‘Recession Is Coming’ Azione Members Told

Azione Unlimited members get sobering message about U.S. economy from demographics expert who says recession is on the horizon. Buying group keeps its momentum with new initiatives.

 •

They say there is no such thing as fate. Tell that to the members of Azione Unlimited (AU) buying group, which got a lesson in inevitability during its recent “Spring Soiree” meeting in Phoenix this week. The advice was just part of the festivities, which gathered 245 people including representatives from among 148 dealer members and 42 vendor members. In addition to presentations, attendees engaged in roundtable discussions to share ideas and several networking events, including dinners, golf, tennis and race car driving.

The sobering message at the conference came from keynoter Tim Costello, president/CEO of BDX, a consortium of the largest homebuilders in North America.  Since new home construction is so closely tied to demographics, Costello has become an expert on the matter. And what he told the Azione Unlimited members this week had them murmuring simultaneously in fear and fascination.

Costello used demographic data to show how closely tied the entire U.S. economy – and therefore the custom electronics industry – is to age and size of the population. Data show that the typical American spends the most money during his or her lifetime between the ages of 45 and 50. After that point in your lifetime, spending declines. So, using figures from the U.S. Census Bureau that shows the age groups of Americans and the peak-spending years, he showed how, for example, the economy boomed from 1980 to 2000 because the massive Baby Boomer generation (80 million people born between 1946 and 1964) was reaching its peak spending years.

The good news is that the huge Millennial generation (born between 1980 and 2000), with more than 84 million people, will be reaching its peak spending years starting in 2025 and running all the way through to 2050. That means the economy will boom during that timeframe, concludes Costello.

But here’s the bad news. The relatively tiny GenX group (born between 1965 and 1979) has just 54 million people. It is significantly smaller than both the Baby Boomer and Millennials generations. And GenX is just now beginning to reach its spending maturity.

“The dance is going to end. Recession is on the horizon,” says Costello. “There are 25 percent fewer GenXers. What do you think will happen when there are 17 million fewer people spending money … the economy will decline. The U.S. economy will not return to its current spending levels until 2033, and there is nothing you can do to stop it.”

Costello’s advice to AU members is to continue to focus on Baby Boomers by catering to their aging needs including second homes, which accounted for 21 percent of all U.S. home sales in 2014. At the same time, he advises dealers to focus on Millennials. That means targeting MDUs and developing their digital prowess with improved websites and social media marketing. Lastly, focusing on international buyers from China, Russia and other countries is a good demographic to target for the next several years.

Azione Gets Down to Business

At the conference, AU CEO Richard Glikes reiterated his goal to get to 200 members this year, but admitted that the group was likely going to fall short. Even still, the momentum of the group is apparent, with:

  • 18 percent of members earning $5 million or more
  • 85 percent of members have never been in a buying group
  • The collective earnings of the membership is $481 million
  • The aggregate membership employs 2,198 people

“Our goals continue to be to deliver exceptional profits to members – both dealers and vendors – to ensure their long-term success,” Glikes told the group.

Among the key new initiatives is the move to get the entire group using the same software. Glikes sees this as a key so AU can potentially develop an exit strategy for individual members. One step in the strategy was the recent selection of D-Tools and Slateplan as the official software vendors for AU. During the meeting, Scott Marchand and Jason Wright of Slateplan, and Randy Stearns of D-Tools, outlined some of the ways dealers can use their software to improve sales and efficiency.

Another new initiative from AU is the offer of a heathcare plan for members. Unfortunately, Glikes admits the plan was rolled out a bit too late in 2015 for members to adopt for the coming year. So far, there are no members on the plan but Glikes says 15 AU dealers have inquired about switching to it. 

About the Author

Jason Knott
Follow
Jason Knott:

Jason Knott is Chief Content Officer for Emerald's Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California.

ARTICLE TOPICS:

NewsAssociations/Buying GroupsOperations

ARTICLE TAGS:

AzioneBuying Group