The Market Potential of Maturing Consumers
By Martin Walker and Martin Walker
Based on current worldwide demographic trajectories, in five years there will be more people over the age of 60 than under five. In 30 years, there will be more people over 60 than under 16. In fact, the fastest-growing age group worldwide in this century will be people over the age of 60.
In the first-ever international survey of consumers over the age of 60, A.T. Kearney interviewed 3,000 people in 23 countries to find out what mature consumers want. The short answer: prices and labels they can read, packaging they can open and more places to sit down in stores.
Based on the survey results, here are some other things retailers need to keep in mind with regard to their older customers:
• The cult of youth is over. For the past 60 years, marketing and advertising strategies and much of our popular culture have been driven by the cult of youth. That made sense in the 1960s, when 37% of the world population was under 15, but that is no longer the case.
The under-15 age group is now 26% of the global population, and heading down to 20% by 2050. Marketing strategists will need to rethink.
• Mature consumers have power. There is power in cash and numbers, and mature consumers have both. Individuals over the age of 50 own 80% of U.S. financial assets and are responsible for 50% of discretionary income. Last year, they spent $87 billion on new cars, compared with $70 billion spent by those under the age of 50. Worldwide, consumers ages 60 and older spent more than $8 trillion in 2010; by the end of this decade, they will be spending $15 trillion.
• The nature of aging has changed. People are active and healthy well into their 70s and 80s. They travel abroad, dine out and spend more as a proportion of their income on food and drink than people under age 60.
• Technology counts. Mature consumers are entering the electronic age faster than expected. In the United Kingdom, for example, “silver surfers” (individuals older than 55) are the fastest-growing age group for Internet adoption.
• The image of “old” is changing gradually. The longer we live, the longer we stretch the definition of “old.” Such stars as Meryl Streep and Helen Mirren illustrate how even Hollywood’s age parameters for female beauty are changing. Yet, while mature consumers want manufacturers and retailers to recognize the realities of aging, they do not want to be treated as “elderly.”
For retailers, aging may mean a paradigm shift in the design of stores and retail chains. Today, the central idea in retail design is to improve efficiency >
for shoppers. It is generally thought that consumers are busy working and raising their families — so they want to get in and out of stores as quickly as possible. Larger stores outside city centers, lots of parking spaces and short queues with focused, efficient cashiers are all designed for less frequent, big-basket shopping.
However, mature consumers, who represent up to 30% of spending power, have an entirely different outlook on shopping. A trip to the store is often a source of physical activity and social interaction, an opportunity to investigate nutritional guidelines, and, in general, a place for enjoyment. Shopping trips are planned during weekdays, take place several times a week (or even daily), and with increasing age, are accessed less by car and more by foot.
Mature consumers spend more time in stores. As such, they want personal attention from friendly, talkative cashiers — not speed. They want to sit down and have a cup of coffee — not be brushed through by checkout personnel with laser scanners. They want smaller stores closer to home, not large and faraway ones. They want a clear, organized assortment of goods, with high-quality products at good prices, not unlimited choice or cheap, low-quality products.
For branded marketers, responding to the aging phenomenon will require a far-reaching rethinking of product design, particularly in labels and directions, legible prices and easy-to-open packaging. Mature consumers want nutritious food and will take their time to get informed about dietary information while at the store, so they need easy-to-read information in larger font sizes. Above all, branded marketers will need to work closely with their customers in the retail sector to coordinate an effective response to the changing consumer market.
We will all be mature consumers one day, and some of us will be very mature indeed. Within 25 years, individuals older than 85 will represent more than 8% of the population in Japan, and between 3% and 5% in Europe and the United States. Adapting to the radically different requirements of mature consumers can have extensive consequences for retailers and branded marketers. As this customer group grows and gains purchasing power, smart companies will adjust their strategies accordingly to gain a competitive advantage.
Martin Walker is senior director of A.T. Kearney’s Global Business Policy Council, based in Washington, D.C. Martin Walker is a partner in the consumer products and retail practice, in the Paris office.