By Graeme McVie
The U.S. population is undergoing a dramatic shift—one that will impact retailers across the country. As the Baby Boomer generation ages, the population aged 65 or older is expected to more than double between 2012 and 2060 to reach an astounding 92 million. The U.S. Census Bureau projects that by 2060, one in every five U.S. residents will fall into the 65 plus age category, up from one in seven today.
This silver tsunami can certainly pose some real challenges for retailers. With that said, the rise of the aging consumer also creates many opportunities for retailers on which to capitalize. The good news is most retailers already possess the key tool needed for success: Data.
Customer data has the potential to transform the customer experience by delivering more relevant, targeted offerings that can be tailored specifically to this consumer base. Retailers that can identify key demographic trends through their customer data, and then adjust the customer shopping experience accordingly, will be best positioned to gain a competitive advantage.
In order to capitalize on the impending shift in the U.S. consumer population, retailers should consider the following:
- Tailor the shopping experience. The physical layout of stores will play a significant role in attracting and retaining a mature consumer base. Retailers that cater their infrastructure to their rising consumer base by lowering shelf heights to allow for accessible products, providing wide aisles and ensuring easy-to-read labels and signs or providing on-cart magnifying glasses, will encourage a loyal following.
- Rethink promotions. In-store promotions that encourage consumers to purchase larger quantities will become increasingly less relevant as the senior cohort increases in size. Consider monetary discounts instead of buy-one-get-one-free promotions.
- Adapt the assortment. In a similar vein to the previous point, retailers will need to re-think pack sizes. Seniors living in households with one or two mouths to feed will not need large pack sizes, especially in categories that are perishable. Fresh, healthy, ready-made meal options in single or double portions would be an ideal offering for seniors.
- Healthcare consumerism is rising. With rapid growth in the drugstore channel to accompany aging shoppers, consider bolstering pharmacy offers to meet the increasing demand for discretionary and essential health care products and services. Pricing for health-related products will be key—setting prices at the appropriate level for discretionary health-related products may allow lower prices to be offered on essential healthcare products. With many seniors facing lower benefits from social security programs, making essential healthcare products affordable will go a long way to earn the loyalty of seniors. Pharmacy convenience is also key. Over-the-phone and online prescription re-fills would be appreciated by customers who are not very mobile or do not have easily accessible transit options.
- Tap into Technology. Unlike the previous generation of seniors, the aging baby boomer is familiar with technology. An increasing number of seniors are integrating the Internet into their daily lives and digital communications are fast becoming an efficient way to engage and inform. Recent research by the Pew Internet and American Life Project indicated that 87% of senior citizens use e-mail and search engines and one of the largest user groups on Facebook is seniors. And the number of senior Internet users is only growing. eMarketer forecasts that there will be over 26 million senior users by 2015. This is a ready avenue for retailers to deliver targeted, relevant offers using data through a loyalty program to increase engagement.
The success of retail has always rested on an industry’s ability to adapt and respond to market changes and challenges. The aging baby boom generation is no exception. If retailers wisely use analytics to properly segment and tailor their offerings, their relationship with this high-spend customer group will continue to strengthen, and in turn create strong customer loyalty.