NEW YORK — U.S. retailers who underestimate the buying power of consumers over 50 are taking a huge risk, according to A Booming Opportunity: Profiting from a Graying America, a new report from the Fung Business Intelligence Centre (FBIC). Baby Boomers are actually expected to be a growing consumer market for the next 20 years.
This generation has radically different plans and attitudes than their parents did for their senior years, according to Deborah Weinswig, Executive Director-Head of Global Retail and Research at FBIC.
"Just as they have at every other stage of their lives, Boomers are now redefining what it means to be old," Weinswig wrote in the report. "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."
The U.S. census reported that 12,500 Americans turn 50 every day, and the number of people aged 60 and older will rise 40 percent over the next 15 years. Additionally, the median net worth of households headed by those ages 55 to 64 is $165,700, in contrast to Millennials' net worth of $11,000, and these younger Boomers are in their prime earning years.
As a result, younger Boomers outspend Millennials by nearly $8,000 annually and the typical consumer by $5,000, with spending occurring across most categories. Boomers will control more than half of all dollars spent on grocery foods this year, with a particular focus on health and wellness. They also spent $1,500 more than the average Millennial on eating at home, entertainment, household furnishings, pet supplies and personal care, according to the FBIC.
However, only 10 percent of U.S. marketing dollars target this demographic due to preconceived notions of aging, such as an inability to adjust to technology. The Census Bureau reported that nearly 87 percent of householders ages 45 to 64 own a computer, as do 65 percent of those ages 65 and up.
"A persistent myth about older adults is that they are baffled by high-tech devices and shun the digital world," the report reads. "But Boomers have been enthusiastic users and creators of technology for their entire lives."
The grandparent market will be a huge source of potential retail sales, with the total number of grandparents increasing from 65 million in 2010 to an estimated 80 million in 2020.
"Given its sheer size and economic clout, the 50-and-older demographic will remain the dominant and most influential consumer group for years to come," Weinswig said. "As they align their lifestyles with their needs Boomer consumers will continue to reshape the marketplace, opening up fresh opportunities for imaginative product development, tailored customer services and innovative marketing strategies. Forward-minded companies are rethinking the tired presumptions about older customers and finding new and lucrative ways to reach them."
The full report is available to download here.