Retailers Are Adjusting To The Surge In Baby Boomers
Each day, 10,000 U.S. Baby Boomers turn 65. If current trends hold, about 10,000 more will reach 65 every day through 2029. This massive demographic shift is not only sweeping through areas like housing and health care – it’s causing big changes in the retail industry. As brands market to the generation that grew up on Main Street and later saw the rise of malls and online shopping, physical store formats, product selection, and technology are evolving to better serve Boomers.
I have covered the influence of Millennials and their desire for convenience and flexibility in the retail experience in previous columns. But it’s also worth explaining why Boomers are such a powerful force in the retail industry. A 2016 report by Visa projects that consumers over age 60 will continue to dominate U.S. consumer spending growth in the coming decade. In sheer numbers, there are more 60-year-old-plus consumers than there were a few years ago. Plus, Boomers are retiring later than their predecessors, retaining more debt, and spending more on travel and discretionary items than earlier generations.
But the ways Boomers are living and spending are changing so quickly that retailers are being forced to respond in real time. For instance, Boomers are downsizing from larger homes and moving into smaller spaces. In 2017, the number of new single-family houses under 1,400 square feet sold jumped from 17,000 to 21,000, according to the Census Bureau. The number of homes between 1,400 square feet but less than 1,800 square feet rose from 79,000 to 90,000 units. Those trends alone have implications for retailers that sell furniture and accessories as well as home-improvement stores.
Here are a few other ways the industry is working to turn the historic shifts in population into opportunities to strengthen loyalty with Boomers.
Friendly formats. As homes shrink, so have the stores that serve the homeowners. As urban locations gain new residents such as Boomers, smaller-format grocery stores are becoming an increasingly popular option for customers who make multiple trips to the supermarket. Stores are also working to become more physically accessible by updating signage, layouts, and other features to make the shopping experience easier to navigate. For instance, some chains have lowered shelf heights or increased the font size on pharmacy labels. Others have placed help buttons around the store or created wider aisles for people to navigate with canes or wheelchairs.
Experiments in technology. In a previous column I discussed how innovations in mobility have led retail centers to plan for autonomous vehicles. It’s important to point out that a majority of Americans express hesitation about self-driving vehicles. Nearly three-quarters (73%) of drivers said they’d be too afraid to ride in a fully self-driving vehicle, according to a recent AAA survey, for instance. Still, as people get more accustomed to the idea of self-driving vehicles on the streets, the benefits for Boomers are evident. Retailers in Arizona are now testing trips with Google’s Waymo unit in which customers can get rides in self-driving vans to Phoenix-area stores. In addition to shopping, the technology could potentially offer Boomers the ability to get to doctors’ appointments, social gatherings, or other activities when taking driving isn’t an option.
Selection and service. Retailers are also taking a close look at their product and service mix to ensure it accurately reflects Boomers’ needs. One example is Pennsylvania-based department store chain Boscov’s, which recently added a hearing aid division to stores to accommodate some of its senior shoppers. Best Buy is piloting a digital elder care service that uses sensors to connect caregivers with loved ones through smart home devices. And JC Penney is tweaking its apparel lines by bringing back private-label brands that have been popular with Boomers.
People are living longer, and Boomers are at the forefront of these complex demographic changes. They represent the population segment with the fastest growth in workforce participation. They’re spending more on fast food. They are also looking for a deal as they transition to fixed incomes, meaning they’re more likely to value product discounts, rebates, or free shipping than their millennial counterparts. Importantly, more than any other generation, Boomers prefer do their shopping in brick-and-mortar formats, so retailers have a loyal base of customers who are willing to exert their purchasing power when the conditions are right.