Retailing 142: A Group Retailers Can’t Afford to Ignore
While Millennials have garnered much of the attention, the real power of the purse is with that old standby — Baby Boomers.
It’s about time Millennials share their spending power. Millennials, those born from the early 1980s to the early 2000s, have been getting a lot of attention lately, and they may well be a driving force in trends and culture. But there’s a group out there that is giving Millennials a run for their money — and retailers better regroup and take notice.
Remember the Baby Boomers, those born between 1946 and 1964? Research firm Fung Business Intelligence Centre (FBIC) reported findings that cement the power of the Baby Boomers in its report, “A Booming Opportunity: Profiting from a Graying America.” The study finds that Baby Boomers will continue to be a growing consumer market in the U.S. for the next 20 years.
“Just as they have at every other stage of their lives, Boomers are now redefining what it means to be old,” says Deborah Weinswig, executive director–head of global retail and research at FBIC. “On the whole, they are healthier, richer and more active than previous generations of older Americans. Younger Boomers (ages 55 to 64) earn and spend more than the average U.S. consumer, and significantly more than the avidly courted Millennials.”
In a Synchrony Financial report, the numbers indicate that while Millennials don’t have the spending clout, 80 million of them will be entering their peak consumption years. But Baby Boomers still have the most disposable income and almost 50 percent of retail sales compared to about 10 percent for Millennials.
The FBIC study shows that on average, younger Boomers outspend Millennials by nearly $8,000 annually and the average consumer by $5,000, with money being spent across most categories. Boomers will control more than half of all dollars spent on grocery foods in 2015, with a particular focus on health and wellness/fitness.
Startlingly, only 10 percent of U.S. marketing dollars target this demographic, as preconceived notions of aging linger.
“A persistent myth about older adults is that they are baffled by high-tech devices and shun the digital world,” a Synchrony Financial report noted. Boomers are very comfortable shopping, browsing and researching online, and while Millennials and Boomers use their digital devices for different purposes, the notion that Boomers aren’t technically engaged with their digital devices couldn’t be further from the truth.
The grandparent market also will be a huge source of potential retail sales, with reports estimating that the number of grandparents will increase from 65 million in 2010 to 80 million in 2020.
One rare area where Boomers appear to have limited their purchases — women’s apparel, especially in fitness and sports — may simply be the result of lack of product. “Older women, especially those in professional jobs, are limiting apparel purchases because they are frustrated with the current styles and selections available, which seem to them as either too dated or too youthful,” the FBIC study concluded. Tennis apparel and equipment manufacturers, take note, because you may be missing the boat here. This area alone can be a cash cow for innovative retailers in this sector.
Boomers dominate 119 of 123 consumer product-goods categories and account for almost half of CPG spending, yet marketers and retailers aren’t tapping into this resource.
The most eye-opening statistic is that people aged 55-plus control more than 75 percent of America’s household net worth of $81.5 trillion!
Boomer consumers will continue to reshape the marketplace, opening up fresh opportunities for product developers and retailers, with emphasis on customer service and innovative market strategies. Tenniswear, crossover apparel, and racquet companies that understand this will find new and lucrative ways to gear their products to this important market segment
Both Millennials and Baby Boomers are key links to retail success, and it’s vital that retailers provide a seamless, compelling experience for both by embracing both the similarities and differences between the two.
See all articles by Cynthia Sherman
About the Author
Cynthia Sherman is a contributing editor for Tennis Industry magazine.
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