Friday, September 25, 2009

Changing for the Boomers

The story is from Emerson Advisors:

The Disappearing Boomers

There was an interesting article recently in the Wall Street Journal titled "Seeing Store Shelves through Senior Eyes". To summarize, Kimberly-Clark, in conjunction with Walgreens and Rite-Aid, has a project to understand and learn from what the shopping experience is like for seniors. Test subjects put on thick glasses to blur their vision, put unpopped popcorn in their shoes, and, tape their thumbs to their palms, all to emulate the senior experience.

This is no small concern. The Baby Boomers, defined as those born between 1946 and 1964, are getting older, entering retirement age, and preparing to live on Social Security and investments. This is the largest single population bloc, representing 36% of the adult population. Often referred to as "the pig in the python", the Boomers have historically outspent all other age groups and have driven the economy for decades.

Their habits are changing. In a recent Gallup poll, the average daily spend by the Boomers has gone from $98/day in 2008 to $64/day in 2009. Obviously the recession has played into this, as spending has dropped across all the age segments. The more important news is that the Boomers are no longer the biggest spenders. That prize goes to Gen-X (born 1965-1979), who spend $71/day. The Gen-X population is a third smaller than the Boomers. To get a preview of Boomer spending trends to come, the Silent Generation (born 1930-1945) spends $50/day and the Great Generation (born before 1930) spends $35/day. Over a third of the consuming population is on this track - $64/day to $50/day to $35/day. Even if/when the economy recovers, the reality is that the Boomers will be spending less and less over the years to come. In sheer spending potential, their numbers cannot be replaced by the generation behind them.

So what should retailers and product manufacturers be focusing on to prepare for this inevitable trend?

The real question is "Are the Boomers my target market?". If your business model today relies on the Boomers, here are some obvious things to consider:

  • Real Estate. If they are spending less and are less mobile, do you really need to have as many stores? Do you really need to open more?
  • Internet. How big is your Internet business? Can it replace the lower business in the stores? How easy is your website to navigate overall and particularly for people with diminished vision?
  • Sales and Inventory plans. With the exception of big gains in market share, the days of "blowing the doors off" are probably over for anyone focused on the Boomers. Emphasis has to be on margin and profitability.
  • Navigation in the Store. How easy is it to get around the store? How easy would it be with a bum knee or with arthritis?
  • Fixturing. The so-called "strike zone" or most productive selling space is from 3'-6' off the floor. This will no doubt become the "selling zone" over time, with all other areas becoming the "markdown staging zone".
  • Apparel Sizing. Gravity always wins. The size scale will surely shift to the right over the coming years. Are you looking at and reacting to sales by size?
  • Apparel silhouette. Sleeveless? Low rise? Cinch waist? Probably not big volume drivers in years to come for this market segment.
  • Product Packaging. The lawyers and Loss Prevention folks have made opening most packaging into a physical fitness routine. Do you think your customers will buy something they can't open?
  • Labeling. If they can't read the label or tell what it is, will they buy it? Ditto for ticketing, signage, and receipts.

While not immediate, these trends are surely going to have a profound impact on how many retailers and manufacturers operate over the coming years. As I said, the list of considerations is partial and rather obvious. Let me know what you think. What else should retailers and product manufacturers be looking at?

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