With the emerging “Silver Tsunami,” a metaphor for the aging population, retailers are preparing for the tidal wave of 78 million baby boomers turning 65 and over in the next 20 years
With their growing numbers and vast purchasing power, senior shoppers present both an opportunity and challenge for retailers. For some of the biggest names in the industry, the 60-and–over crowd represents an important customer base already, and they are doing more to accommodate it.
“This demographic should be important to retailers as there is a gap between the scale of the senior consumer population’s purchasing power and the current offerings in the retail sector that are more geared toward younger shoppers,” said Deborah L. Weinswig, managing director at Fung Global Retail and Technology in New York.
She said the senior proportion in the U.S. was a substantial 14.8 percent, or nearly 48 million people in 2015, and is projected to grow to 20.7 percent of total population of 356 million by 2020. Likewise, spending by U.S. seniors continues to grow faster than consumer spending in total.
Some major retailers have taken steps recently to cater to seniors.
On its website, Kohl’s offers a 15 percent discount Wednesdays in stores only for customers age 60 and over.
Best Buy recently began a pilot program, known as “Assured Living Service” in Denver and Minneapolis as a sensor-based notification service connecting caregivers with their loved ones through smart-home technology. Best Buy consults with both the child and parent to customize a system that best meets their need, and the company’s Geek Squad installs the technology in the parent’s home and offers training on using it.
The payoff potential is huge. Senior households spent $1.43 billion last year – up 6.7 percent from 2015, according to National Consumer Expenditure Surveys. The mean family wealth and before-tax real income of households headed by most age groups under 64 contracted considerably between 2001 and 2013, while average wealth and income in households headed by seniors increased significantly in those years.
U.S. households consisting of those ages 65–74 direct a substantially larger share of their spending to retail categories than the average household does, but households consisting of those ages 75 and older direct a lower share than average toward retail.
Fung researcher Swarooprani Muralidhar said seniors bought twice as many household supplies, cleaning products, books and periodicals, than they did clothing, 142 percent vs. 62 percent of their average household total spending in 2016.