Observers have a tendency to underestimate the long-term impact of technology while exaggerating its short-term effects. That's why I was so interested to come across a recent study in Advertising Age that has sweeping implications for our society.
At the crux of the report is a dramatic shift in the patterns of young drivers -- in essence, they're vanishing. The percentage of 17-year-olds with a driver's license dropped from 75% in 1978 to under 50% in 2008. Even if you go up two years, the drop is still significant, from more than 90% of 19-year-olds in 1978 being licensed drivers to only 77% of them 30 years later.
And it's not only teens. The share of miles driven by people in their 20s has dropped from 21% to just 14% since just 1995. The younger members of our society are simply driving less. This is a frightening trend for a number of businesses, from the automotive industry to big-box retailers.
Why is this happening?
The reason for the decline lies in a combination of larger demographic shifts into urban areas with public transportation, coupled with that pesky "series of tubes" known as the Internet and the digital revolution it helped spur. It turns out that potential young drivers are more interested spending time with their mobile devices -- multitasking while commuting via public transportation -- or efficiently ordering products through e-commerce sites such as Amazon
Seeds of Detroit's destruction?
One impact of this trend: Outside of a random strong month, auto sales have been steadily declining since 2005 and bottomed out last year. And while things have stabilized and year-over-year comps look great, total sales are still below where they were pre-crash.
This is the reason you're seeing an increased focus on filling each car and truck with high-tech gadgets such as DVD players and Sirius XM
Even if all the technology manages to coax some younger people into cars, the likelihood remains that the number of drivers will decline as baby boomers leave the roads, potentially putting long-term downward pressure on the companies dependent on auto sales, from Toyota
Big trouble in Big Retail
The other casualty of this trend is the big-box store, the king of which is Wal-Mart
As it becomes easier, cheaper, and more efficient to get goods through e-commerce or from convenient urban locations, Wal-Mart may struggle as it tries to get customers whose first instinct is not to drive to its stores.
Can the big-box stores adapt their model to smaller locations? Will automakers have to look at increasing an international presence to find new revenue streams? Those who identify and figure out how to let the larger demographic trends carry them downstream will certainly fare better than those who stubbornly swim against an unforgiving current.
David Williamson owns no shares of the companies mentioned. Microsoft and Wal-Mart Stores are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers pick. Amazon.com and Ford Motor are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days. The Motley Fool's disclosure policy loves a nice boat ride.