Consumer trends: Boomers tighten their belts

Baby boomers face an old age restricted by the hedonistic choices of their youth. Helen Edwards asks how straitened circumstances will affect their spending in retirement.

The first baby boomers were conceived in 1946, after the troops returned from World War II with, apparently, one thing on their minds. The boom came to an end in 1964 with the enthusiastic acceptance of the birth control pill. This generation of consumers became the biggest and richest in history, breaking rules and flouting convention from the days of Woodstock through to the yuppie years and the internet era.

It is also the generation that invented consumption culture. Emerging from the privations of rationing in 1954, boomers learned to flirt with, embrace and capriciously drop the brands that came their way, and marketers have hung onto their coat tails ever since. To follow the boomers was to follow the money.

This generation has led lives light on duty and high on thrills in a time of relative peace and unprecedented prosperity - 'a six-decade party' is how one boomer website describes it. But is it now hangover time, as this generation starts to feel the physical effects of ageing and the combination of demographics, debt and denial threatens to take its toll?

From this year, British boomers will turn 60 at the rate of 2800 a day, with, on average, a further 21 years on the clock left to run. Perversely, it is the very size of the generation and its predicted longevity that pose the economic problems. Who pays for their healthcare and state benefits as the boomers age? Subsequent generations are neither as big nor as prosperous. This tightens the dependency ratio, leaving too few propping up too many for too long: the much-vaunted demographic time bomb. The only way for governments to balance the books is to slash welfare payments, force more patients to pay for medical procedures and put the squeeze on state pensions. In other words, the boomers will have to pay for themselves.

For a generation that has always tended toward a live-for-the-moment ethos, its savings hole is inevitably a big one. A 2004 independent government report assessed the total pensions shortfall at ú57bn.

Most boomers have money locked away in property - predicted to swell to a collective value of ú1425bn by 2020, when the bulk of the cohort will be over 60. The realisation is dawning, though, that their bricks and mortar will be used neither to fund the good life nor to provide for heirs: it will have to pay for the basics. According to a report from The Prudential, 12.9m British boomers expect to use their property to provide for their old age. With so many selling to downsize, or opting for equity release, this is the one force that might finally depress house prices. The Prudential predicts a double-whammy: bigger houses will sell for less as supply exceeds demand, while those selling to downsize will compete with first-time buyers for smaller properties, pushing those prices up and leaving the boomers to pocket less than they expected.

Compounding this coming financial squeeze is the boomer psychology. Never mind average life spans: boomers think they are going to live and stay active for ever. In a recent US survey, when asked to define 'old age', most boomers quoted an age three years above the country's average age of death. Many fully expect to make it to 100. This denial of death and an urge to stay in the thick of things throws the issue of finite funds into sharp relief: so much time, so much to do, but not so much in the kitty. Something has to give. Perhaps, after all these years, boomers will do the thing they have never done: tighten their belts and ease up on consumption. If so, the conventional wisdom on 60-something marketing will be turned upside down.

The usual-suspect predictions for winner categories tend to focus on financial services, leisure and travel. A greying but still young-at-heart couple, hand-in-hand on a perfect beach, is the cliche image for the many 'silver-market' seminars, but it is wide of the mark: this been there, done that generation is unlikely to be found forking out its dwindling reserves on a world cruise.

Health tourism, on the other hand, could be a big winner. For example, Anita Hildreth, a boomer in her 50s, was told she was too young for the new hip she needed to be provided on the NHS. To go private in this country would mean an ú11,000 bill, so, following advice from her specialist, she flew to Chennai, on India's east coast, where the surgeons are superb and the costs are low. For the operation and the travel she paid ú5100.

Financial services targeting older consumers should hold up, as boomers seek to ring-fence the resources they have, but look for losers among branded essentials, fashion and leisure equipment as they prioritise experience over acquisition and straightforward value over badge values.

The rewards will go to those marketers who understand both the psychology and circumstances of the boomers and find imaginative ways to reconcile them. Richard Elliott, professor of marketing at Warwick Business School, predicts the explosion of the hire market. Those last-chance Harleys won't be bought, they will be rented for the week, or for the summer, and chalked up as another great life experience.

Raoul Pinnell, chairman at Shell Brands International, believes mobility will be a hugely important consideration for members of this generation as they head into their seventh decade. 'We are looking at value and service propositions to keep them loyal,' he says. Both are based on afternoon times when business falls off and the elderly tend to be the main customers. 'The value proposition is to offer deals for that part of the day; the other idea is to provide attendant service at the pumps for those hours, so customers won't have to get out of their cars.'

The voluntary sector will burgeon, too, as retired boomers seek new outlets for their intellectual and social energies. Just don't expect it all to be altruistic; this is, after all, the so-called 'me generation'. Boomers will be doughty activists in the fight to protect their state pensions and maximise their rights - and political parties will need to engage with them, because by 2025 over-60s will outnumber the under-25s for the first time. Expect social and political marketing to surge, and watch for a high-profile figure to be appointed minister for ageing.

Despite their political clout, boomers will have a fight on their hands. The generation that vowed never to trust anyone over 30 will find younger generations equally unsympathetic to their suddenly reduced circumstances. Those boomer traits - selfishness, hedonism, insouciance - threaten to boomerang and wound their credibility. Or will this be just one more challenge the boomers will take in their stride? James Murphy, associate director of The Future Foundation, thinks so. 'They won't be so dependent on welfare and won't really retire - they will just move into new roles,' he says, citing newsreader Anna Ford's retirement at 62 from the BBC, only to be snapped up as a director of Sainsbury's.

While Ms Ford's choices are not open to everyone, Murphy's point has resonance. This generation tends to surprise, thrive and change the rules to suit itself. Marketers looking to make money from them will need to be clever.

BOOMER BRANDS

1940s: The first boomers, born in 1946, were bottle-fed OsterMilk and weaned on Farex, brands that survive today. Teething pains were soothed with Steadman's Powders, a foul-tasting cure-all.

1950s: With wartime food rationing finally ending in 1954, eight-year-old boomers could tuck into Spam Luncheon Meat - a salty mix of chopped pork shoulder and ham that soon sold its billionth can worldwide. In 1957, aged 11, they read The Topper, a comic produced in a novel double-size format.

1960s: As trendy teenagers in 1964 they hung out in Wimpy bars and tuned in to the original pirate station Radio Caroline. They came of age in 1967 and spent their early-20s making love, sporting Mary Quant cosmetics, devouring the contents of Vesta Curry packs and taking to the road in the ubiquitous VW Combi - the hippy bus of choice.

1970s: In 1978, aged 32, the boomers went transatlantic aboard the Laker Skytrain, the brave but doomed low-cost airline venture that would later inspire Richard Branson.

1980s: Riding the bull market in the mid-80s, 30-something boomers wore Reebok and got a deep tan with Bergasol - two things consumers are less inclined to do now. A few pioneered the Motorola 'brick phone', which weighed about a kilo and cost ú1400.

1990s: In 1991 at the age of 45, they discovered Dell. In 1996, as they hit 50, they engaged with BUPA as a claimant for the first time.

2000s: By the turn of 2000, aged 54, the attractions of Clairol's Nice 'n Easy range of hair colourants became all too apparent.

2010+: Who knows, by 2010 the boomers may be discussing the merits of Smith & Nephew hips and knees. But look on the bright side, boomers - it's the price you pay for not dying before you get old.

DOS & DON'TS

Do understand boomers' delusions. They do not accept their bodies are deteriorating.

Don't be taken in. 70% will have a chronic condition or disability by 65. They will need help to deal with physical impairment, such as extra-large instrument panels in cars, but it will need to be presented as cool design.

Do innovate. 65% of over-55s agreed with the statement 'I welcome all technological advances for everyday living'.

Don't take loyalty for granted. They are more likely to switch brands than previous 60-plus consumers.

Do segment. There are winners, losers, mavericks, mainstreams, actives, passives, as for all cohorts.

Don't refer to 'grey' or 'silver' consumers. It is a sure-fire way to get the marketing wrong.

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