Older Consumers - The Golden Economy

The International Longevity Centre-UK is an independent, non-partisan think-tank

dedicated to addressing issues of longevity, ageing and population change.

The Golden Economy: the consumer marketplace

in an ageing society

David SinclairHead of Policy and Research – ILC-UK



Summary

About ILC-UK/Golden Economy

The context.

– Size of the market

– What makes a consumer an older consumer

10 Do’s and Don’ts

Other recommendations from “the Golden

Economy”



We influence Government policy and debate

The ILC-UK was established in 2000 to explore and address the new longevity revolution and its impact on the life-course and society.

Think TankGlobal (12 ILCs)Evidence BasedHigh visibility around Westminster (e.g. 17 events/1000 people in 2010) Engage at highest levels of GovernmentFocussed on life-course



It’s a big market

Older people’s spending

reached an estimated

£97bn in 2008 (over 65)

The over 50s spent £276bn

in 2008. This represents

44% of the total family

spending in the UK

ONS Family Spending 2010



An ageing society means more older consumers

The 65+ age group now accounts for 20% of the UK consumer population (16+), and is expected to rise so that in 2030 over 65s account for 25% of the consumer market. PRFC for ILC-UK

The older market will grow by 81% from 2005 to 2030 while the 18-59 year old market will only increase by 7%. EU figures quoted by Stewart

In the UK, the number of consumers over 60 years old could increase by 40% over the next 30 years. Meneely, Burns and Strugnell (2008)



Yet as we age the consumer market becomes more difficult



5 Don’ts

Don’t assume older people are all the same

Don’t assume money is the biggest barrier to

consumption

Don’t ignore new technology

Don’t discriminate

Don’t ignore the older consumer



5 Do’s

Be wary of “the changing consumer” mantra Do think about how an ageing society might change

demand for products and services Think about the older consumer as a giver and

receiver Ensure your products and services are accessible

(inclusive design) Deliver good customer service and help the older

consumer get what they want (be more demanding)



Don’t 1: Let’s not assume older people are all the same.



Many like to travel



Don’t 2: Don’t Assume Money is the Biggest Barrier: Social Participation and Age



Yet people would like to participate more



There are some very wealthy people not spending



It’s not just about money.



Distribution of net household financial wealth1: by age of household head (2006/08)



Don’t 3: ignore new Technology – an opportunity (and a challenge)

Around 820,000 older consumers (65+) in the UK made an internet

purchase PRFC Analysis for ILC-UK (EFS 2007)



Don’t 4: Don’t discriminate

“Interflora, Britain’s biggest flower

delivery business, has been

accused of ageism as their new

‘happy birthday’ balloon range only

goes up to 60 years old”

Telegraph, September 2010



Don’t 5: Don’t ignore the older consumer

“Just because I’m over 60 nobody wants to sell me anything anymore” Germaine Greer

“Advertisers and marketers are astonishingly neglectful of older audiences even for products primarily sold to older people” Mike Waterson, Chair World Advertising Research Centre

Advertising/marketing agencies rarely asked to pitch for the older consumer



Why don’t companies target older people?

Perception of a lack of buying power

Stereotyping of older people as “powerless, ugly, dowdy or uninspiring” (alongside an obsession with youth)

Lack of information about older people’s sensitivity to marketing Tynan and Drayton (2008)



Do 1: Be wary of the changing consumer mantra

“It is blindingly obvious that there is enormous difference between the seniors of yesteryear and people of the same age today.” Saga 2008

We have a wealthy cohort (on average) (and there are more of them)

Recent retirees “are more strongly defined by the impact of consumer society on their lives and expectations of post work life than previous generations”



But is this a new phenomenon?

“They have fewer ties to family responsibilities... With their homes paid for their major housing concern is for property taxes and repairs... Being essentially free from obligation, they may spend their income and assets as they wish. Here is a potential market, therefore for those marketers who wish to appeal to it. It is a new market, almost unrecognised which must be developed with care as it depends upon the changing role of older persons in our society and the realisation that they are more free than their predecessors in the past century.”



But is this a new phenomenon?

“They have fewer ties to family responsibilities... With their homes paid for their major housing concern is for property taxes and repairs... Being essentially free from obligation, they may spend their income and assets as they wish. Here is a potential market, therefore for those marketers who wish to appeal to it. It is a new market, almost unrecognised which must be developed with care as it depends upon the changing role of older persons in our society and the realisation that they are more free than their predecessors in the past century.”

Dodge, 1962



Do 2: Think about how might an ageing society change the consumer marketplace?

Older people currently spend more than other ages on: drugs and healthcare; personal care; and coffee

They represent a significant market for new cars and travel.

Clothing spend declines with age

But less on eating out, movies, theatres, petrol and champagne

Certain industries will need to adapt to an ageing society



Even beer …

“German beer consumption

fell 2.1% in 2009 based on

an ageing population”

Bloomberg.com



Categories of household expenditure by age of household reference person (2007)



Growth in expenditure (BIS)



Do 3: Think about the older consumer as giver and recipient

Marketers note that older consumers buy a relatively high proportion of toys (25%?) and confectionary

Grandparents spend £50,000 on their first grandchild (Oct 2010)

Younger children/grandchildren often buy for the older person

In other words, people aren’t always buying for themselves.



Do 4: Well design your services



Can you read the menu?

In many European cities one of the main groups eating in restaurants are those over 50, yet very few 50 year olds are able to read a menu by candlelight with out their reading glasses. That is because the menus are usually designed by younger people in print shops, not for senior citizens. What a crazy situation: the people who the restaurants want to market to cannot read any of their sales literature. Patrick Dixon (2008)



Do 5: Deliver good customer service

Investigate! volunteers also highlighted access to information and advice about what was available in the consumer market

Examples of good customer service – but it is often poorly promoted.



Other findings

Mixed evidence about shopping around

Limited evidence about older people and ethical

consumption

Mixed views on brand loyalty

Mixed evidence on the best way to reach the older consumer

Incomprehensible jargon and modern phraseology a

barrier to the market (esp. financial services)

Some Investigate! participants argued that they had less

choice than when younger



Other findings

The end of the cheque could have a negative impact on the older consumer

Older consumers are often the main target for fraud, scams and mis-selling

Need for an age friendly retail environment: In 2009 Tesco announced it was building an older person friendly retail environment complete with wider shopping aisles and brighter lights

Good built environment (toilets/mobility scooters/parking/transport) makes the consumer marketplace work better.



Summary

The older consumer has money

They value good service

Lot’s of companies get it wrong

There is money to be made by those who get it

right.



Many thanks

David Sinclair - Head of Policy & Research,

International Longevity Centre (ILC-UK)

[email protected]

Twitter: @sinclairda@ILCUK

Older Consumers - The Golden Economy

Documents

major housing

changing consumer

dont assume

changing role

older consumer

ageing society

family responsibilities

biggest barrier