October 24/31, 2016: Volume 31, Number 10
By Steven Feldman
It seems wherever you look these days, there is some type of article that centers on marketing to millennials. The marketing industry is obsessed with millennials: what they want, how they think, how they buy and ultimately how to engage with them.
Yes, at some point they will become the most important demographic in terms of purchasing power. But not yet. Not by a longshot. While we all have to understand how their shopping tendencies differ from prior generations, we can’t lose sight of the fact they have nowhere near the buying power of the most important consumer today—and for the immediate future: the baby boomer. In a BloombergBusiness article, Jody Holtzman, head of AARP’s Thought Leadership unit, was quoted as saying, “You’d have to be an idiot to turn your back on this humongous growth market.”
So while millennials might be the focus of the headlines, boomers—their wants, their needs and how they buy—should not be ignored. After all, the spending power of this group is predicted to be $15 trillion worldwide by the end of 2019.
Some statistics to keep in mind:
- There are 77 million people born between 1946 and 1964 living in the U.S.
- Every seven seconds someone will turn 50 in the United States.
- These baby boomers (ages 51-70) control the lion’s share of today’s disposable income and are either at their peak income-earning years or retiring.
- These are the people that have the impact on business.
- They only comprise 29% of the labor force but approximately half the population and control 70% of the nation’s disposable income.
- Over the next 20 years, spending by people over the age of 50 is expected to increase 58% to $4.74 trillion, while spending by Americans ages 25-50 will grow only 24%.
- Baby boomers will inherit $15 trillion in the next 20 years.
- Boomers own 80% of all money in savings and loan associations.
- 63% of baby boomer households have at least one person working.
- The 50+ population has $2.4 trillion in annual income in the U.S., which makes up 42% of all after-tax income.
- Globally, the spending power of consumers age 60 and older will hit $15 trillion by the end of the decade, up from $8 trillion in 2010.
- They have 40% more income adjusted for inflation than their parents had at this stage of their lives, while at the same time they have seen the cost of basic life necessities drop dramatically. For example, the average real price for appliances dropped in the last 30 years. As a result, they have much more disposable income.
- Then you have the empty nesters, who are seeing their children leave the house, which, in turn, increases their discretionary income. Thus, they are buying better products, and better products mean better margins.
- The baby boomers are moving into more expensive homes, and in some cases are buying second and third homes, which is driving the housing market. In fact, the number of million-dollar homes in the U.S. doubled from 2000 to 2005. It has also doubled from 2012-2016. Million dollar homes now account for 3% of all homes in the U.S.
- The average baby boomer is in the process of renovating something right now; kitchen is No. 1. And ironically, boomers are putting in professional grade kitchens, despite the fact they don’t ever cook.
Ignore this demographic at your own peril.