A recent report by global management consultants McKinsey has identified the consumer groups they predict will generate three quarters of global urban growth over the next 14 years.
Nine groups were defined, but just three are expected to account for half of that growth. The 60+ market in developed countries was identified as one of the three groups of ‘consumers to watch’. This group is expected to grow by more than a third by 2030, from 164 million in 2015 to 222 million in 2030. McKinsey claims that the group will generate 51% of urban consumption growth in developed countries and 19% of global urban consumption growth in this period.
As well as growing in numbers, this group is also spending more per person than other demographic groups. Today’s per capita consumption of 60+ consumers is $39,000 a year compared to the 30-44 year old consumers consumption of $29,500 a year.
This group of 60+ consumers is different to this age group of previous generations. They are more educated, more ethnically diverse, more urban and more tech-savvy. Whilst some will be worried about their finances in retirement through lack of savings, many others will retire with significant disposable income and the ability to indulge in the purchase of luxury goods.
The report states that consumers in this age bracket are spending on health care, cars and leisure. Time spent on leisure and sports in the US is expected to increase by 210 million hours by 2030, and the 65+ market will account for 93% of these hours.
This category is expected to contribute 40% of the US consumption growth in categories such as personal care, housing, transport, entertainment and food and alcoholic beverages between 2015 and 2030. With this in mind, McKinsey suggest that companies who have not traditionally tailored their products or services to the retiring or older consumers in the past should consider whether this is a strategy they should start to employ.
Travel and entertainment are two stand-out sectors for consumption by this age-group. In 2009, US grandparents spent over $77 billion on travel, $100 billion on entertainment and over $97 billion on restaurants. And the products and services they consume are not mundane. Significant segments of this market say they want “more professional, premium, or sassier versions” of goods and services.
The baby boomer market is poised to defy stereotypes with their use of technology, active lifestyles and travel, willingness to spend and the savings to support this. With the monumental growth expected in the population size of this age-category and the per capita growth expectations, McKinsey states this is “a group of consumers that few consumer-facing companies can afford to ignore.”
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Source: Urban World: The Global Consumers to Watch. April 2016. McKinsey Global Institute.
