Where the Money Is Boomers are becoming the wealthiest and healthiest generation of older people in the history of the world. As they have aged, they havent stopped spending on themselves. Their total spending power per year surpasses $1 trillion, according to American Demographics.
Web sites, restaurants, consumer packaged goods, entertainment, vacations, and hundreds of other categories will be refined and transformed to meet the needs and desires of the aging Boomers. Lets look at some of the emerging challenges and opportunities growing out of this trend and consider some relevant forecasts.
According to the 2004-05 edition of The Bureau of Labor Statistics Occupational Outlook Handbook,"The U.S. population is expected to increase by 24 million over the 2002-12 period. Thats a slower rate of growth than during both the 1992-2002 and 1982-92 period. The youth population, aged 16 to 24, will grow 7 percent over the 2002-12 period. As the Baby Boomers continue to age, the group aged 55 to 64 will increase by 43.6 percent or 11.5 million persons, more than any other group. Those aged 35 to 44 will decrease in size, reflecting the birth dearth following the Baby Boom generation."
This will make a dramatic impact on the labor force. "The youth labor force, aged 16 to 24, is expected to slightly decrease its share of the labor force to 15 percent by 2012. The primary working age group, between 25 and 54 years old, is projected to decline from 70.2 percent of the labor force in 2002 to 65.9 percent by 2012.
"Workers 55 and older, on the other hand, are projected to increase from 14.3 percent to 19.1 percent of the labor force between 2002 and 2012, due to the aging of the Baby Boom generation."
The Bureau of Labor Statistics, or BLS, projects that total employment will increase from 144 million in 2002 to 165 million in 2012. Of the 21.6 million jobs that will be added by 2012, 20.8 million will be in service industries. The biggest growth will be in education and health services. Healthcare will add 4.4 million new jobs, primarily because the population is both aging and expanding its average lifespan. We will discuss what this will mean for Medicare when we explore Trend #2.
Private educational services add 759,000 new jobs through 2012, because of increases in the need for training, as we will examine in our discussion of Trend #5.
Meanwhile, professional and business services will add about 5 million jobs. The fastest-growing industry in this sector, according to the government, will be employment services, which will grow by 54.3 percent. The surge in demand for residential and business land-line and wireless services, cable service, high-speed Internet connections, and software will fuel job growth in the Information sector of the economy, which will add 632,000 jobs by 2012.
As the Baby Boomers age, the demand for leisure and hospitality will soar. The BLS expects employment in this sector to grow by 17.8 percent, with the greatest increase in the arts, entertainment, and recreation industries. The elderly workforce will have more spending money than previous generations, and they are more aware of the benefits of physical fitness. They will also have more money to spend at restaurants and bars, and less time at home to prepare their own meals, so the government foresees an increase of 1.6 million new jobs in the food services industry by 2012.
In the retail industry, 2.1 million jobs will be added because affluent consumers will continue to demand more goods ? and because they will continue to work well past the traditional retirement age, they won’t be limited to what they can afford on a fixed income.
At the same time, however, the Baby Boomers are also entering their peak savings years, so the finance and insurance industries will employ another 590,000 people by 2012.
The BLS also expects employment in religious organizations to grow by 24.4 percent, and personal care services to increase by 27.6 percent.
In the goods-producing industries, job growth will be much slower. The BLS expects only a 3.3 percent increase in employment by 2012. However, the outlook varies widely, with big declines ahead in textile mills and computer manufacturing, which will each shed hundreds of thousands of workers.
By contrast, the aging population and longer life spans of the Baby Boomers signals a bright future for drug makers, which will increase their labor forces by 23 percent over the next 10 years.
It’s clear that the success of many industries will depend on how they are positioned to meet the needs and desires of the aging Baby Boomers. While some of those needs and desires are obvious, others are more subtle.
For example, once people reach middle age, all of their senses start to weaken. Consider the sense of vision. Around the age of 40, people begin to notice less sharpness of vision. In the U.S., more than 13 million people aged 40 and older have signs of macular degeneration, and more than 900,000 people are legally blind, with a vision of 20/200 or worse in their better eye (even with glasses). More than 2.3 million people over 40 are considered visually impaired. They have a visual acuity of less than 20/40 in their better eye (even with glasses).
The BLS expects employment of dispensing opticians to increase about as fast as the average for all occupations through 2012 as demand grows for corrective lenses. As the Bureau points out, the number of middle-aged and elderly persons is projected to increase rapidly. Middle age is a time when many individuals use corrective lenses for the first time, and elderly persons generally require more vision care than others.
There will also be a need for larger print and brighter lighting on restaurant menus, and for back-lit video menus with fonts that can be increased in size by the customer.
Menus will also have to change because elderly diners need spicier tastes. Studies show that more than half of people over the age of 65 have suffered major losses in their ability to taste food. Research at Duke University found that older subjects are less accurate at identifying food flavors than younger people.3
Part of the problem is the natural aging process, which begins eroding the senses of taste and smell as people reach their 40s. Another problem is that older people tend to take more medications. The study at Duke also found that elderly people who take an average of three medications need to experience a smell or taste from 200 percent to 1,500 percent higher than the level that younger people do.
However, most people never recognize that their senses of taste and smell are deteriorating, as they do when their vision becomes blurry or their hearing begins to fade. Instead, they tend to blame the quality of the food they are served, because it doesn’t taste as good as the food they remember eating when they were younger.4
This perception can damage the brand image of a business, and it can also lead the elderly to eat less, which begins a downward spiral to poor health. The Hyatt Corporation noted an interesting phenomenon at its retirement homes. Nearly all of the residents ate salad dressings that were loaded with salt, and desserts that were drenched in sugar. But many rejected their servings of meat, which they said were bland and flavorless.
The staff tried marinating the meat in flavor enhancers, such as chicken or beef stock, but even this approach failed. Finally, the company developed a successful technique to cook the meat at a higher pressure so that the stock penetrates the meat and boosts its flavor.
The demand for spicier foods can also be seen throughout the restaurant industry and in data from grocery store scanners. Sales of Mexican food items such as salsa are soaring, reflecting not just the increasing Hispanic population in the U.S. but also the Baby Boomers’ demand for bolder tastes.
Another common trait of the aging Baby Boom population is their willingness to embrace technologies. For that reason, it’s not surprising that Internet usage among the middle-aged and elderly is much higher than many marketers assume it to be.
About 8 million Americans aged 65 or older now go on-line, according to the Pew Internet & American Life Project.5 That represents a 47 percent increase in Internet use among seniors from 2000 to 2004. The study found that “wired seniors” are just as enthusiastic about using the Internet as younger users, that they are just as likely to go on-line during a typical day, and that they frequently use e-mail and search engines.
Most relevant to marketers are the findings that: half of wired seniors made on-line purchases by the end of 2003; two-thirds used the Internet for product research; two-thirds looked up health or medical information on-line; 41 percent made travel reservations on-line; and 20 percent did banking on the Internet. All of these activities are rapidly growing in popularity among seniors compared to previous research.
Another significant finding of the Pew study is that 62 percent of Americans in the 50-58 age group use the Internet. According to the researchers, this wave of Baby Boomers is “more like Generation X Internet users (between 28 and 39 years old) than like their older, ‘Mature’ generational neighbors (those between 59 and 68 years old).”
The study found that 75 percent of Gen X and 75 percent of Baby Boomer Internet users get news on-line, compared to 67 percent of Mature users. And 59 percent of Gen X and 55 percent of Boomer Internet users do on-line research for their work, compared to 30 percent of Mature users.
The researchers conclude, “As Internet users in their 50s get older and retire, they are unlikely to give up their wired ways and will transform the wired senior stereotype.” Based on all the research we’ve discussed, we offer the following forecasts:
First, Web sites will have to be redesigned to be more accessible to older users. Web pages typically use small fonts and low-contrast colors that are hard to see, and have pull-down menus that can be difficult for people to navigate. A study by the Nielsen Norman Group revealed that the typical Web site is twice as hard for wired seniors to use than for people between the ages of 18 and 55. And research by the National Institute on Aging and the National Library of Medicine6 found that people over the age of 59 find it difficult to read font sizes of 12-point or even 14-point type. Their recommendations for Web site designers should be mandatory for anyone hoping to use the Internet to sell to the largest generation of consumers in history: Use larger, simpler fonts. Present information in simple language with short sections of text. And arrange the site so that users can find what they need with just one click of a mouse.
Second, e-commerce aimed at wired seniors must become part of every company’s marketing strategy, not an afterthought. Contrary to the stereotype, many seniors are now going on-line to learn about new products, to research medicines, and to compare services.
Third, marketers of products and services will succeed by enhancing their appeal to the senses. As the Boomers’ vision, hearing, taste, smell, and tactile senses lose their power, offerings that compensate by providing intense sensory experiences will win in the marketplace. Examples include coffees with bolder flavors, hamburgers with extra meat flavoring, perfumes with bolder fragrances, and high-definition TVs with larger screens.
Fourth, companies in every industry must change their business models to target Baby Boomers as they age. Consider the travel industry. The idea of a perfect vacation for empty nesters no longer consists of packing up a Winnebago and going to visit the grandchildren. Instead, for many middle-aged Americans, it consists of kayaking, rock climbing, and scuba diving. Before long, 60 percent of the 45 million adventure travel vacationers will be over the age of 50, according to the Adventure Travel Trade Association. Baby Boomers want to preserve the feeling of being young; they know the importance of staying fit and healthy; and they have more money to spend than any previous generation. If you want your business to stay profitable over the next 20 years, now is the time to change your assumptions about the older generation, and to change your strategy to meet their needs.
References List :
1. The Dallas Morning News, August 23, 2003, "As a Generation Ages, Companies Line Up to Offer Variety of Services," by Anuradha Raghunathan. ⓒ Copyright 2003 by the Dallas Morning News. All rights reserved. 2. To find out more about future job opportunities, visit the Bureau of Labor Statistics website at:www.bls.gov/oco/print/oco2003.htm 3. For information about the decline of sense of taste in the elderly, visit the Duke University website at:www.dukemednews.org/new/article.php?id=665 4. The Globe and Mail, September 27, 2003, "When Tastebuds Turn Grey," by Stephen Strauss. ⓒ Copyright 2003 by Globe and Mail Publishing, Inc. All rights reserved. 5. To access the report "Older Americans and the Internet," visit the Pew Research Center website at:www.pewinternet.org 6. To access the National Library of Medicines recommendations for creating a senior friendly website, visit them at: www.nlm.nih.gov/pubs/staffpubs/od/ocpl/agingchecklist.html
