When Gray Is Golden: Business in an Aging America

By Doka, Kenneth J. | The Futurist, July-August 1992 | Go to article overview

When Gray Is Golden: Business in an Aging America


Doka, Kenneth J., The Futurist


In the late 1950s, an entrepreneur named Perry Mendel recognized that the baby boom was producing an abundance of preschool children. He also realized that many women, including the mothers of these children, were interested in returning to work. Seeing an unmet and growing need for quality child care, Mendel founded Kinder-Care Learning Centers. Three decades later, the company grossed over $1.25 billion during 1990 alone.

Kinder-Care's success in capitalizing on a major demographic shift is a valuable lesson, and many businesses today are beginning to view the next major shift - the aging of America - with great interest. Older Americans will want and need different services and products than younger people. The businesses that can effectively meet those needs may realize profits that will make Kinder-Care's success seem like child's play.

A simple analogy illustrates the changing business climate. Imagine a community where most of the residents comprise young parents and their children. The stores and services that this community might offer include toy stores, recreational activities, day care, and day camps. Now imagine that this community has suddenly aged: A high proportion of its residents are over 65, but the mix of stores and services remains pretty much the same. The first stores that catered to the town's new older adults might gain a substantial number of loyal customers.

Almost 12% of the U.S. population is now 65 or older. By 2025, when most baby boomers will have reached retirement age, older Americans will outnumber teenagers by a 2-to-1 ratio.

If one adds to this population those "near old" - that is, 50- to 64- year-olds - the size of the mature market becomes truly astounding. Americans over 50 have combined incomes of more than $800 billion. They hold 51% of all discretionary income in the United States, accounting for 40% of consumer demand. They own almost half of the luxury cars in the country, over a third of the spa and health-club memberships, and over three-quarters of the dollars in savings. Mark Zitter of Age Wave, Inc., a firm that advises business and government on the implications of an aging society, has called this new awareness of the spending power of mature Americans "the demographic discovery of the decade."

Yet, this vast market cannot be taken for granted; older people will not purchase goods or services that they don't want. Businesses are beginning to recognize the complex nature of this market, the barriers they will face, and ways they can be more sensitive to the needs of older consumers.

The Great Gray Marketplace

Businesses are learning that there is no one great gray marketplace, but rather a number of different markets. Mature consumers are highly heterogeneous, differing by family and marital status, ethnicity, geography, education, and social class. In fact, older Americans probably have less in common with each other than do younger people, since a higher proportion of seniors where born abroad. They also lack of unifying culture that television provided for later generations.

Another variable is age itself. For example, the "young-old" are far more likely to be interested in travel and leisure services than are the "old-old."

George Mochis, director of Georgia State University's Center for Mature Consumer Studies, believes that two criteria are essential for understanding older consumers: health, and what he describes as extroversion-introversion, meaning that some seniors are private and home centered while others are more interested in socializing and traveling. From these two variables, Mochis divides older Americans into four categories.

A range of businesses can expect to gain from an aging population, says Jeff Ostroff, a vice president of Data Group, Inc. These businesses include:

1. Home products. Since many older consumer's lives are centered in their homes, products that offer luxury, convenience, or security may find a ready market. …

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