Winter 2003 Zooming In On Boomers
You’d think they’d grow up and settle down, now that they’re middle-aged. You’d think they’d behave. Well, they do—the way they always have, these children of the ’60s, of Beatles and VW bugs, flower power and civil rights, love vs. war and more. They broke the rules of convention then, and they’re breaking them still. As consumers, this generation acts more like 30-somethings than the grandparents many of them are.
Marketers and retailers will do well to pay serious attention to the boomer population—76 million strong in the US and another 6 million “boomies” in Canada. The sheer size of this market segment makes it a dominant consumer group. “Baby boomers are the wealthiest, best educated and most sophisticated of purchasers,” says James Gilmartin, president of Coming of Age, Inc. (Lombard, IL), a marketing firm that specializes in helping companies meet the needs of the boomer market.
From the market research firm Yankelovich Partners, Inc. (Norwalk, CT) come these facts: 70 percent of boomers are married; 50 percent have children under 18 at home; and 27 percent are grandparents. A recent AARP study adds that “29 percent of older boomers are caregivers for elderly relatives, and 13 percent are juggling the needs of children under 21 and older adults.”
And boomers have money. Echoing the Yankelovich findings, Peter Francese, demographics expert and founder of American Demographics magazine, says, “The 21 million US households age 45 to 54 have more aggregate income to spend than the entire economic output of Canada, our largest trading partner.” And the age group he cites is only a subset of the boomer market segment. In addition, he says, boomer income, already above average, has grown at nearly 10 percent a year since 1995. According to the Yankelovich Partners report, “Insights into the Baby Boomer Market” (2002), the median household income of baby boomers is $60,345. And the US Bureau of Labor Statistics reports that the median household income of the 45-54 segment is more than $72,000—and $100,000+ a year for more than 20 percent of those households.
The vast majority of boomers still work—72 percent full-time, 9 percent part-time—which contributes to their strong financial picture and often offsets investment portfolios that weakened in the past year or so. Though the youngest are 38, this group is entering their 50s at the rate of seven people a minute. But unlike their parents and grandparents, who eagerly counted down the days to 65 and full pension benefits, few boomers expect to fully retire in the future. In the Yankelovich report, 59 percent say they expect to keep working in one form or another when they retire, extending their earning years even further. They often talk about exploring options such as entirely different work (often part-time) or turning hobbies into income sources.
Home as refuge
Baby boomers spend a good deal of their current income. They buy lots of “things,” many for the home. Older boomers spend more on home furnishings and equipment than any other group—$40+ billion a year. This accounts in large part for the popularity of cable networks like HGTV and DIY, new shows like Trading Spaces and Christopher Lowell in addition to “classics” like This Old House and Martha Stewart Living. It also accounts for the strength of home-improvement superstores like Home Depot and Lowe’s. “Home is ‘leisure central’ for the majority of boomers; over two-thirds (68 percent) prefer spending their leisure around the house rather than out and about,” according to the Yankelovich report. In addition, 71 percent get together with friends at home more often than in restaurants or bars. The study also found that 63 percent of boomers feel that home is the only place they can relax, and 59 percent have a strong emotional attachment to their current homes. These preferences suggest a continuation of “cocooning” that trends expert Faith Popcorn identified more than 10 years ago. To some extent, “Let’s stay in” may also be a reaction to the Mom’s/Dad’s-taxi syndrome, in which parents shuttle kids to play-dates and practices all over the place all week, every week. In addition, 9/11 reinforced the desire to be safe, sound and together at home.
For empty-nesters in the boomer demographic, “the home will take on new roles and be expected to deliver new kinds of satisfactions,” according to Yankelovich. “[They] will likely continue spending on their homes as they will continue to, perhaps increasingly so, view the home as both command central and [as] refuge.” The fact that 29 percent have a home office underscores their preference for being at home, and also foreshadows their extended post-retirement work life.
While they spend more than average on home furnishings and less in other categories such as clothing and footwear, that’s not to say boomers don’t buy other things—they certainly do. But as the Financial Times reported (“Fashion Fails to Find the Silver Dollar,” Oct. 18, 2002), retail consultants say apparel retailers are under the mistaken impression that older customers, which includes these customers, don’t buy clothes. Not quite: they haven’t stopped shopping for clothes—it’s that they don’t find what they want, and won’t buy what they don’t. “Aging baby boomers are put off by aggressively trendy merchandise, and clothing that doesn’t flatter or suit older figures.” As a result, the proportion of boomer consumers in department stores fell from 85 percent to 72 percent between 1996 (the year the oldest boomers turned 50) and 2000.
“As baby boomers get older, they are more interested in comfort rather than high style,” according to The Retail Council of Canada’s Web site (retailcouncil.org). “Boomers are time-pressed, can afford to pay more for clothing if the quality is there, and do not place a high priority on [cutting-edge] fashion.” Retailers who successfully woo boomers are those who emphasize traditional or classic styles, quality materials and workmanship, generous cuts, and good customer service.
While their spending on clothes may be down, it rises sharply in other categories. “Spending on jewelry peaks in the 45-54 age group at about 16 percent above that of younger households,” says Francese. “[This] suggests that the market for watches, rings and bracelets should remain strong.” Spending also rises sharply for health and beauty products and services. As boomers age, says Francese, “they will spend more time and more money on health-related goods and services, much of which is spent just to make them feel better.” Spending on general health care rises 42 percent, and 52 percent on prescription eyeglasses and contact lenses. Add to that all of the non-prescription sunglasses, readers, and accessories—cases, clips, cords, cleaners and more—that this group buys from a variety of merchants, including specialty retailers.
Youth in a bottle
Boomers have come a long way from being babies. Feeling and looking younger than Nature decrees are their primary health-related goals, and products that help them get there sell briskly. According to Michael J. Weiss in American Demographics (“Chasing Youth”, Oct. 2002), “Baby boomers are doing whatever it takes to hang on to their youth.” The available options include facelifts, Botox, Viagra and hormones… vitamins, enzymes and herbal supplements… Rogaine and Renova… makeup, hair color and hair extensions… Wonderbras and body shapers (“foundation garments” when these kids were kids), shoe inserts, Pilates mats, spa products and more. Much more.
“Staying young is a common thread you see among boomers of all races,” says Chris Wilson, president of Simmons Market Research (NY). Many boomers pride themselves—and often deservedly so—on looking and “living” a good deal younger than their parents at the same age. (You’ll see that difference in 1950s magazines such as Look or Good Housekeeping, or family snapshots from that era.) Yankelovich found that although today’s generation of middle-agers don’t want to turn back the clock, 57 percent want to look young for their age: “The notion of being youthful, not just looking good, is propelling boomers to combat aging, which they tend to see as a future event.” Boomers today see (and sometimes even define) “old age” as beginning at 67, slightly more than 10 years older than the oldest boomers.
Boomers tend to work hard to maintain overall good health. According to the Yankelovich study, “63 percent of boomers are concerned about taking care of themselves, a proportion that has been increasing as more boomers move into their middle years.” To that end, many participate in fitness and sports activities to stay trim and in good physical condition, but they tend not to overexert themselves. They’re “likely to gravitate to exercise regimens and activities that meet their desire to be reasonably fit, and that match their physical characteristics.” That plus an increasingly home-based lifestyle suggest that many of them are drawn to exercise routines they can do at home “with minimum effort and on their own timetable.” That helps explain why purchases of home gym equipment rose to $5.9 billion last year.
But boomers don’t rely on exercise alone. They’re dieting—books like The Zone and Body for Life have been best-sellers for ages, and more “power” snack bars appear every year. Many boomers also turn to remedies and therapies to slow or halt the effects—and the appearance—of aging. That’s what drives the purchases of products and services that range from foods to pharmaceuticals, cosmetics to biotechnology to surgery. In the American Demographics article, Paul Leinberger, PhD, a managing director of the market-intelligence firm RoperASW, says boomers not only exercise but “are willing to use whatever drugs or technology is available. We thought they might be a health-conscious group that didn’t want to get into drugs. But with boomers, it’s whatever works. And more is better than less.”
As a result, they’ve helped spawn the $28 billion “nutraceuticals” industry. The most common and straightforward nutraceuticals are nutritional supplements in the form of capsules and pills, powders and drinks, even candy. An estimated two-thirds of Americans use nutraceutical products, and boomers constitute the largest user segment, according to Gary Troxel, EVP of InterHealth Nutraceuticals, as quoted in American Demographics. These products range from calcium and garlic to the more exotic but increasingly popular herbal and mineral supplements like ginkgo biloba, glucosamine chondroitin, zinc-magnesium aspartate, and omega-3 fatty acids (good old cod liver oil in a gelcap).
Not just supplements, nutraceuticals also include foods. Going beyond King Vitaman and Special K, they include “functional” packaged foods and beverages that combine familiar foods with ingredients that target specific nutritional or health needs. Well Bean Coffee, for example, is enriched with soy for its anti-oxidant and hormonal benefits; and Dannon’s Actimel is a “probiotic” drink laced with “good” bacteria to fortify the immune system. Looking ahead in this direction, Faith Popcorn puts “food engineered [to contain] prescription medicine” on her list of “Trends we’ll see.”
I feel pretty?
That takes care of trying to the preserve the inside. For the outside, boomers buy lotions and potions in record numbers, and manufacturers continually scramble to meet the demand for new, more potent cosmetic products for men as well as women. Just as nutraceuticals include foods supplemented for specific benefits, cosmetics companies increasingly “supplement” moisturizers, makeup and lipsticks with anti-aging components like sunblock and anti-oxidants. Weiss reports that sales of anti-aging beauty products reached $374 million, a 24 percent increase in the past five years. Boomers fight the good fight with “age-defying” products designed to “battle the appearance of age” and marketed that way. They buy myriad anti-wrinkle “renewal” creams, fruit-acid lotions, “light-reflecting” makeup, and various hair preps (dyes, removers, and growth stimulators) and more in supermarkets and drug stores, department stores and discounters, on the Net, off TV, and from specialty retailers.
But for many, the lotions and potions are a stop-gap at best, and often a disappointment. More boomers are willing to have cosmetic surgery, and at an earlier age: in the last 20 years, the average age of facelift patients dropped from 60 to 50. With more doctors offering more services (including liposuction, laser contouring, and non-surgical options like Botox and dermabrasion), and many costs holding at mid-1990s levels—plus the stigma of “having some work done” disappearing—cosmetic procedures for this demographic are way up. The American Society of Plastic Surgeons reports that over the past five years, the number of cosmetic surgery patients increased an astounding 11 times to 5.6 million patients, the largest segment being the 35-50 age group.
Serving the market
Material, mid-life and senior—Gilmartin says these are the three stages of modern life as they relate to making purchases. In the material stage, people focus on acquiring. In mid-life, where the boomer generation sits, it’s service, being catered to. And in the senior stage, it’s experience. So there’s the first clue about how to sell to boomers: service. But that one fact isn’t enough.
Also worth knowing: there are age-related differences in how people process information. The 20-something brain functions differently from the 50-something brain. “It’s not what baby boomers and older consumers think that’s important—it’s how they think that’s important,” says Gilmartin. “The older we become, the more [our] emotional reactions determine if we should think about a matter. Emotional triggers… activate memories, and the stronger the memory, the stronger the emotional response.” Gilmartin advises using storytelling with this market to trigger the memories, experience, and emotional reaction that affect their buying behavior. The Yankelovich report bears that out: buying just to acquire things isn’t what interests boomers—they want purchases with “emotional benefits.” In the study, “62 percent of boomers say that even though there are many things they would like to own, they prefer spending money on experiences that will enrich their lives—like travel, vacations, theater or good restaurants.” And they can afford to be demanding: they have the income and the buying power that comes with being a market force of 76 million. So savvy retailers are tailoring their merchandise mix to give this group what it wants and can easily pay for. But more than that, these retailers position those products to activate boomers’ buying behaviors.
In short, great service, information (“story,” memory, experience), and positive emotional response: Put them together and what have you got? A large stream of profitable customers.
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