The document discusses a roundtable event focused on market segmentation and expenditure patterns among older consumers in the UK, using data from the Living Costs and Food Survey. It identifies six distinct consumer segments based on various spending habits, revealing how different demographic factors influence expenditure on essentials and non-essentials. Key findings indicate that while average expenditure decreases with age, diverse factors such as income and living conditions significantly affect consumer behavior.

1. Should we forget about ‘the older
consumer’? An expert roundtable
on market segmentation
22nd October 2013
This event is kindly supported by PFRC

2. Welcome
David Metz
Visiting Professor
Centre for Transport Studies, University College London
This event is kindly supported by PFRC

3. David Sinclair
Assistant Director of Policy and Communications
ILC-UK
This event is kindly supported by PFRC

4. Laurence Miklichansky-Maddocks
Director of Brand and Business Insights for Europe
Brown-Forman Beverages
This event is kindly supported by PFRC

5. Spending by older people
David Hayes
Research Associate
PFRC
This event is kindly supported by PFRC

6. Exploring patterns of expenditure:
Segmenting the older UK consumer using
the Living Costs and Food Survey
David Hayes and Sharon Collard
Brown-Forman 22 October 2013
www.pfrc.bris.ac.uk/esrc
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7. Our Approach
• Using the Living Costs and Food (LCF) Survey, we:
1. Describe average household expenditure by age
(using descriptive analysis);
2. Segment older households based on their patterns
of expenditure (using cluster analysis);
3. Explore cluster membership (using descriptive and
CHAID analysis).
www.pfrc.bris.ac.uk/esrc
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8. Standard LCF expenditure categories
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Alcohol & tobacco
Clothing & footwear
Communication
Education
Food & non-alc. drinks
Health
Household goods &
services
www.pfrc.bris.ac.uk/esrc
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Housing, fuel & power
Recreation & culture
Restaurants & hotels
Transport
Miscellaneous goods &
services

9. Data Considerations
• Good sample of household heads aged 50+
• To cover transition into and beyond retirement
• Total sample size of 2,769
• Good distribution of age groups (even 80+ ~ 12%)
• Equivalised expenditure
• To take account of household size
www.pfrc.bris.ac.uk/esrc
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10. Absolute and equivalised expenditure by age
600
Pounds per week (£)
500
510
400
300
Absolute
286
189
200
160
100
0
50 but under 55
yrs
55 but under 60
yrs
www.pfrc.bris.ac.uk/esrc
60 but under 65
yrs
65 but under 70
yrs
10
70 but under 75
yrs
75 but under 80
yrs
80 and above
Equivalised

11. Proportion of total expenditure by age
↑ Food & non-alc. drink increases: 12% to 19%
↑ Housing, fuel & power doubles: 12% to 24%
↔ Communication constant:
3%
↓ Clothing & footwear halves:
6% to 3%
↓ Transport decreases:
18% to 7%
↓ Recreation drops:
16% to 11%
www.pfrc.bris.ac.uk/esrc
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12. The segmentation (clustering) process
• Exploring how types of expenditure co-vary
• Identifies dominant patterns
• Classifies people into segments based on these
• Clustered on the 12 expenditure categories
• ...the optimal solution contained six clusters
www.pfrc.bris.ac.uk/esrc
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13. Drivers of cluster membership
• Highly statistically significant variations in
expenditure for all 12 categories
• Three categories were particularly strong
• Alcohol and tobacco
• Clothing and footwear
• Housing, fuel and power
www.pfrc.bris.ac.uk/esrc
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14. The clusters
Percentage in cluster (%)
Mean weekly expenditure
‘Conservative consumers’
46
138
‘Foodies’
19
228
‘Burdened by bills’
11
231
‘Smokers’
9
245
‘Recreation and clothing’
4
392
‘Socialites’
12
405
The average equivalised expenditure across the sample is £217.
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15. Spend far below average
on non-essentials (such
as recreation and hotels)
Conservative Consumers
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Spent £138 on average
Transport (£18) much lower than average (£32)
Only 47% connected to the internet
More likely to be the oldest old (22% cf. 15%)
38% in the lowest income quartile; 60% retired
56% gave benefits as main source of income
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16. Very high expenditure
on food (£58 compared
to the average of £34)
Foodies
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Spent £228 on average
Close to average expenditure in most categories
A half (54%) live in two-adult households
Very few households are renting (12%, cf.25%)
Only 18% in lowest income quartile
Larger houses (58% cf. 50% with 6+ rooms)
www.pfrc.bris.ac.uk/esrc
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17. Very high proportion of
expenditure on housing
costs (£4 in every
£10, twice the average)
Burdened by Bills
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Spent £231 on average
All other expenditure is relatively low
Low transport costs (lowest petrol expenditure)
70% in rented accommodation (cf. 24%)
• Including 45% from a social landlord
• More single households
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18. Spent £28 a week on
tobacco products
Smokers
• Spent £245 on average
• Very high spend on alcohol and tobacco (£36 per
week/15% of total expenditure, cf. 3%)
• One of the ‘younger’ clusters (62% under 65)
• Almost a third still in full-time employment
• Home-ownership is relatively low (42% cf. 54%)
www.pfrc.bris.ac.uk/esrc
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19. Recreation and Clothing
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At £65 each week, these
fashionistas spend more
on clothing than all the
other groups combined!
One of the two high-spending clusters (£392)
High spend on recreation (£65) & transport (£53)
Only 21 per cent of this cluster are 70 and above
Two-thirds in larger houses (6+ rooms)
20% say benefits main income (cf. 10% socialites)
Half of the cluster in the highest income quartile
www.pfrc.bris.ac.uk/esrc
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20. Enjoy the finer things in
life, spending £131 per
week on eating
out, holidays and
recreation
The Socialites
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One of the two high-spending clusters (£405)
Spent £96 on transport costs (24% cf.15%)
Three quarters under 65; 41% working full time
Income – 57% earnings; 33% investments
More than half in highest income quartile
90% of households connected to the internet
www.pfrc.bris.ac.uk/esrc
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21. Important socio-demographic characteristics
• Tenure: 97% of Socialites were homeowners
• Compared with 29% of Burdened by Bills
• Age: 40% of Smokers aged under 60
• Compared with just 26% of Conservative Consumers
• Income: 7% of R&C in lowest income quartile
• Compared with 39% of Burdened by Bills
www.pfrc.bris.ac.uk/esrc
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22. What does this research tell us?
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Equivalised expenditure decreases with age...
...but other factors important
No such thing as the ‘older consumer?’
Depends on preferences, resources, mobility
However - Smokers are young (stop/morbidity)
Housing costs key in wellbeing (+/- constraints)
www.pfrc.bris.ac.uk/esrc
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23. But, we only know so much...
• Conservative Consumers are a diverse group
• And need unpacking further to understand why they
spend comparatively little
• Hostels, boarding houses, and institutions such
as rest/care and nursing homes are excluded
• The true effect of ageing vs. generational effects
remains unclear – further analysis needed
www.pfrc.bris.ac.uk/esrc
23

24. Exploring patterns of expenditure:
Segmenting the older UK consumer using
the Living Costs and Food Survey
David Hayes and Sharon Collard
Brown-Forman 22 October 2013
www.pfrc.bris.ac.uk/esrc
24

25. Response
Dick Stroud
Managing Director
20plus30
This event is kindly supported by PFRC

26. Debate and Q&A
This event is kindly supported by PFRC

27. Should we forget about ‘the older
consumer’? An expert roundtable
on market segmentation
22nd October 2013
This event is kindly supported by PFRC