An excellent report from McKinsey identifies nine groups of urban consumers that are projected to generate three-quarters of global urban consumption growth from 2015 to 2030. That’s now!
Every businessperson should download and read this report carefully.
Two of the nine influential consumer groups are older consumers.
According to McKinsey’s analysis, the single most powerful force among the nine groups are the so-called “Developed retiring and elderly” (60-plus years in developed regions) which, driven largely by the growth in their numbers will generate 51 percent of urban consumption growth in developed countries, or $4.4 trillion, in the period to 2030.
The fourth most influential group identified in the report are the “China 60-plus“.
Once again, we have intelligent, indisputable, empirical evidence that screams out to businesses about the importance and the opportunity in the ageing consumer market, yet most companies are letting the opportunity slip by, turning instead to the familiar comfort of the younger consumer markets. As we have long advocated, this should not be an either/or situation!
What I found so impressive about this report among a sea of similar predictive studies, was the avoidance of fads and instead the development of insights based on hard evidence. Here are a few examples:
- A focus on ages not generations
As this is a global study, the authors were wise to avoid the common mistake of making sweeping generalisations about people of certain ages based on generational stereotypes. After all, the behaviour and attitudes of someone of boomer age in the USA cannot be compared to a peer in China. Boomers and Millennials certainly get a mention but mainly around their age/life-stage rather than an attempt to cluster their psychographics.
- No sugar-coating the older consumer
McKinsey states that “in 2030, we expect to observe a wider variation in purchasing power among the elderly than we see today. Insufficient retirement readiness limits the per capita consumption of the 60-plus age group and exacerbates already evident income inequality among people of this age group”. This understanding is absolutely crucial to any business planning to serve this segment.
- They will spend on more than just healthcare
While true that in developed regions, ageing populations mean that health care is the major growth category, expected to account for 34 percent of overall consumption growth among the 60-plus age group. It’s a massive opportunity, no doubt. But that’s not all they will spend on! The report highlights the differences in household expenditure between different consumer segments but as the chart shows, Developed and retiring early consumers have more uses for their money than merely healthcare. Each area of consumption needs to reconsider how it will meet the changing needs of its ageing customers.
- Age is just one determinant of spending
McKinsey has avoided the usual simplistic stereotypes and proposed four key factors behind consumption choices per the chart below with Age and Income being two key drivers but far from the only determinants.In a world that’s ageing more dramatically than anytime in history, and with older consumers holding the purchasing power evidenced in this report, it makes good sense to ensure that adults of all ages, Gen A~Z, can access your brand.