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.
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. 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.”
Where the Opportunity Exists:
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
The Female Economy: Women control a lion’s share of consumer spending, controlling 85% of overall consumer spending in the US alone.
Leading Areas of Opportunity
The HBR went to on identify six business sectors that represent the greatest potential for growth, places where women are likely to spend more or simply trade up. These sectors represent vast potential for savvy female entrepreneurs.
Food: Represents one of the largest opportunities. Women still do most of the grocery shopping and meal preparation. It’s an important budget item for consumers, one that can be adjusted but not eliminated. This is a category ripe for further disruption – from digital coupons to making supermarkets more experiential and curb-side service.
Fitness: In the US the market for diet foods is growing 6-9% each year, and it’s worth about $10 billion. The US health club industry generated $14 billion in annual revenue. Opportunities for innovation including wearable devices that monitor performance to fitness gear and ways to women-only / no-frills fitness chains like Curves.
Beauty: 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 simply be too many choices. And male senior managers at cosmetic companies often seem to miss the mark with what they offer women. Recent innovations in the sector include spray-on nail polish to compacts with a built-in LED light ring, that can also charge your smart phone.
Apparel: Including accessories and shoes, is an industry with plenty of room for improvement, especially when it comes to fit and affordability. Trying on close can be an exercise in frustration. 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.
Financial Services: May be the industry least friendly to women, and one in which innovative companies stand to gain the most if they can adapt their approach. 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. Opportunities abound in use of technology to provide faster and better services – as exemplified by the rise of “robo-advisory” firms such as like Betterment and Wealthfront as reported by Barron's last year.
Health Care: The HBR reported that health care is a source of frustration for women, those in middle age in particular. 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 in terms of 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.
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. The challenge for women founders will be to marshal the human, financial and social capital necessary for starting and sustaining three entrepreneurial ventures.
These three types of capital 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.