The Great Recession may have sent boomers for a loop, but smart retailers will realize this group is still a powerful purchasing force. Sure, Millennials — those children of the Baby Boomers born between the early ’80s and 2000 — are 70 million strong in the U.S. alone. But Boomers are in a more favorable spending position.
WSL Strategic Retail’s Wendy Leibmann, CEO, says Boomers are suddenly looking like a good generation to target again.
“Unlike two years ago, when they were reeling from shrinking retirement funds and savings, they now have as much income as Generation X and fewer people to support,” she explains. “They made cuts in category spending then so they have to make fewer cuts now. They shop almost as many stores as younger shoppers, including the Internet. As companies look for sales growth, they need to again consider the Boomers, who will be spending more on themselves in many categories.”
On average, Millennial shoppers spend significantly more on clothes each month than Boomers ($56 versus $49), according to the Cotton Incorporated Lifestyle Monitor™ Survey. Monthly apparel spending declined significantly among both groups, but Millennial spending declined 35% over the past five years ($86 to $56) while Boomer spending only declined 30% ($70 to $49).
Additionally, while Boomers became significantly more likely to plan their apparel purchases over the past five years (60% to 73%), planning among Millennial shoppers has increased even more so (48% to 68%).
Despite the data, indications are retailers are moving away from marketing to Boomers, and instead favoring the younger Millennial group.
Leibmann says this strategy may be misguided.
“The financial struggle of Millennials does not look like it will get better any sooner. Few entry-level jobs, college debt and the costs of starting a family will limit their spending for anything beyond the essentials. This will challenge the brands and retailers who have courted the youth market, often at the expense of anyone over 35.”
A recent survey by the Pew Research Center shows half of young adults between ages 18 and 34 have taken jobs they don’t want in order to pay their bills, and almost a third (31%) have delayed marriage or parenthood because of the economy.
Meanwhile, Pew finds 31% of today’s parents say kids should not have to be on their own financially until age 25 or later, compared to 1993, when 80% said children should be on their own by age 22.
"This [Boomer] consumer wants brands that look young, but accommodate an aging body. It's a conundrum. "
The Business of Aging
The tight economy and this changed outlook have led to more cautious spending among both generations.
Lori Bitter, president and senior strategist at The Business of Aging consultancy, San Francisco, says besides looking out for their children’s needs, Boomers may not be spending on clothes simply because their apparel needs are not being met.
“Boomers are the largest market of entrepreneurs and consultants and they’re working in more flexible, casual environments,” Bitter says. “They aren’t looking for suits or resort wear. They want great-looking, casual wardrobes that allow them to express who they have become, not who they were. But if you shop the offering, it’s just not there.”
Bitter says some brands try to appeal to the older end of the Boomer market, but women who are 50 but may look and feel younger will not shop those clothes.
“This consumer wants brands that look young, but accommodate an aging body. It’s a conundrum. When retailers ask where the Boomers are, they should be asking where the designers are who can meet their needs.”
McKinsey & Company’s Nora Aufreiter, senior partner, Toronto, says retailers should also target boomers for online shopping.
“Our analysis shows current Boomers are savvy online shoppers: 80% are online; two-thirds use the Internet for shopping; and two-thirds also research products and services.”
Meanwhile, Aufreiter says, retailers are catering to Millennials via discounted high fashion, frenzied buying, affordable luxury, personalization and user-designed content. If any stores are targeting Boomers, she says, it is not for apparel, but more for pharmacy initiatives and wellness concepts.
This may be due in part to the fact that Boomers are not a segment known for their fashion-forward wardrobes; Y shoppers are significantly more likely than Boomers to say they “stay on the cutting of fashion” or adopt style changes quickly (47% versus 21%), according to the Monitor.
But over the last five years, the Monitor survey finds both Millennial shoppers (48% to 54%) and Boomers (41% to 57%) have become significantly more willing to sacrifice apparel quality to get a good price. Additionally, apparel shopping at mass merchants has increased significantly for both Boomers (20% to 27%) and Millennial shoppers (13% to 22%), the Monitor shows, while shopping at department stores has dropped significantly, from 26% to 13% among Boomers and from 24% to 12% among Millennials.
“But here’s the rub,” Leibmann points out, “most retailers and brands still see Millennials as much ‘sexier,’ trendier and appealing. As such, they continue to focus their attention on them, in spite of the opportunities and income that exist in the Boomer market. It’s silly to pass up this opportunity.”