older consumers

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



Methodology

Literature review Previously unpublished primary research

(Investigate! – Mystery Shopping commissioned by Help the Aged in 2006/07)

Previously unpublished quantitative evidence from Age Concern Research Services

New quantitative analysis by Bristol University (ELSA; WAS etc)

Sense checking with experts (Age UK and Consumer experts) and older people (2 sessions)



It’s already 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

Age Concern and Help the Aged analysis of 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)



Government and the older consumer

“Businesses need to ditch outdated stereotypes... And focus on the grey pound” Foresight Ageing Population Panel (2000)

“Generalised failure by industry and commerce to take advantage of the lucrative market represented by the ever growing group of older people” House of Lords Select Committee on Econ. Affairs (2005)

Ageing Strategies (2005 and 2009)

“Establish an Innovation and Growth Team to draw up an action plan for business and Government on the economic opportunities presented by an ageing society”. BIS New Industry, New Jobs (2009)



Infrequent participation and respondent would like to participate more often

Age 52 to 54

55 to 59

60 to 64

65 to 69

70 to 74

75 to 79

80 to 84

85 to 89

90+

All

Cinema 38 34 27 26 26 21 22 30 34 28 Eating out 28 24 22 21 22 23 24 24 29 23 Art gallery, museum 36 34 30 26 24 24 30 26 19 29 Theatre, concert, opera

45 48 44 43 41 39 44 42 39 44

Unweighted Base 92 1,307 1,079 879 825 625 372 188 47 5,405

ELSA (English Longitudinal Study of Ageing) Wave 3 Core respondents



There are some very wealthy people not spending

30 and below

30 to 49

50 to 64

65 to 74

75 +

All

Expenditure in Lowest quintile 1

3 2 2 5 6 3

2 14 10 7 12 16 10 3 21 15 15 28 23 16 4 24 25 29 25 29 26 Highest quintile 5 38 48 47 30 26 45 Unweighted base 92 602 376 57 31 1,158 Source: EFS 2007 (weighted percentages)



But what makes a consumer an older consumer? Impact of biological ageing in the consumer marketplace

Loss in physical strength may make opening jars/bottles more difficult

Older people losing mental capacity/dementia may find difficulties with problem solving or processing information. They may also find it difficult to shop around or exercise choice

Older people losing sight/hearing are likely to find that the design of products and services may become increasingly problematic

Those housebound can be excluded from the physical marketplace

Ageing can make it more difficult to carry heavy weights and can also result in reduced appetite (Twofers!)



52 to 54

55 to 59

60 to 64

65 to 69

70 to 74

75 to 79

80 to 84

85 to 89

90+

All

Difficulty shopping for groceries

2 7 8 8 9 13 19 32 60 11

Difficulty making telephone calls

1 1 1 1 3 3 6 7 24 3

Difficulty managing money, e.g. paying bills, keeping track of expenses

- 3 2 2 3 4 7 14 34 4

Unweighted Base

119 1,656 1,419 1,176 1,129 907 622 372 135 7,535

Difficulty with shopping, communicating and handling money

ELSA Wave 3 Core respondents. Weighted percentages.



Impact of social ageing in the consumer marketplace

Older people could assume that certain products and services aren't for them and therefore don't consider purchase

Older people may assume that certain technologies are for younger people and don't consider their use as a means of engaging with the consumer market

The media and corporate sector may strengthen the negative impact of social ageing through ageism



And who are the older consumers?

Companies use different ways to segment the market including: – chronological age; – generational segmentation; – income; – life stage; – cognitive ages and values

There is no such thing as a single “older consumer”

Chronological age is widely used a poor tool for segmenting the population

Some research finds that age has little impact on consumer demand (if income is taken into account)



Average gross weekly income

The gross household weekly average income peaks for households headed by someone aged 30 to 49 (£44,000 a year), and falls gradually among older cohorts

The average weekly income of the oldest households in 2007 (75 or older) was around £300, or just under £16,000 a year.

Taking household size into account, on average, income is actually greatest on a per person basis for those in households headed by someone aged between 50 and 64 (£321). PFRC analysis of Expenditure and Food Survey



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

1Results exclude households with zero net financial wealth.

Wealth and Assets Survey, ONS© Crown copyright 2009



Are older consumers ignored?

“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)



But some companies are getting more interested

“Coca Cola moved into the wine, coffee, tea and orange juice markets during the 1980s to capture older consumer markets who were less interested in their coke brands” Simcock and Sudbury 2006

“Anheuser Busch, the largest US beer maker, attempted to reach the 50 plus age group and wound up creating one of it’s top selling brands” Green 2004



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.Travel has long been a key part of retirement

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)

Expenditure and Food Survey (2007) Office for National Statistics (created from data in click-use data table).



Growth in expenditure (BIS)

Growth in expenditure 2008-2033 (%)

0%10%20%30%40%50%60%70%80%

Food/

drink

Alcoho

lic d

rinks

Clothin

g

Fuel/p

ower

House

hold

good

s

Health

Trans

port

Comm

unica

tion

Recre

ation

Educa

tion

Resta

uran

ts/ho

tels

Misc

ellan

eous

Demography Expenditure growth

BIS (2009) Is Business Ready for an Ageing Population? Economic Opportunities and Challenges of Ageing: an Analytical Paper.



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.



Older consumers in a digital world

Age

19 and below

20 to 24

25 to 29

30 to 34

35 to 39

40 to 44

45 to 49

50 to 54

55 to 59

60 to 64

65 to 69

70 to 74

75 to 79

80+

All

Yes 22 30 36 47 35 37 35 37 31 23 13 10 7 2 1,645 Unweighted Base

23 170 395 459 593 647 621 541 549 552 446 405 325 410 6,136

Just 3% of 75+ and 7% of 65+ use social networking on

internet at home

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

purchase

PRFC Analysis for ILC-UK (EFS 2007)



Digital exclusion in the consumer market

Can make products more expensive

Can make shopping around more difficult

Can restrict access to information in the consumer marketplace

Online grocery shopping could benefit older people (but very few seem to use at the moment)

Media literacy, accessibility and usability of technology creates a barrier to digital inclusion

Stroud argues that income/class is as big a factor as age in internet use.



Lots of examples of products failing in terms of inclusive design

“The instructions with the hand-held tape recorder are – as with all electrical items in very small print.” Molly, Investigate! 2007

“Mobile phones have so far been deigned for those with 20/20 vision, petite and nimble fingers, who relish the challenge of mastering fiendishly complex menu systems.” Stroud (2008)



Inclusive design of mainstream



Shopping around

There could be a number of reasons for this:

Older people are happy with the product? Difficult to calculate the benefit of switching (telecoms/utilities) There are few alternatives (e.g. upper age limits) Switching is a hassle Reduced information processing abilities (but does experience

compensate for age?)

Mixed evidence about shopping around but in terms of insurance; utilities; communications technologies, there is evidence that as we get older we are less likely to shop around.

But if marketers assume people don’t shop around they won’t target them.



Other findings

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)



Direct and indirect age discrimination

“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



Other findings

“Ghost Town Britain”, poor transport and access to toilets are barriers to the market

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



Other findings

Some Investigate! participants argued that they had less

choice than when younger

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.



Are older consumers changing?

“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”

A “Charmed Generation” - Stroud



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



Convenient myth of the elderly hedonist

“The elderly have had a recent makeover, as appears in the ‘70-is-the-new-50’ cliché….This is profoundly reassuring for

the rest of us, and it conveniently dissimulates the image of those who live on into their ninth and 10th decade…, too timid to go out, who have lost confidence on the uneven pavements and dizzying shopping crowds; those afflicted by the mysterious paranoias of old age, trembling each time

the doorbell rings and frightened of the unexpected telephone call; people whose days are marked by boredom and its twin, loneliness.”Jeremy Seabrook



And do we need to take age out of the equation?

Age Neutral approach argues that:

An Age Neutral approach should be taken to marketing

Needs of older people are not that different from other adults

The principals of marketing to all ages are the same

Lifestyle or interest is going more important than age

Dick Stroud



Many thanks

David Sinclair - Head of Policy & Research,

International Longevity Centre (ILC-UK)

[email protected]

Twitter: @sinclairda@ILCUK