Time to Rethink the Boomers?
Although convenience store operators are eager to embrace millennial consumers, it is still the Baby Boom generation that plays the dominant role in the U.S. economy, controlling 70 percent of the nation’s disposable income.
Born between 1946 and 1964, this valuable age cohort accounts for nearly $230 billion, or 55 percent, of consumer packaged goods sales, according to New York-based Nielsen.
And it’s no secret that between 2012 and 2050, the United States will experience significant growth in its older population. The U.S. population aged 65 and older is projected to reach 83.7 million in 2050, almost doubling its estimated population of 43.1 million in 2012, according to a 2014 U.S. Census Report, An Aging Nation: The Older Population in the United States.
Baby boomers are largely responsible for this increase, as the leading edge of this generation began turning 65 in 2011, the Census report noted.
“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,” said Deborah Weinswig, executive director/head of global retail and research for Fung Business Intelligence Centre (FBIC), a Hong Kong-based market data firm. “Forward-minded companies are rethinking the tired presumptions about older customers and finding new and lucrative ways to reach them.”
A recent FBIC study revealed that 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 in 2015, with a particular focus on health and wellness.
AT THE PUMP
The significance of older consumers to the c-store industry is not lost on NACS, the Association for Convenience and Fuel Retailing. “You have close to 160 million people a day in convenience stores, at the pump or in the stores,” said Jeff Lenard, vice president of strategic industry initiatives for the trade group. “That’s half the country, and if you ignore any segment, you do it at your own peril.”
As proof of baby boomers’ relevance, Lenard pointed to a recent Fuels Institute study, Driver Demographics: The American Population’s Effect on Vehicle Travel and Fuel Demand, which found boomers are offsetting the decline in millennials’ driving. Baby boomer drivers are experiencing the highest driver licensing and vehicle travel rates in history, according to the report.
“While everyone wants the younger consumer, there’s a bit of a concern that they might not be driving as much,” Lenard said. “The only group that is seeing an increase in driver registration is older drivers. We’re at a record low of teens who have their driver’s licenses.”
In addition to the frequency of baby boomers’ c-store and gas station visits, Lenard observed that operators would be wise to appeal to older consumers given their high levels of community involvement. He noted that older residents are more likely to attend the many zoning hearings required when c-store operators wish to build or change the use of their existing locations.
“If [members of] the older demographic [group] see that you have all the things in your store that they want in their area, they will be more likely to work with you than against you,” Lenard said. “They may have grown up there. They have more free time. They treasure their community.”
Staying healthy remains a growing concern for the baby boomer generation and may offer an opportunity for c-store operators to woo them with more products geared toward health and wellness, as well as fresh food alternatives.
The 2015 Nielsen Global Health & Wellness Survey, for example, noted that sugar-free and low-sugar products are more important to older consumers, while The NPD Group, a Port Washington, N.Y.-based global information company, recently reported that more than a quarter of all boomers are dieting.
Baby-boomer customers also are most likely to visit c-stores outside of the morning and evening rush hours, Lenard observed, adding that someone over the age of 50 visits a c-store more often in the mid-morning or afternoon than younger patrons. This pattern presents another unique opportunity for the c-store industry.
“The post-morning rush hours might be a fertile opportunity to encourage that demographic to come into your store,” he said. “Everyone’s pretty familiar with Starbucks being that place where you set up meetings, so how can you encourage older consumers to use your store as a place to meet or hang out and have a cup of coffee? It’s a chance to sell some food as well.”
DON’T FORGET THE TECH
Local weekly newspapers receive high readership from older residents, making these publications one way for operators to get the word out about their c-stores. However, while older consumers may lag behind their younger counterparts in technology adoption, their usage is increasing. And this opens another outlet through which c-stores can reach these valued customers.
In April 2012, the Washington D.C.-based Pew Research Center found for the first time that more than half of older adults (defined as those aged 65 or older) used the Internet. Today, 59 percent of seniors report that they go online and 47 percent say they have a high-speed broadband connection at home. In addition, 77 percent of older adults have a cell phone, up from 69 percent in April 2012.
“If you think about what everyone has learned to do over the last 10 years with adapting to change, it’s astonishing,” said Lenard. “I think some of those previous beliefs about older consumers and how they might be set in their ways is changing every time you see a 70-year-old with a cell phone using it as effectively as a teen.”
“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.”
— Deborah Weinswig, Fung Business Intelligence Centre