Multi-Gen_Shopper_White_Paper
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  • 1. The Multi-Generational Shopper Are retailers ignoring the biggest spenders of all? ©2004 Nova Marketing, Inc.
  • 2. Introduction Welcome to a unique time in the history of retail. A time when one single customer segment enjoys unprecedented purchasing power – not only for itself, but for three other distinct segments. A unique and historic dynamic has emerged that enables retailers to actually reach four different customer segments all through one powerful new consumer: the new "Multi-Generational Shopper." The Multi-Generational Shopper has substantial disposable income, buys for themselves along with three other segments and, for the time being, is underserved and undermarketed to by retailers. In short, retailers are ignoring the biggest spenders of them all. Retailers are doing very little to take advantage of this unique opportunity. But this could be great news for you – and a chance to get in early on perhaps the largest sales opportunity ever. The implications for retailers who can successfully leverage this dynamic are huge in terms of increased near-term sales and longer-term market share dominance.Meet the New Multi-Generational Shopper The Multi-Generational Shopper overlaps with the Baby Boomer segment. Whereas Boomers are recognized as 38–56-year-olds, the Multi-Generational Shopper typically falls in the 45–64-year-old category. The Multi-Generational Shopper typically is distinguished by the following characteristics: • They have one or more elderly parents • They have children in their 30’s • They have an average of five grandchildren And they spend money on goods and services for each one of these segments. That’s four generations, including themselves, all needing to be fed, housed, clothed, medicated, entertained and provided for. Today, the Multi-Generational Shopper is footing a larger piece of the bill for everyone. 2
  • 3. This is a powerful population marketers must address. Yet historically, marketers haven’t done a particularly effective job reaching this segment. Very few marketers seem to have the Multi-Generational Shopper on their strategic radar – unaware of the enormous influence they have over the entire family’s buying behaviors. This opportunity is largely untapped. Retailers simply don’t target these people – unless the retailer is selling denture crème or some other product designed specifically for the mature market. Retailers and their agencies continue to adhere to the idea that all signs of economic life end at about age 50. That’s how they tailor their marketing messages. That’s how they buy media. It’s true that the healthcare companies do a good job targeting those 50-60 years old, but only as buyers making decisions for themselves. Retailers, particularly today’s drug stores and department stores with multi-generational merchandise, are missing a huge sales opportunity by failing to acknowledge the multi-generational shopper in promotions and marketing. As a forward-thinking retailer, you need to act now, before your competition, so you can take advantage of this emerging and huge sales opportunity today, and own substantial market share for years to come.Enormous Buying Power Have you ever thought about how much buying influence and power this 50-something-year old shopper has over other consumer segments? On any given day, they might buy baby furniture for a grandchild, a digital camera for an adult child, a first computer for their elderly parents, and pick out a new car for themselves. Multi-Generational Shoppers just might be the biggest spenders of all, yet most retailers haven’t been paying attention. They have the money to buy what’s being sold today, and they’re spending it on all generations within their family. Yet, retailers continue to target the coveted 18-to-34-year-old and 25-to-49-year-old age groups. If that’s you…you’re missing out. 3
  • 4. Consider the following statistics: • The total buying power within the mature market will increase from about $1.6 trillion in 2002 to 2.1 trillion in 2007. (Packaged Facts) • The buying power of those aged 55-to-64 will grow faster than any other age group, and will reach $1.3 trillion by 2007. (Packaged Facts) • In 2002, those aged 55-to-64 were responsible for 55.1% of all buying within the mature market. The buying power of this segment will grow faster than any other age group and will reach $1.3 trillion by 2007. (Packaged Facts) • There are 45.6 million grandparents aged 55+, who spent a total of $22.8 billion on their grandchildren in 2002. This is predicted to climb 30.9% to $29.8 billion in 2007. (Packaged Facts: 2003) • 37% of Baby Boomers in the near future will be responsible financially for parents or children during retirement. (Allstate Financial)This one shopper can generate four separate revenue streams foryour business. For every one Multi-Generational Shopper to whichyou market, you’re actually promoting your products to four differentsegments.Yet, their formidable spending power, this segment remains largelyunderserved. And, this new generation of Multi-Generational Shoppersis not only among the wealthiest segment of society, but they also tendto be proud of their generosity.Take a look at the credit card statement of today’s typical 50+ year-oldshopper and you’ll be stunned by the variety of purchases. A crib; anew pitching wedge; an orthopedic chair; a DVD player. One personbought all these different things? Went to all these different stores?Says Alice, a 60-year-old grandmother, "My mother is in a nursinghome. I control all her finances – do all her shopping. I buy herclothing, medicine, candy – everything, you name it. And with threegrown kids, I can’t even begin to tell you how much I spend on myeight grandchildren." 4
  • 5. Items Purchased For Grandchildren During The Past 12 Months 1999 2002 Clothing 74% 87% Books 60% 80% Fun food/snack food/ fast food N/A 78% Educational toys (not for computer) 29% N/A Any other toys 38% 76% Magazines 23% 32% Music, CDs, tapes N/A 48% Videos, DVDs N/A 45% Jewelry N/A 37% Video games N/A 31% Computer software 18% 28% Other electronic devices (radios, CD players) N/A 28% Source: AARPA Growing Market The fact that the 45–to 64-year-old segment is spending money on themselves and on others within their extended families is just part of the story. Their real value hits home when you look at how this already large segment is growing. • From the years 2000 to 2010, the 50+ population will increase by 37%. That’s three and a half times the growth rate of the general population. (Selling To Seniors – 3/03) • Each year, five million Americans turn 50 and another 5 million turn 55. (Selling To Seniors – 3/03) According to the AARP, A record number 70 million Americans – about one-third of all adults – are grandparents. Overall, grandparents today are a $35 billion market, and this is only expected to grow as the population ages. Today, the average age of a first-time grandparent is 47. And with today’s life expectancy of 76, this generation of elders may have as much as 30 years of grandparenting ahead of them. Yet retailers are paying little attention, allocating few marketing dollars to them. 5
  • 6. Financially, their children’s educations are paid off. Chances are the house is, too and their nest egg is coming along nicely. Many are pre-retirement and still draw a paycheck. In other words, they have money to spend.More Households Are Multi-Generational A growing number of households are also multi-generational. According to the U.S. Census Bureau, as of 2000, there were 3.9 million multi-generational households in the US. Some 65% of those households consist of grandparents, their child or children, and grandchildren. And these grandparents are more likely to have parents who are still alive, so there are four generations with which to contend.What To Do About It Retailers are at a strategic fork in the road – and most are doing very little about it. This is not only the emergence of a new buying segment, but a market with more buying power and more buying influence, than any in history. Those who have recognized the opportunity presented by this phenomenon known as the Multi-Generational Shopper are getting in early on perhaps the largest sales opportunity in years. Retailers who don’t act now will miss out. Now is the best time to get a large piece of this segment while it’s still early. Most likely, your competition is over-marketing to younger consumers, even though there are less to go around and they don’t really have the wealth and discretionary income as the older consumers. If you are first to target this segment, you are more likely to get the rewards.Basic StrategiesDirection To Your Agencies Direct your agencies to target the Multi-Generational Shopper. Consumers in the 45–64-year-old age group have the money to spend, they spend it on four consumer segments, and this category is just going to grow larger in the coming years.Expand Your Media Segment or splinter off some of your media buys to media with older demographics. For example, if you’re a retailer of kids clothing, consider not only the media that caters to the baby’s parents, but also media that caters to their grandparents. Not only do they help their children pay for their grandchildren’s clothing, they’ll often advise them where to buy it. Include all media – radio, television and print. 6
  • 7. Target Your Creative Acknowledge the multi-generational influence in ads. For example, retailers in the home decor category could show a mother helping her adult daughter select a new kitchen appliance. Show the baby boomer as part of the shopping experience along with other family members. Acknowledge how active these shoppers are in the lives of the other generations.Define The Message Learn how to develop messages for the Multi-Generational Shopper, or find an agency that does. These shoppers don’t respond to the same messages you send to teenagers or young adults. Simply put – don’t just sell denture crème to grandparents. The Multi-Generational Shopper exerts great power in the marketplace because of their relationships with others combined with their healthy wallets. This constitutes a new market for your business to tap, and this a unique approach you need to look at to expand your market and increase your sales. Once retailers accept the Multi-Generational Shopper for the enormous buying influence he or she has, the marketing mix can begin to reflect it. Only then will cash registers begin to ring out with the sound of a single person spending for four generations.We Invite You To Learn More To gain a full appreciation for what fresh and innovative strategic thinking can do for your company, Nova Marketing invites you to visit our Web site: www.novainc.com. Or simply call 617.770.0304 and ask for: Greg Jones, extension #136 Email: gjones@novainc.com Larry Green, extension #121 Email: lgreen@novainc.com About Nova Marketing Nova Marketing is a retail focused, international marketing and advertising firm that partners with retail companies to provide a straight forward approach to increase market share, capitalize on customer life-time-value, and improve overall promotional sales performance. 7
  • 8. Founded in 1992, Nova Marketing is internationally recognized for theiremphasis on creating brand identity, building consumer awareness,increasing promotional effectiveness, gaining market share and boostingR.O.I. Nova Marketing offers expertise in all aspects of retail marketing andadvertising, multi-channel initiatives and store design. 8