Boomers Are Going to Drive a Silver Surge
Companies tend to neglect older generations, focusing instead on millennials and Gen Z. Such a strategy will be costly this year.
Companies long to partner with the Kardashians. Over the past couple of years, we have seen beauty leader Coty Inc., for example, strike cosmetics deals with both Kim Kardashian and Kylie Jenner to appeal to young, social-media-savvy shoppers. Before that, Kendall Jenner was the face of an Estee Lauder Cos. Inc. collection targeting millennials.
But in 2021, the family member who businesses should really be keeping up with is 65-year-old momager Kris Jenner. The successful matriarch represents just the type of customer they’ll need to court in the wake of Covid-19.
Many companies have tended to neglect baby boomers, focusing instead on winning over millennials and Generation Z. The strategy could cost them dearly this year. Older generations are set to get vaccinated first. Once they’re inoculated and free to venture out again, they could drive a silver surge in spending — in some of the worst-hit corners of the economy.
Not only will this group have more freedom, but they will also have more money to spend. After all, they’re less likely to have suffered job losses from the pandemic, and having to stay home for nearly a year has only swelled their savings.
While Americans’ incomes tend to decline at older ages, wealth remains high.
Already this combination is proving lucrative as seniors rush to book holidays in anticipation of being able to travel again. That’s good news for TUI AG, the world’s biggest package-tour operator, as well as British over-50s travel specialist Saga Plc. It also bodes well for battered cruise lines, such as Carnival Corp. and Royal Caribbean Cruises Ltd., which are dependent on older customers. Saga is requiring all travellers to be fully vaccinated before taking one of its vacations. If other tour operators follow suit, that could encourage more confidence in overseas holidays in general and, after being cast as Covid super spreader sites, cruises in particular.
“A fifth of U.K. over 65’s are estimated to have assets of one million pounds or more”.
We could also see a boost to the broader leisure sector, as seniors typically spend more on holidays closer to home. That may explain why U.K. transport operator National Express Group Plc saw a 250% increase in bookings in its Lucketts business, which offers coach holidays to destinations like Scotland, Cornwall and the Cotswolds, after launching its summer brochure in January, compared with 2020.
Domestic holidays and staycations also mean more money spent in local restaurants, pubs and other establishments, presuming they are open again. These businesses will benefit from older consumers being free to go shopping and eat out even when they’re not on holiday.
Boomers tend to spend less on clothing and beauty than their younger counterparts. But with the prospect of holidays and meals out, some wardrobe refreshment looks likely.
The next generation of mature consumers will spend more on food, travel and technology and less on fashion and beauty
In the U.K., one of the biggest beneficiaries could be Marks & Spencer Group Plc, whose core clothing customer is between 45 and 65. In the U.S., it could be the likes of Chico’s FAS Inc., J. Jill Inc. and Talbots Inc. whose fortunes are lifted. That would be a welcome reversal, seeing as they’re among the mall middleweights that my Bloomberg Opinion colleague Sarah Halzack says have been badly hurt by the pandemic.
But companies targeting “Gray Cash” should tread carefully. Baby boomers are healthier and have a younger outlook than their parents did. One sure way to alienate them is to treat them as old.
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Instead, in travel and hospitality, companies can win them over with high-quality services that emphasize both comfort and luxury. More age diversity in brand ambassadors — think Kris Jenner, not just Kylie — would also help connect with these valuable consumers. Choosing the right platforms matters, too. Facebook, for example, is particularly popular with the over-50s. And online ordering has grown more customary — Walmart Inc. saw more over-50s shopping on its website during the pandemic — creating new market opportunities and sources of data.
To be sure, there are some reasons for caution when it comes to the silver surge. Those between 50 and 64 years old tend to be bigger spenders than the over-65s, and it will take a while before the vaccine rollout reaches this cohort. What’s more, even after being inoculated, some older people may feel nervous about going out and about again.
Nevertheless, it’s still worth paying more attention to this long-overlooked demographic. Even when the health crisis is over, the economic effects will linger. Younger people, especially the many working in retail and hospitality, will feel the most financial pain. Consumer companies better start speaking to the boomers.
“What a great opportunity or investment this year could make for retail and the travel industries, the organisations that can tailor make products and services inclusively, with focus towards age-related benefits, will see an upturn in business.
Nevertheless, there is positive vibes and confidence starting to bloom.”