,000 yen/ married 15,000 yen; clothes and shoes: single 18,000 yen/ married 8,000 yen. Source: "Women in their 40s are saving Japan." (2012). Economist, Vol. 4119, 85-87.

13. Statistics Korea (2012). "2011 Household Trends".

14. http://www.SingleEdition.com/

15. ulkki-Raback, L. et al. (2012). Living alone and antidepressant medication use: a prospective study in a working-age population. BMC Public Health. http://www.biomedcentral.com/1471-2458/12/236.

16. Bennett, J. & Dixon, M. (2006). Single-person households and social policy: looking forwards. Joseph Rowntree Foundation.