CHASING THE DYNAMIC “SILVER SPENDER”

As the oldest Baby Boomers turn 70, their generation is rewriting the rules about what it means to be a consumer in the “silver” years. Their spending hasn’t decreased as significantly as previous generations; data from the U.S. Federal Reserve actually shows a 25 percent increase in the median net income for those aged 65-74 since 2001, says Deborah Weinswig, executive director and head of global retail and technology for the Fung Business Intelligence Centre. Those under 35, in contrast, have seen net income decline 18 percent.

Baby Boomers have “driven consumer spending over the last few decades,” says Robert Haslehurst, managing director in L.E.K. Consulting’s consumer products and retail practice. “That isn’t going to stop just because they qualify” as senior citizens.

Shoppers 60-plus are not just spending — they’re spending in discretionary categories.

“When I looked at this data eight to 10 years ago, I used to see a dramatic falloff after ages 69-70 in terms of discretionary spending, and you’d also see a drop off in essential spending,” says Christine Barton, a senior partner at Boston Consulting Group.

“When you look at that over the last 10 years, that cliff is marching up. It was hovering around 74-75 in our data. … Folks are spending more on the categories that they continue to love. They’re spending in travel, experiences, in home decor.”

And forget the adage about allegiances being set in stone by this point.

“Twenty or 30 years ago, brand preference and brand loyalty were real concepts because there were so many fewer choices,” says Pam Danziger, president ofUnity Marketing.

“Today with the explosion of brands and offerings and products and access to products, the old ways of thinking about the silver consumer needs to go out the window. They are as likely to try new brands or give new brands a chance, but [those brands] need to be marketed properly.”

Certain retail sectors “talk more about the Boomer,” Barton says, citing food and non-alcoholic beverages, over-the-counter health and wellness, personal care and restaurants.

But others are missing the opportunity. “While most of the revenues of women’s apparel in the United States are driven” by those under 35, she says, “non-athletic footwear is dominated by those over 35. Boomers aren’t a focus” because that’s perceived to be a younger life stage category.

“It ignores the fact that Boomers are changing and extending their behaviors at a much faster rate,” Barton says.

 

FOCUSED ON SERVICE

Silver spenders’ habits look a lot different than those of their parents. In fact, BCG research showed 10 of the top 20 brands favored by Millennials also make Boomers’ list of favorites; Boomers share another three in common with Generation X. When it comes to aspirational brands, Millennials and Boomers share 12 of 20.

Weinswig sees a preference for spending in “big-ticket, home-related categories, such as furniture, appliances and do-it-yourself. Silvers are more likely to be homeowners and they have been gaining share of total net wealth. Conversely, 65-74 year olds allocate a slightly smaller proportion of their spending to apparel than 55-64 year olds, and 75-plus consumers allocate a lot less to this category.”

Silvers may share some of the same preferences in brands and stores, but the same is not true when it comes to expectations.

Danziger, who is in the silver generation, cites a recent example of shopping with her Millennial son at a store popular with both generations.

“They ask you to register for service and stand over here and wait. After five minutes, I was totally antsy, then disgusted because the young kids who were staffing the stores were consulting each other instead of the customers. My son accepted it and waited.”

Silver shoppers have an expectation of service that belies much of today’s retail trends.

Danziger believes that silver shoppers have an expectation of service that belies much of today’s retail trends.

“So many of these stores are trying to go high-tech with the notepads and the checkout on the floor,” she says. “That goes way over the heads of Boomers. They need to keep the cues and clues about shopping in a real-world environment firmly grounded in their stores.”

Haslehurst agrees that the silver generation is more willing to “engage with store associates, which perhaps sets them apart from the tech-first Millennials. Appropriate levels of staffing, welcoming and helpful staff are important, although many would prefer to keep engagement‘optional.’”

And forget the idea that silvers don’t prefer online shopping. In fact, Weinswig sees that as an area of opportunity for retailers.

“Online shopping is currently perceived as skewing toward younger consumers, but the convenience it provides through home delivery makes it well suited to the demands of retirees,” she says.

REALITY BITES

Silvers may feel and act young, but reality sets in — with its own cues for retailers: They may not prefer large malls or supercenters.

“Aging does happen, and while the Boomers have a younger point of view and mindset, after 60, your knees may be going,” Danzinger says. “The huge stores with the racetrack concepts may not be the best approach if you want to attract Boomers.”

Weinswig sees an opportunity for “proximity retailing,” with retailers locating in neighborhoods largely populated by seniors or that include senior communities.

“The grocery sector, where convenience stores and local grocery stores cater well to the smaller-basket shopping of older consumers, offers a good example of silvers’ interest in proximity shopping,” she says. With typically smaller households and appetites, they have less need to travel farther to shop at large grocery stores.

 

In Europe and Asia — both of which have larger senior populations than the U.S. — retailers already are responding. Weinswig points to two grocery chains — Germany’sKaiser and Austria’s Adeg — as havingadapted store designs and product labels. Changes include wider aisles, improved lighting, nonskid flooring, additional seating areas, easy-to-read price labels and the availability of magnifying glasses to better see packaging labels.

In Japan, convenience store Lawson has widened aisles, lowered shelves and reconfigured its food mix to better appeal to seniors. It also added nursing care consultation areas with advisors available whenever the store is open. Other convenience stores have added meal delivery service and pharmacies.

In the U.S., Walgreens and CVS Caremark are on the forefront, Weinswig says, retrofitting stores with carpet to reduce slipping, lowering shelves, improving lighting, eliminating curbs from store entrances and painting existing curbs yellow to heighten awareness.

Haslehurst says retailers that are “experiencing growth in general … seem to incorporate a good eye on the needs of older customers, and both merchandise and create store environments to suit them.”

Source: National Retail Federation, July 2016