Selling to seniors
Why many firms fail to market to mature consumers - and how a cooling economy could reverse that trend.
Jodie and Marilyn grew up in the shadow of the Great Depression. They did not have much money back then. And like so many in their generation, they've worked hard since, and tucked away their savings.
The two friends recently drove south from their hometown of Bangor, Maine, for a shopping expedition in a Boston mall.
"We're ready to enjoy the fruits of our labors," says Marilyn, who, like Jodie, requested her last name not be used.
A little splurging is certainly within their budget. Yet they probably won't spend nearly as much as they could. People 55 years old and up are the savviest consumers on earth, and have plenty of extra money in the bank, but evidence shows they're quickly losing interest in what retailers have to offer.
After a decade of prosperity, seniors like Jodie and Marilyn have more discretionary income (money left over after regular expenses), but spend far less of it than all other age groups, according to WSL Strategic Retail in New York
The research firm's biannual "How America Shops" study shows seniors spending less in retail channels such as drug stores, malls, supermarkets, and warehouse clubs. While purchasing by 18 to 34-year-olds jumped by 20 percent in department stores since 1996, seniors' spending actually dropped 9 percent.
Experts chalk up the discrepancy to retailers' increasing focus on younger buyers, whose collective income has soared in the past five years. One consequence: Fewer products appear to be made for older buyers, and mainstream items, like kitchenware or clothing, are rarely marketed to an older audience.
"Take a mental walk through a mall," says Candace Corlett, a partner with WSL. "There's not much there to attract someone over 60. About 80 percent of clothing in a mall is displayed to encourage young people to buy."
Jodie and Marilyn agree. Sitting on a bench in Boston's Prudential Center, the two ladies watch with bemusement as 20-somethings rush by with purchases from swank retailers. "Everything these days is directed to younger folk," says Marilyn.
But as the economy cools, and many in the dotcom generation go back to school, retailers are looking to tap into the dormant pocketbooks of mature consumers, who hold 58 percent of the nation's disposable income. Retailers now marketing to older buyers include Disney, Gateway Computers, Liz Claiborne, Master Card, and Quaker Oats. They are harbingers of a new marketing strategy that will likely make the retail world far more hospitable to seniors.
Take Disney's latest ad campaign. The media and theme-park giant traditionally markets to families with young children. But its latest television ads target an older audience. One depicts "empty-nesters" who leave their grand kids at home so they can have fun on their own.
"Everyone who goes to Disney World is amazed by the number of senior citizens who are there," says David Urban, a marketing professor at Virginia Commonwealth University in Richmond. "They're capitalizing on seniors' desire for opportunities to socialize with other people in their age group."
Seniors are responding to technology, too. Gateway Computers in San Diego is airing TV ads promoting services that help seniors set up a home computer and get online. They also offer a number of discounts to AARP members.
As baby boomers near retirement, similar ads selling adventure, technology, and other "young" products to an older audience could become far more common. This colossus of American demographic groups is recasting social perceptions of aging. As a consequence, stereotypes that have framed marketing for years are crumbling.
In the past, retailers have been reluctant to market to consumers like Jodie and Marilyn for fear of being labeled an "old" company. The reputation even repels those in the 60-plus group, who often don't associate themselves with the "senior" label.
But the term "senior" will soon include a generation of hippies, rock-'n'-roll enthusiasts, and veterans of corporate America who made a fortune on the stock market. Some experts add that they have a younger mentality than their children.
"This is a very different senior than what we've seen before," says Arun Jain, a marketing professor at the University of Buffalo. "They are technologically sophisticated. They have money in the stock market and are better educated. And the industry is responding to them."
Chicago-based Quaker Oats has targeted seniors for many years. But the 55-plus age group's financial influence and shifting profile is altering the foodmaker's sales pitch.
"This group has always been important to us, but they are actually becoming even more important as they grow so fast," says Rick Gomez, head of Quakers' hot-cereal division. "Baby boomers are very active. They have hobbies. This is a very vital group and our advertising reflects that."
While marketers' acknowledge the growing influence of seniors in the marketplace, some believe that efforts to draw older customers could founder unless marketers rethink their priorities.
Holger Enge has specialized in writing ads for seniors for more than 20 years. He says that most advertisers deemphasize the very information that seniors' value most: price and quality.
"Seniors have seen it all before, they've heard it all before," says Mr. Enge. "They're not impressed with the current advertising, which is based mostly on production values."
Baby boomer Murial Finegold, a Boston resident, speaks for many of her peers: "Very frequently I'll see a commercial and have no idea what it's about," she says.
It might be a symptom of a generation gap. Enge says most current advertisers are products of the MTV generation, and care more about pictures and music and, above all, wit, than substance. He says that if the ad is clear, however, seniors will buy what are considered "young" items, such as a DVD player.
But evidence shows that marketers' perceptions of the average senior are based on outdated stereotypes. Donnely Marketing, a consulting firm in Ames, Iowa, found that many retailers underestimate the spending of mature consumers, their willingness to swap brands, and their interest in new products and technologies.
It's an illogical impression, according to Jessica Weiss, a historian at California State University who studies the pre-boomer age group. "This group helped to make the Levitt Town and suburbs a success," says Ms. Weiss. "They were certainly a target marketing group in the post World War II era. They have plenty of experience as consumers."
(c) Copyright 2001. The Christian Science Monitor