In recent weeks, the Harley Davidson disappointing earnings report generated a lot of headlines. Most of the attention was devoted to the impact of tariffs. Less attention was devoted to the other reasons for the drop in profits, like the challenge of a shrinking core customer base and difficulty “to find new riders outside its aging core customer base”.

For us the disappointing results were not surprising. In a report we released last year, we estimated the impact of demographic changes on consumer spending. Unlike most economic forecasts, demographic predictions are quite certain. If you tell me your age today, I can tell you how old you’ll be in 10 years with a very high degree of certainty. Based on information on consumption patterns by age, I can also tell you, with somewhat lower, but still high, degree of certainty, how being 10 years older will impact your consumption on various products and services.

We found that spending on motorcycle sales are almost exclusively concentrated in middle-aged, white households. It turns out that in the next ten years, the number of consumers in this group is likely to shrink faster than any other population group in the US. Baby boomers are aging into groups where motorcycle spending is typically lower, and they will be replaced in that 45-54 cohort by the much smaller Generation X. We predicted that these demographic shifts alone will lower spending on motorcycles by 3.7 percent over the next 10 years.

Motor cycles are just one example of a product class where a core group of customers is aging out of a key demographic. Men’s clothing is another. It turns out that while women continue spending at previous rates on clothes when they age and retire, men dramatically reduce their spending on clothing. As a result, sales men’s clothing is likely to grow much more slowly than for women’s clothing as older consumers grow in population share.

There are plenty of opposite examples, where demographic trends are likely to boost sales. Health related categories are the most obvious ones, but even within healthcare spending categories there is large variation. In some healthcare segments such as eye glasses spending is more or less evenly spread across all age groups. In these categories the aging of the baby boomers will not make much of an impact. The larger impact will take place in categories where most of the spending is concentrated in older ages, like hearing aids and assisted leaving facilities. For example, we expect demographic trends to lead to a 22 percent growth in hearing aids and 19 percent on assisted living in the next decade.

Businesses of all stripes should know the identity of their core customers and how their numbers will shift over the next decade. This knowledge can help executives formulate a strategy catering to a still large core customer segment, or to develop alternative strategies and product lines designed to attract new customers in growing demographic categories. Harley Davidson and others in its predicament would be well-served to try both.

To learn more please read our report.