North America Retail Sector Leader & Senior Client Partner
Catching the New Big Spenders
Retailers have been targeting cool young customers in their marketing campaigns for years. Seniors were just another demographic—if not ignored, then certainly not a focus.
But spiking inflation since the pandemic has changed spending habits: Last year, senior citizens accounted for 22% of all retail spending in the US—despite being just 17% of the population. This positions them near the top of the age-group heap in discretionary spending, and represents a jump from 2010, when they accounted for 15% of consumer spending. “The reality is that baby boomers are the richest people in society right now,” says John Long, North America retail sector leader at Korn Ferry. “The challenge to retailers is that they’re looking beyond retail to spend it.”
To some degree, it’s similar to the challenge many leaders face: shifting customer or client habits. In this particular case, several factors have emerged. Yes, seniors often have their mortgages and student loans paid off, and are done financially supporting their children, which means they have more disposable income. Another factor: Because they borrow less, they’ve been insulated from the recent interest-rate spikes.
Experts say seniors are also spending more because they’re retiring later: about 30% of people between the ages 65 and 69 are still working and, in many cases, pulling in full-time incomes, according to Gallup data. Yet attracting those dollars can be a challenge. “It’s a group that doesn’t ‘need’ anything: they don’t need new clothes, they have all their furniture, and most aren’t worried about fashion,” says retail expert Craig Rowley, senior client partner at Korn Ferry. Many seniors may feel reticent about unnecessary spending because they’re anxious about unpredictable future expenses. This has lead to a decrease in splurge buys, says Rowley, such as luxury cars or fancy home furnishings.
He suggests that retailers focus not on what seniors need, but on what they want, such as customer experiences and health products designed for them.
Indeed, many consumer firms have turned their focus to experiences like travel and entertainment. Hospitality is being blended with a variety of activities, particularly active senior living featuring a variety of amenities, says Radhika Papandreou, sector leader for travel, hospitality and leisure at Korn Ferry. “There’s huge opportunity for these really cool active communities,” she says. “Seniors want amenities and a hospitality-driven environment.” Other experiential offerings tailor both their marketing and their content to retirees, such as cruise lines and travel organized around friend groups and more flexible schedules.
Enticing this demographic to spend will require exceptional products and innovations, says Long. Experts caution that it’s unclear whether the emphasis on experiences is simply a matter of pent-up pandemic-era demand or actually reflects a permanent shift. “It’s probably a little of both, but time will tell,” says Long.
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