Dear M & M: Just how important will the people age 65 and over be towards consumer spending as we move closer to 2040? – Dan
Dear Dan: With falling birth rates and rising life expectancy, the older demographic is growing globally. This market share of an older demographic creates some market opportunities and consumer trends that companies should develop strategies to stay relevant and profitable going forward. In the next 20 years, the global population of people 65 and over is expected to increase by 600 million to reach a total population of 1.3 billion.
Technology development, climate changes and an aging population will be three major driving forces all business will need to adapt to. In the US the population over 65 is projected to have an average gross income of $21,811 in 2040 this is a rise of 38% if prices remain constant. This growth is weaker than the 51% forecasted growth in income of the rest of the population over the same period. One has to remember normally the plus 65 population is no longer working and are no longer income earners, thus making sense of the lower increase in income. Population aging will change labor market, consumption and the economy.
With the rise in older consumers worldwide business strategies that innovate and adapt to serve this elder market segment will likely be more successful that companies that don’t. With lockdowns and social distancing opportunities exist to develop strategies to offer online shopping, curbside pick-up, online exercise classes, video conferencing with health care providers, clubs, organizations and family members.
Online retailers that focus on easy to use platforms to shop, pay and deliver will show the most success. In the next 20 years, health goods and medical services will absorb 1 in every 3 dollars spent by older households. That’s over 30% of the total spending in health related purchases. Leisure, travel and insurance will also be important categories spending will take place. Cutbacks are expected to take place in household goods and services related to the home.
Source: Euromonitor International, Aging Matters the Future of Older Populations, July 2020.