October 10, 2024
Photo by Philippe Leone on Unsplash
Should US Retailers Be Focusing More on the Silver Economy?
Last December, RetailWire covered how Generation Z emerged as a significant economic force, with a global spending power of $450 billion, including $360 billion in the U.S. Their spending habits reflect careful consideration due to financial challenges like entry-level salaries and student debt.
Gen Z shoppers are highly informed and conduct extensive research before purchases, prioritizing quality over brand loyalty. They are quick to switch brands if products don’t meet their expectations. Sustainability is crucial to their buying decisions, as they prefer companies that demonstrate authenticity and environmental responsibility.
Although no age or generation demographic can be entirely monolithic, should there be another shift in how retailers think about targeting specific consumers?
The “silver economy” encompasses all economic activities, products, and services aimed at individuals over 50. Originating from Japan in the 1970s, this concept highlights diverse sectors such as health, banking, automotive, and tourism, specifically designed for the senior market.
Key characteristics of the silver economy consumers include high purchasing power and minimal financial burdens. They prioritize experiences like travel and leisure, maintain active lifestyles, and seek personalized products and services. This demographic values brand loyalty, consumes more than younger individuals, and enjoys cultural and leisure activities in their free time. Technological innovation, particularly in smart home technologies and eHealth, plays a crucial role in appealing to this market.
According to Rothschild & Co, the World Bank reported that global life expectancy rose from 65 in the early 1990s to 73 in 2020, driven by improvements in healthcare and nutrition. By 2030, the population aged 60 and above is expected to reach 1.4 billion across the globe, surpassing children under 10, thus creating opportunities in the silver economy. This demographic, also called Baby Boomers, represents the fastest-growing consumer group, with a combined net worth of around $70 trillion.
Rothschild & Co explained that “the 60-plus segment is expected to represent nearly 60% of consumption growth in Europe and Asia from 2015 to 2030, and nearly 50% in the North America, posing unprecedented economic opportunities and challenges for businesses.”
Companies like Estee Lauder and Nestlé are adapting their products to older consumers, such as the latter redesigning chocolate boxes and coffee jars to make them “easier to hold and open.” Investment opportunities are particularly strong in healthcare and audiology, with the hearing aids market expected to grow significantly. Overall, the silver economy presents diverse prospects for businesses targeting this expanding demographic.
For instance, China’s silver economy is receiving considerable attention due to the fact that the country “has the largest number of older people in the world with 216.8 million of its population aged 65 or above, and that number is set to increase to 400 million by 2050,” as reported by the UNFPA. This aging demographic is projected to drive the value of China’s silver economy from $750 billion in 2020 to $2.1 trillion by 2030, with the potential to reach $4.2 trillion, representing 10% of China’s GDP by 2035.
South Korea is also trying to take better advantage of this market. As the population aged 65 and older increases — expected to reach nearly 40% by 2050 — businesses are shifting their focus toward what Park Yeong-ran, a professor in the department of silver industry at Kangnam University, calls “an awareness of older people as active consumers.”
“Twenty years ago, companies were focused on providing care for dependent elderly people. Now the market is shifting toward catering to people who pursue their own new lifestyles in their elder years,” Park told Nikkei Asia. Key growth areas include vocational training for learning new skills, leisure activities like tourism, and sustainable products.
Furthermore, according to research from Porch Group Media, “Baby Boomers still have the most disposable income and account for almost 50% of retail sales. However, don’t think they should only be targeted through traditional media.” Boomers are very active online, with 85% researching products digitally. Immersion Active also reports that 66% of Americans over 50 regularly make purchases from online retailers, underscoring their comfort with e-commerce.
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Clay Parnell
President and Managing Partner
David Spear
President, Retail, OrderlyMeds
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
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Discussion Questions
How can retailers tailor their strategies to meet the distinct needs of the silver economy while still considering the preferences of Gen Z and other generations?
What innovative product offerings can retailers develop that appeal specifically to older consumers, and how do these differ from the demands of younger shoppers?
In what ways can retailers leverage technology to enhance the shopping experience for the silver economy, and how can these innovations also resonate with Gen Z?
Poll
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Retailers should be focusing on their customers. Sometimes those customers will be older, sometimes they will be younger. However, there is no universal in any age segment. Silver shoppers might be a neat shorthand, but the group is composed of many different lifestyles and shopper typologies. With that out of the way, one thing that does hold true is that older consumers, collectively, command huge spending power so they are most certainly an important constituency for retail.
Should retailers give more focus to senior citizens? There is not one right response that fits for all retailers. This depends on what type of retailer and who is their target market?
I have personally targeted seniors for several brands I have launched in certain HBC categories, and it worked well because brands I competed with were targeting all the same other markets.
When its the right fit, the senior market is excellent for brick and martyr retail stores, because even now, seniors shop B&M stores more than other generations.
I’ll respond much as I did the other 3,567 times this has been asked over the past few years: who you priortize depends a Hell of a lot on what you sell; if you sell waffle mix, phone services or airplane seats, then your market is pretty much everyone. If you sell hair replacement, retirement villages or medic alert button, then sure, the Silver Economy could be gold (if you’ll forgive the mixed metaphors). But what if you sell skateboards?or spring break packages? I doubt it. Do retailers sometimes underestimate their product’s appeal outside of core groups? Sometimes. Is talking about it threadworthy? No.
“Americans over 50 regularly make purchases from online retailers.” Ya think?
Calling people who are 50 part of a “Silver Economy” is ridiculous. (So is citing a concept from the 70s.) Still, I am happy to read that Estée Lauder, a brand loved by mature women, is adapting its products to the consumers it has long served. Gen Xers aren’t out there worrying about buying walkers and Baby Boomers are actively aging, busy living their lives.
So much of the information in this article makes my head explode. We spend so much time stereotyping people that we tend to miss who they actually are.
Agree with you completely. Saying Baby Boomers use online like it’s some kind of revelation is just ridiculous!
Just as consumers focus on attributes of product, not broad categories, retailers should focus on refined demographics of their consumers, not overly broad subsets of the population. How marketers analyze and look at groups of consumers has changed dramatically in the past 20 years, and it continues to evolve as individuals refuse to be pigeon-holed into any one generational label. With this said, the older population will continue to have spending power, and retailers should determine where it makes sense to focus their products and services on appropriate and specific consumer needs and lifestyle solutions.
I agree that the Silver Economy market is burgeoning and is under-served. I would also be carful aggregating such a broad group (50+) into this category. My instincts suggest that Gen Z may find less value in such focus for themselves, but would welcome such a focus for their aging parents who may very well be living under their roof.
That said, the watchword for retailers is that efforts to attract, serve, and retain the “silver economy” must be authentic and consistent. Properly done with an all-in effort, an Aging in Place and Healthy Living focus could be a tremendous differentiator. (Not to mention renewed discoveries and interest in the area of longevity.)
Retailers should constantly be analyzing their product offerings and customer segments to gain insights that can be leveraged in unique ways via targeted promotions, new product entries, and differentiated messaging. Some retailers may serve older segments vs others who skew younger, which is why data and its resulting insights are such such a critical piece to addressing varying preferences.
Let’s avoid labels & focus on the makeup & needs of our customers, regardless of age. Is it a large portion of our population? Yes. Does it have significant purchasing power? Yes. Is it monolithic? No. Then don’t treat this market segment as such.
Most retailers can’t be everything to all customers. GenZ’s shopping habits are typically different – sometimes dramatically different – from those of older generations (Boomers and “The Silver Generation”). People are living longer, and that is good for companies and brands that focus on older customers. There are more of them to do business with. As retailers create innovations and product rollouts, they must consider the target customer. This is more important than ever, and smart retailers know this.
I appreciate that retailers always need to be thinking about capturing the minds, hearts and wallets of the emerging generations; but too many do so without deeply considering the connection between the products they sell and the customers they already have.
Paraphrasing Willie Sutton, you market to those who have the money to spend and are willing and able to spend it…And if that equals a particular demographic, you should do it. If Gen name a letter is not spending $ at your store, ignore them–they will come back when they are ready and you have the goods. This idea that you can message your way to revenue growth with a group that is not spending is not a very informed position.
Much if this is a numbers game and based on market geography, what’s in demand. If you’re a food retailer operating as high quality/organic grocer, you certainly market to everyone but give more emphasis on the boomer age/silver group because collectively they have higher disposable income to afford good food.
In the more conventional or large chain food retail space, or even in price-oriented formats, your demographic emphasis will be more spread across the board. But it also depends on the geography and local income levels.
In the case of the silver economy, it’s important to use technology to save time and increase understanding of the value equation and lifestyle. Will it help save steps, lower hassle, improve a simple experience.
I feel like this is a trick question… know your customer and understand what problem your product is making easier or solving and the value if it. Why do we have to decide on an age group and put all of our eggs in one basket?! It’s more complicated than that and usually involves the lifestyle and behavior of your targeted audience.
Retailers can segment their marketing according to consumer values (health, value for money, diversity, vegan lifestyle, sustainability) rather than age. Gen Z consumers might have no job or entry-level salaries while older consumers may be on a tight budget, especially if they don’t have a pension. Showing a range of ages in ads can help different generational cohorts feel seen, understood and ready to shop.
Retailers should stop over-segmenting and focus more on delivering great products that caters to the target audience and customers that they already have. Instead of customizing every little detail to specific age groups, they should prioritize quality, usability, and sustainability.
A good product should work for both older consumers and Gen Z. When you focus on making things easy to use, accessible, and innovative, the product speaks to all generations.
Retailers can enhance the shopping experience through technology, but the core should always be a product that meets the needs of all customers, not just one group.
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Retailers should be focusing on their customers. Sometimes those customers will be older, sometimes they will be younger. However, there is no universal in any age segment. Silver shoppers might be a neat shorthand, but the group is composed of many different lifestyles and shopper typologies. With that out of the way, one thing that does hold true is that older consumers, collectively, command huge spending power so they are most certainly an important constituency for retail.
Should retailers give more focus to senior citizens? There is not one right response that fits for all retailers. This depends on what type of retailer and who is their target market?
I have personally targeted seniors for several brands I have launched in certain HBC categories, and it worked well because brands I competed with were targeting all the same other markets.
When its the right fit, the senior market is excellent for brick and martyr retail stores, because even now, seniors shop B&M stores more than other generations.
I’ll respond much as I did the other 3,567 times this has been asked over the past few years: who you priortize depends a Hell of a lot on what you sell; if you sell waffle mix, phone services or airplane seats, then your market is pretty much everyone. If you sell hair replacement, retirement villages or medic alert button, then sure, the Silver Economy could be gold (if you’ll forgive the mixed metaphors). But what if you sell skateboards?or spring break packages? I doubt it. Do retailers sometimes underestimate their product’s appeal outside of core groups? Sometimes. Is talking about it threadworthy? No.
“Americans over 50 regularly make purchases from online retailers.” Ya think?
Calling people who are 50 part of a “Silver Economy” is ridiculous. (So is citing a concept from the 70s.) Still, I am happy to read that Estée Lauder, a brand loved by mature women, is adapting its products to the consumers it has long served. Gen Xers aren’t out there worrying about buying walkers and Baby Boomers are actively aging, busy living their lives.
So much of the information in this article makes my head explode. We spend so much time stereotyping people that we tend to miss who they actually are.
Agree with you completely. Saying Baby Boomers use online like it’s some kind of revelation is just ridiculous!
Just as consumers focus on attributes of product, not broad categories, retailers should focus on refined demographics of their consumers, not overly broad subsets of the population. How marketers analyze and look at groups of consumers has changed dramatically in the past 20 years, and it continues to evolve as individuals refuse to be pigeon-holed into any one generational label. With this said, the older population will continue to have spending power, and retailers should determine where it makes sense to focus their products and services on appropriate and specific consumer needs and lifestyle solutions.
I agree that the Silver Economy market is burgeoning and is under-served. I would also be carful aggregating such a broad group (50+) into this category. My instincts suggest that Gen Z may find less value in such focus for themselves, but would welcome such a focus for their aging parents who may very well be living under their roof.
That said, the watchword for retailers is that efforts to attract, serve, and retain the “silver economy” must be authentic and consistent. Properly done with an all-in effort, an Aging in Place and Healthy Living focus could be a tremendous differentiator. (Not to mention renewed discoveries and interest in the area of longevity.)
Retailers should constantly be analyzing their product offerings and customer segments to gain insights that can be leveraged in unique ways via targeted promotions, new product entries, and differentiated messaging. Some retailers may serve older segments vs others who skew younger, which is why data and its resulting insights are such such a critical piece to addressing varying preferences.
Let’s avoid labels & focus on the makeup & needs of our customers, regardless of age. Is it a large portion of our population? Yes. Does it have significant purchasing power? Yes. Is it monolithic? No. Then don’t treat this market segment as such.
Most retailers can’t be everything to all customers. GenZ’s shopping habits are typically different – sometimes dramatically different – from those of older generations (Boomers and “The Silver Generation”). People are living longer, and that is good for companies and brands that focus on older customers. There are more of them to do business with. As retailers create innovations and product rollouts, they must consider the target customer. This is more important than ever, and smart retailers know this.
I appreciate that retailers always need to be thinking about capturing the minds, hearts and wallets of the emerging generations; but too many do so without deeply considering the connection between the products they sell and the customers they already have.
Paraphrasing Willie Sutton, you market to those who have the money to spend and are willing and able to spend it…And if that equals a particular demographic, you should do it. If Gen name a letter is not spending $ at your store, ignore them–they will come back when they are ready and you have the goods. This idea that you can message your way to revenue growth with a group that is not spending is not a very informed position.
Much if this is a numbers game and based on market geography, what’s in demand. If you’re a food retailer operating as high quality/organic grocer, you certainly market to everyone but give more emphasis on the boomer age/silver group because collectively they have higher disposable income to afford good food.
In the more conventional or large chain food retail space, or even in price-oriented formats, your demographic emphasis will be more spread across the board. But it also depends on the geography and local income levels.
In the case of the silver economy, it’s important to use technology to save time and increase understanding of the value equation and lifestyle. Will it help save steps, lower hassle, improve a simple experience.
I feel like this is a trick question… know your customer and understand what problem your product is making easier or solving and the value if it. Why do we have to decide on an age group and put all of our eggs in one basket?! It’s more complicated than that and usually involves the lifestyle and behavior of your targeted audience.
Retailers can segment their marketing according to consumer values (health, value for money, diversity, vegan lifestyle, sustainability) rather than age. Gen Z consumers might have no job or entry-level salaries while older consumers may be on a tight budget, especially if they don’t have a pension. Showing a range of ages in ads can help different generational cohorts feel seen, understood and ready to shop.
Retailers should stop over-segmenting and focus more on delivering great products that caters to the target audience and customers that they already have. Instead of customizing every little detail to specific age groups, they should prioritize quality, usability, and sustainability.
A good product should work for both older consumers and Gen Z. When you focus on making things easy to use, accessible, and innovative, the product speaks to all generations.
Retailers can enhance the shopping experience through technology, but the core should always be a product that meets the needs of all customers, not just one group.