[Jeon Young-su's Population Prism] Population Change-Driven Consumption Trend Shift... Towards the 'Sharing Economy Era'

Times change. And changes in the era are reflected in consumption patterns. The root of these changes is demographic shifts. Quantitative and qualitative changes in population structure drive a variety of ripple effects throughout society. Since the population (customers and their needs) has changed, market restructuring is inevitable. In a country like Korea, experiencing unprecedented rapid demographic changes, this leads to much more complex and intense consumption changes. Therefore, consumption trends driven by demographic changes must be carefully monitored and absorbed. If products do not sell well or sales decline, it means that the changed customer needs and expectations are misaligned. Mass consumption is over. From Generation X to Millennials and Generation Z, everything from financial situations to tastes and desires has completely changed.

The quantity has decreased, but the quality demands have become more stringent. Quantitative growth has peaked. With the per capita Gross Domestic Product (GDP, purchasing power parity) reaching $40,000, Korea has experienced rapid growth until now. The problem lies ahead. The situation is not easy. The establishment of a shrinking economy is inevitable. The shrinking economy is especially felt from the social entry of the younger generation. Growth without employment and the lack of long-term, stable jobs deepen the worries of youth. This soon means a decrease in purchasing power. Moreover, there is a shared value system that lowers the desire for ownership. It marks the end of quantitative expansion aimed at having more and faster. The traditional structure, where future uncertainty is exchanged for present patience to achieve future happiness, has been broken. At least, the adjustment or abandonment of material aspirations is a common perception among the MZ generation. The MZ generation refers collectively to Millennials (born 1980 to 2004) and Generation Z (born 1995 to 2004).

Rapid demographic changes reflected in consumption patterns
From Generation X to Millennials and Generation Z,
Youth population’s tastes and desires have completely changed

More importantly, it is about realizing happiness in the present. Rather than postponing painfully, there is a spreading mentality to enjoy lightly. This creates new consumption points. The shift in consumption style from 'ownership → usage,' where people borrow instead of buying, is an example. It is an era of abundance where even durable goods are limited to replacement demand. Even if something is essential, if the usage frequency is low, purchase decisions are blocked. Especially for the digital generation, who want to handle everything conveniently and enjoyably in their hands, the desire to consume based on ownership itself is weak. Even if they want to buy, the realistic purchasing barriers due to precarious employment and low wages remain strong.

Japan, which experienced rapid demographic changes, has seen a clear decline in ownership-based mass consumption. This trend is spreading regardless of age, beyond the younger generation. It is the rise of the "Sharing Economy." Korea, which has entered the "high growth → low growth" phase, also has a bright outlook. New sharing targets and changed sharing methods are promising business models. The Japanese government has identified the sharing economy as a stepping stone to overcome the deflationary economy. It plans to nurture it as an attractive model for economic revitalization. By recycling idle assets, it aims to create new opportunities, revive local regions, and even expand exports overseas. The coherence is sufficient. Significant economic effects are expected in a short period. This is because it does not create what does not exist but utilizes what already exists. Above all, its scalability is effective. Platforms can gather surplus space, mobility, goods, people, and money, enabling not only sharing but also trading and exchanging.

Professor Jeon Young-su, Graduate School of International Studies, Hanyang University

The sharing economy precisely targets the gaps in the needs of new customers. Frugality is a representative example. A frugal daily life is an essential virtue for new customers living in a shrinking growth and contraction society. The impact of recession directly linked to disposable income suppresses the desire to purchase and own. Over a minimum of 50 years of productive age (15?64 years), the rigid consumption patterns of new customers are bound to be the mainstream. Except for essentials or small luxuries for self-realization, they are accustomed to buying less or not buying at all. Although deprivation feelings last only a day or two, they accept it. This is especially true for those who had affluent childhoods. Having consumed most things thanks to their parents, their wallet condition comes first unless absolutely necessary. Having used and owned things, they understand the actual utility well. Therefore, aligning the sharing economy with the consumption frequency of these new customers is natural.

The lost desire for ownership gives birth to new alternative consumption. It is the expression of the desire to enjoy indirect utility. Attention is focused on usage value, which seeks to obtain utility from use without purchase or ownership. This is the economic rationality of the sharing economy. It is a connected framework of 'shrinking economy → frugality orientation → ownership refusal → usage value → sharing economy.' Without burdensome purchase decisions, the ease of borrowing and using makes it a niche desire, but it matches and becomes familiar to the majority of new customers, confirming its potential as a mainstream market. The sharing economy also aligns with the preference for secondhand goods (Reuse). If ownership desire cannot be resolved through sharing, the secondhand market can increase consumption utility with high cost-effectiveness. Ethical consumption and ethical purchasing are also expansion factors for the sharing economy. Instead of accepting production goods made in unjust or unfair ways, such as environmental destruction, it connects with a sustainable global ecosystem.

Shift in service style from buying to borrowing
'Ownership → Usage' Sharing Economy Booms

The change from 'ownership value → usage value' is spreading. The frugality orientation caused by low growth connects to a preference for rentals with low initial and maintenance costs, and lifestyle aligns with a non-ownership reactive mechanism. Quality control, safety assurance, and value changes of rental goods also influence this. Especially, the desire to borrow the latest products has been effectively targeted by the sharing economy itself. There are many types. The lineup has expanded from mainly luxury and high-priced items to almost everything being shared. The background of this spread can be summarized in three points: ▲Advancement of IT (facilitates sharing information matching) ▲Changes in economic and social structures (value usage over ownership) ▲Serious resource and environmental issues (need to reduce environmental burden). In developed countries, the sharing economy is a promising growth industry. The market size exceeds 100 trillion won. The growth rate is about 29.5% annually (PWC, 2014). Potential markets by sharing target are mobility (36%), space (20%), goods (19%), technology (18%), and money (7%) (Information and Communications Policy Institute, 2017). The Japanese market grew to 1.8874 trillion yen in 2018. With regulatory adjustments, it is estimated to reach 11.1275 trillion yen by 2030. This scale is comparable to the convenience store market.

By category, sharing goods through applications and rentals is the largest at 520.1 billion yen. Space sharing such as private lodging and parking is similar at 503.9 billion yen. Monetary sharing like crowdfunding is 458.7 billion yen, and mobility such as cars has grown to 193.5 billion yen. The market for sharing skilled services like housekeeping and childcare also reaches 211.1 billion yen (Japan Sharing Economy Association, 2019). Startups and large corporations entering the sharing economy are accelerating. It is a gradual but definite trend. Everything necessary for life is a potential sharing target. There is little resistance. A survey of 18?25-year-olds showed that 63% had no resistance to using the sharing economy. Although the sharing economy is a niche demand driven by demographic changes, it has all the conditions for growth. Centered on a pessimistic youth population, even self-deprecating views that ownership itself is a heavily taxed penalty are shared, making market expansion almost certain. Korea’s market has also opened. Various models creating shared value are gradually expanding. Potential targets start with items with mid- to long-term consumption periods and low ownership desire. However, the scalability is limitless. If one aims for a minimal and light lifestyle, the sharing economy is perfect. The added value created by low cost and high convenience is inevitably empathized with.