Tomorrow’s households will be bigger & closer
1.0 What’s happening: are communes coming back?
The answer is yes, but without all the incense. We are moving to a future where families and friends cohabit in a 21st Century update on the traditional vision. A combination of socio-economic factors, together with the convenience of developing tech from media-streaming and payment-splitting apps, means communal living will proliferate.
We believe the UK will see more three-generation family households, all sharing their food, TVs, voice assistants, cars, holidays and insurance. More friends buying homes together with specially engineered mortgages. Over-fifties not buying homes but happily moving into shared flats. And hi-tech co-living spaces housing dozens of socially-minded householders, with TV rooms and media-streaming built in. All of which will create new product and service demands.
It is a reversing of the trend for smaller households: one that itself created entire new product sectors, from single portion meals to mini kitchens.
Threats and opportunities
Bigger family households will disrupt traditional requirements across sectors: holidays to insurance to media.
But the trend will also create lucrative new opportunities, resonating across even more sectors than the smaller households trend did. It will impact food and transport, insurance and entertainment. For instance, as larger households offer much more combined income. It means a single household may in future wield real buying power, affording it ‘rock star’ type luxuries from swim jets and Peloton bikes to 3D printers and second kitchens. Co-living spaces will also offer multiple brands the chance for facilities sponsorship.
Below we offer a glimpse into tomorrow’s households, the commercial opportunities – and threats – they offer, and what businesses can do to prepare.
2.0 Key trends: Home stretched home
At Next Big Thing we’ve been studying a massively growing trend for Community. This ranges from increasing demand for social leisure to more focus on neighbourhoods and local retail. One of the areas where it’s set to have the most impact is household composition.
The last few decades have seen disruption hit almost every market sector. But one area that’s remained comparatively stable is the household. Aside from a comparatively small trend towards single occupancy, household composition has remained comparatively stable. But we believe that is about to change.
Get ready for households to get bigger, not smaller, as children stay home much longer and their grandparents move in. Add to that the increasing importance of local neighbourhoods. Then sprinkle in the impact of e-commerce and delivery services, and the emotional desire to reconnect with family post-lockdown. The scene is set for the biggest household shake-up in decades.
The final factor in all of this of course is the pandemic and subsequent lockdown. It’s made many re-evaluate what they want from a home. As Simon Bird, director at LOM Architecture and Design, says:
“These last few months of lockdown have been an opportunity for many to re-evaluate how they live, and how they want to live. What we require from a home has changed. While desirable locations are changing, so too is our idea of desirable housing. People have higher expectations around quality, amenity, and community.”
At Next Big Thing, we believe we’ll see three major household trends:
- bigger households
- a rise in shared living
- more purpose-built co-living developments
Children are leaving the family home later and later in life. There was a 46% rise in the number of UK 20- to 34-year-olds living at home between 1999-2019. 20-34s are now six times more likely to live with their parents than live on their own. Almost a quarter of 27 year olds today are still living with their parents .
The tradition for moving away from the family home after Higher Education is falling away. We’re seeing growth in Boomerang Kids – those who return home after university – but also more and more living at home while attending local universities.
It’s all down to a combination of economics and emotions. Increases in youth unemployment and house prices mean young people are having to wait longer until they can afford to move into their own home. In 1997, 50% UK citizens owned their own home by the age of 26. But that’s fallen significantly. In 2017, it took until 34 before half owned their home.
Adults and children alike are now placing greater value on spending time with their families. The average mother spent 104 minutes a day caring for children in 2012 compared to just 54 in 1965, despite a rise in working mothers. For men the jump’s been even higher: from 16 minutes a day to 59. Meanwhile 73% of US 6-17 year olds today want to spend more time with their parents than they do, and consider their relationships with their families closer than those with their friends.
Meanwhile, with interest rates so low, grandparents are finding it harder to live alone on their pensions. Moving in with their children will become increasingly attractive. Especially given the equity they can release by selling their homes. Already one in eight UK adults expect their parents will move in with them. More than half (51 percent) of adult children expressed willingness to have an older parent move in with them when they could no longer live on their own. In the US, 14 percent of adults living in someone else’s household are a parent of the household head, up from just seven percent in 1995.
As a result, there are more multi-generational households today than ever. In 1996, just 5.7 percent of US children lived in multigenerational families. Twenty years later, this figure had nearly doubled to 9.8 percent. Multigenerational households are the only type of shared living arrangement that increased over the last 20 years. In the UK, the number of granny flats and ‘graddy flats’ – that is, self-contained spaces for grown-up children returning home after university – rose by a third from 2015-2017.
The pandemic is likely to accelerate the multi-generation-household trend. Many families were kept apart geographically by lockdown and claim to have suffered emotionally as a result. This will inspire some to mitigate the situation by moving their family in with them.
The trend won’t just impact family households. Growing love of social interaction plus growing economic concerns, will encourage more non-familial sharing too. There’s a growth in identification with “framilies”: groups of close individuals that combine family, friends, neighbours and favourite work colleagues into one trusted whole.
As time with friends becomes more important, and with house prices in many areas still rising, house-sharing with friends and strangers will grow. The number of people looking for flatshares has risen 31 percent since 2011. More than half (51 percent) of those sharing in the UK today previously rented alone or with a partner, and 16 percent used to be homeowners.
If economies remain unstable, more older and higher income groups will start renting. The proportion of UK 35 to 54-year-olds who live as private tenants nearly doubled in the last 10 years. Between 2014-2018, one UK flat sharing website saw searches by over-35s rise 26% and those by 45-54s rise 50 percent. According to the Centre for Ageing Better, the number of over-60s renting privately in the UK rose from 254,000 in 2007 to 414,000 in 2017. It predicts about a third of over 60s could be renting by 2040.
Sharing won’t be limited to rental. Recent research from Marks and Spencer Bank identifies a trend for groups of friends to buy homes together. It’s a big enough trend for them to create a new product just for them: the ‘Mortgage For Four’.
“Our research suggests the majority of millennials would take out a mortgage with two or more people to get a foot on the property ladder. The option of becoming a mortgage-mate is particularly appealing to those already in a housemate arrangement.”
Paul Stokes, Head of Products, M&S Bank
Build to let
In the short term much of the new sharing will take place in traditional spaces such as converted family homes. But in the longer term, it will drive growth in co-living spaces: purpose-built multi-occupancy apartments that include communal amenities like kitchens, shops and food halls.
Rooms in co-living spaces are already in demand. Common, a co-living startup with homes in New York, San Francisco, Chicago and Washington, claim it’s receiving 1,000 applications per week for its 500 bedrooms. Meanwhile three quarters (76 percent) of property development professionals believe there will be a rise in co-living spaces in the next twelve months.
Given the growth of community, and its importance as a driver of co-living, we believe the successful co-living developments of the future will embrace their communal spaces. They might include more home cinemas or ‘playrooms’ with access to streaming services – the Netflix and Xbox Game Pass packages of the day. We see managed kitchen dining spaces, a hybrid of cook-it-yourself and professional catering, where Building Services offer pizza nights or group cooking sessions.
Community-driven co-living could develop in several directions. Examples range from those targeted at the young and single, to those like the Amaryllis Centre in Bonn, Germany which houses both pensioners and young families.
Room to live, work, play
Live work play (LWP) developments have long been predicted as the ‘next big thing’. The community trend looks set to make such mixed-use social environments a reality.
Malls focused more on leisure than retail are already hugely successful. One that points the communal way forward is The Forum in Groningen, Netherlands. It’s a 10-storey “part library, part meeting space, part science museum and part recreational hangout ‘multi-space’, which saw 700,000 visits in its first six months: which is impressive in a city of only 250,000 people.
The next step for mixed use will be adding more flats and offices into the blend, realising a much-anticipated shift towards integrated ‘live work play’ (LWP) spaces.
Such spaces could be key to keeping people away from the traditional rush hour-driven city centres. They could also be the solution to isolated malls. If malls incorporate living and working spaces too, people won’t need to drive there.
Residential demand for such spaces is already there. According to a recent study from the International Council of Shopping Centers, 78 percent of US adults would consider residing in such a development. Such integrated communities used to attract older residents. But today they’re most popular with the young. 85 percent of Millennials and 81 percent of Generation X polled would choose one compared to just 71 percent of Baby Boomers.
3.0 Key opportunities: Bigger households = bigger wallets
With traditional household composition breaking down, retail and leisure strategies based around traditional households will need to change. New households will create new needs, driving demand for new products and services.
Bigger households will need more industrial size and variety packs. Multi-occupancy households will seek products previously outside the budget or requirements of single households and flat shares. That could include high-end sports equipment like Peloton bikes, electric vehicle charging points, 3D food printers or porta-cabins for additional house sharers.
The battle for the home hub
Three generations congregating under one roof will mean a single customer account with one company instead of three separate ones with potentially three separate brands.
The battle to be provider-of-choice for broadband, media and other utilities is already strong, even for today’s comparatively small households. For tomorrow’s three-generation family households and thirty person co-living spaces, it will get even more intense. Entertainment, energy and internet suppliers will fight it out with loss leaders for a foothold in a single, lucrative household,.s It will likely have a consolidating effect, with specialists bought out by larger suppliers. Eventually we’ll see entire houses powered by Amazon, for instance. Why not one account for heating, TV, music, food and banking.
Get ready too for some great multi-user interfaces. While suppliers win larger households, they’ll need to appeal to the diverse audience within each home. Their customer won’t just be Mum or Dad but a range of grandparents, children and housemates all with their own agendas. Suppliers will need to deliver multiple user profiles, offering easy personal controls and simultaneous multi-play options on any joint account.
Adaptable or die?
There will be an increasing demand among sandwich households for more adaptable products and services, from modular furniture to multi-user insurance policies. Or maybe smarter furniture rental services that help them adapt to the comings and goings of their family. For instance, Ikea has just set up a furniture-hiring subscription service.
There will be new demand too for products that work in multiple rooms and multi-occupancy homes, like voice assistant hubs and payment management apps. This has particular importance for media, telecoms and utility companies.
Financial packages will need to work for families as much as individuals and couples. With more people needing to interact financially – with family members or flat sharers – there’ll be a rise in demand for money sharing and administration apps. More renting will reduce the importance of mortgages in favour of short term savings and more adaptable credit services. There may be a demand for family and ‘framily’ bank accounts – one step up from joint accounts – and family investment schemes and pensions.
Meanwhile the scope of ‘family’ loyalty cards, car club memberships, streaming and co-working discounts will need to be broadened to ‘framilies’ and extended families. This will be especially true for leisure centres, theme parks, heritage sites and the 80 million leisure centres predicted to exist in Europe by 2025, as the composition of family – and framily – holiday groups shifts.
Put your stamp on build-to-let
New commercial living spaces will also provide a whole new sales platform. As co-living and LWP communities develop over the next ten years, they will compete for residents by offering the most attractive amenities.
Smart retail and leisure brands will help them out, placing small retail and leisure outlets in these new living spaces. In terms of functionality, most spaces will be improved by a branded cafe or gym, a ‘corner shop’ or a pharmacy. For smaller sites, there’ll be increasing opportunities around next generation vending machines. Meanwhile smart media companies will compete to install their broadcast packages or magazine subscriptions in any new development.
Co-living spaces and larger flat shares also offer opportunities for leisure companies. With their combined wallet-share, they might be interested in renting out entire bowling alleys, music venues or charter flights.
There will also be big opportunities around sponsorship. There’s an obvious brand benefit to placing products within consumers’ lives, as demonstrated recently by companies from Versace to Muji who have built their own branded hotels.
Investment and placement in co-living and LWP sites offers a similar benefit for a much smaller investment. As such spaces grow in influence, they’ll provide further opportunities for brand investment and sponsorship. Mini, Amazon and Airbnb have recently begun investing in housing developments. It’s easy to imagine a Coca Cola LWP community in London or Chicago. Or perhaps a more socially conscious Patagonia or Ben & Jerrys one in Margate or San Francisco.
4.0 Next steps: how we can help
Any company currently marketing to households needs to understand how they are set to change. They also need to know what opportunities – and threats – such changes will provide, and how to take advantage of them.
Next Big Thing offers the solution. We also offer tactical and strategic consultancy on the topic. We’ve created an action plan for companies looking to target tomorrow’s households. Founder Will Higham has also created a talk on the topic that he can deliver online or in-person. It offers practical methods companies can use to appeal to tomorrow’s households.
At Next Big Thing we’ve spent years exploring how companies can best prepare themselves for a changing market. We’ve helped businesses find success across a range of macro-shifts: from the migration from physical to virtual and mobile, to the emergence of Generation Y and Z. We’d love to help you and your products appeal to tomorrow’s households.
To find out more, just call (020 3542 1900) or email (email@example.com).