As a woman, it would seem that startups founded by women – that target women – would be flourishing in the current economy. But sadly, this is not the case, despite the massive economic opportunity women represent and the advantages that women founders bring to the table in terms of empathy, insights, business acumen, and emotional connectivity with other women. Here are statistics showing how women are the dominant consumer demographic in many crucial categories.
Women Drive the World Economy
Back in September of 2009, The Harvard Business Review reported that “Women now drive the world economy.” The HBR estimated then that women controlled $20 trillion in annual consumer spending, and that figure was likely to rise to $28 trillion by 2014.
In terms of yearly earning, they cited $13 trillion in total female income projected to grow to $18 trillion by 2014, far overshadowing China and India’s combined GDP, shown above. Those are a staggering set of statistics, indeed.
The HBR went on to make the following observation:
“Women feel vastly underserved. Despite the remarkable strides in market power and social position that they have made in the past century, they still appear to be undervalued in the marketplace and underestimated in the workplace.”
Women are the Dominant Consumors
According the HBR data, women offer a tremendous source of opportunity, as they make the purchase decision for:
- 94% of home furnishings
- 92% of vacations
- 91% of homes
- 60% of automobiles
- 51% of consumer electronics
It is the female economy. In fact, women control the lion’s share of consumer spending, controlling 85% of such spending in the US alone, as shown by this graph:
Here are the 6 Fields where Women Will Dominate:
Us women still do most of the grocery shopping and meal preparation in the United States. It’s an important budget item for consumers, one that can be adjusted but not eliminated, and happens to be a very low-variance market in that way. No matter how bad or good the economy gets, people will still need to spend money on food. This is a category ripe for further disruption – from digital coupons to making supermarkets more experiential and curb-side service, the food industry can only grow bigger, and women will play a big role in it.
In the US, the market for diet foods is growing at an incredible 6-9% each year and it’s worth about $10 billion in total, while the US health club industry generates $14 billion in annual revenue. Opportunities for innovation in this industry include everything from wearable devices that monitor performance to fitness gear to women-only/no-frills fitness chains like Curves, and everything in between. The industry is also rather fragmented, which keeps the door open for new business ventures for hopeful entrepreneurs.
Products in this category promote a sense of well-being in women, yet research indicates that women are fundamentally dissatisfied with beauty offerings. There appear to be too many choices, and male senior managers at cosmetic companies often seem to miss the mark with what they offer women. What the industry needs is more women, the primary customer of the industry. Recent innovations in the sector include spray-on nail polish and compacts with a built-in LED light ring, that can also charge your smart phone. The door for innovation in this industry is wide open.
Greenpoint business, Zoe’s Beauty, is leading the way and is a fantastic example of women entrepreneurs catering to untapped female consumers.
Including accessories and shoes, the apparel industry has plenty of room for improvement. Trying on clothes can be an exercise in frustration for many people, due to variations in sizes and fits. Recent innovations in this sector include phone charging pants to conductive fibers and smart watches. There is explosive growth in “athleisure” clothing estimated to generate $35 billion in sales or 17% of the US clothing market in 2016. Similarly to the food industry discussed earlier, the apparel industry (excluding high-priced luxury-style clothing) does not fluctuate with economic growth or decay.
5. Financial Services
Maybe the industry least friendly to women, and one in which innovative companies stand to gain the most if they can adapt their approach, financial services can still offer great opportunities to women. Despite the Great Recession, the private wealth market in the US is expected to top $22 trillion by 2020, with half of that amount in the hands of women. Yet women are still subjected to poor service quality from financial services companies, which presume men to be their primary target customers.
As more women enter higher positions in this industry, the gender bias that the industry has will fade, and it will be less difficult for women to enter and rise in the field. Opportunities are everywhere as new technology aims to provide faster and better services – as exemplified by the rise of “robo-advisory” firms such as Betterment and Wealthfront, as reported by Barron’s last year.
6. Health Care
The HBR reported that health care is a source of frustration for women, especially for those who are middled aged. They resoundingly reported dissatisfaction with their hospitals and doctors. Pain points included waiting time in doctors’ offices and lab results, as well as scheduling and keeping appointments for their families and themselves. The Advisory Board has identified business opportunities in this sector as tackling these problems by aiming to increasing access and convenience. The explosive growth of urgent medical care centers in the US is a great example of a disruptive business changing the health care industry for the patient experience good.
So what are the takeaways?
These data points and trends point to the vast business opportunities that are available to women founders, focused on creating products and services targeting women. The economic stakes are massive by any measure, and the challenge for women founders will be to marshal the human, financial and social capital necessary for starting and sustaining their entrepreneurial ventures.
The previously mentioned capitals (human, financial, and social) are interlinked, and women tend to be less likely than men to have access to them all. As a result, women may be less able to take advantage of the opportunities that are available to them. Changing this situation and finding ways to empower women to succeed as founders is clearly the challenge at hand.