The traditional marketing model based on “life stage” assumes retirement at age 65. This in turn means – automatically – a switch over from earning income to living on a fixed income. That fixed income may be low, medium or high, but it almost always leads to very conservative spending relative to the spending of that same individual before retirement.
Spending is also dampened down by age itself. The household is smaller (the kids having grown up and gone out on their own ), the needs are less and, let’s face it, there aren’t that many years of life ahead. So why bother going after this market?
But what if it’s no longer happening that way?
The fact is that more and more people are not retiring at the “traditional” age of 65. Part of the reason is longevity and attitude – they’re healthier, they’re going to live longer, and they want to stay active and engaged. Part of the reason is financial – they can’t afford to stop earning because their pensions are inadequate, or they have financial responsibilities for ageing parents or kids who aren’t quite getting untracked yet…or some combination of both.
In 1976, according to Statistics Canada, there were only 177,000 people above the age of 65 who were still working. Today, it’s close to 700,000. And still rising.
The effects on spending are crystal clear. According to PMB Fall 2013, in a huge range of categories the 65+ population produces as many shoppers as the much-coveted younger demos (18-24 and 25-34)…and often, more. The table below gives just a few examples.
|Number of people qualifying (000)||18-24||25-34||65+|
|Owns their own home||2,100||2,853||4,271|
|Spent $40,000+ on most recent car purchase||178||274||268|
|Spent $4,000+ on most recent vacation outside of Canada||279||364||468|
|Spent $10,000+ on home renovation in the past 2 years||254||554||523|
|Spends $1,000+ per month on credit card||101||644||650|
|Dined in a high quality restaurant 3+ times in past 30 days||267||393||399|
And remember, these are the so-called “retirees.” The ones you don’t need to bother with any more.
One thing they haven’t retired – for sure – is their spending.
How many hundreds of thousands of customers – how many tens of millions in spending – might you be ignoring by following an obsolete marketing model?
That's how many Zoomers worked out at a fitness club over the past year. You'd expect the younger Millennials to contribute more. You'd be wrong. They're almost a million behind -- only 2,486,000 people. Source: Vividata Fall 2018