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Silver wave could swamp bottom line
Businesses may be forced to rethink the discounts they offer seniors and the way they market goods and services to the 65-plus crowd as the so-called Silver Tsunami sweeps across Canada in coming years.
There may be severe financial implications for companies slicing 10 or 20 per cent off prices, says a marketing expert, as the number of seniors is expected to reach 10.4 million by 2036, more than double the 4.8 million in 2010.
"It's likely that we will anticipate seeing that some companies will not be able to sustain the same level of subsidies," said Ingrid Kajzer-Mitchell, an associate professor in marketing at Royal Roads University.
They may have to rethink how they distribute senior offerings, depending on the type of business, she said.
Industry Canada says the baby-boom generation is the most influential demographic force shaping Canada's marketplace.
"In society in general we are trying to understand what does this really mean and what is society going to look like. We are seeing that people aren't retiring at the same rate that they would normally do. They are looking for opportunities beyond that 65-plus," Kajzer-Mitchell said.
Many seniors feel younger, have money to spend and are consuming different brands.
Some companies are already tapping into specialized seniors markets, but many still rely on old assumptions and myths, Kajzer-Mitchell said. "We are not really catching on to that as fast as this customer group is expanding."
Seniors can't be lumped into one consumer group and treated the same just because they fall into an age bracket, she said. Companies should be careful not to label this consumer group with preconceived assumptions. Today's seniors are smarter and healthier than many companies think they are, Kajzer-Mitchell said. "I think it could be dangerous for a company to assume this is a safe and easy customer."
A myth exists that a senior will stay with the same brand because that's what they were used to for the last 20 years. "We are not seeing that any more," she said. "Contrary to this popular belief, they are starting to be just as keen as younger consumers to try a different brand.
"You can't see this consumer group as a convenient sort of add-on. Strategically you need to design products and services that meet the needs of this demographic in a truthful and honest way."
Consumers are generally responsive to businesses who understand what customers really want, she said. "The same applies for the senior segment. You really have to make an effort to understand this customer group.
"We are seeing some interesting, bigger companies that are starting to exploit this market as a potential customer base."
For example, seniors are shown exercising to programs on the Wii game.
And the Apple iPad sparked a "huge senior market that was interested in buying the product because it was easy to use," said Kajzer-Mitchell.
Businesses wanting to sell to this market need to understand aging in today's society, Kajzer-Mitchell said. More seniors being engaged in and using social media, giving them more opportunities to gather information and evaluate alternatives.
Within the 65-plus segment, there are sub-groups who are different depending on lifestyle needs and attitudes and beliefs.
Also, remember that within this group, there are "customers who do not consider themselves as seniors," said Kajzer-Mitchell.
"There is research that suggests that many 65-plus feel younger than their actual age and they are setting out to challenge our assumption of what life at this stage means."
Some seniors might be turned off by such a label. That could create a barrier to a company wanting to form a relationship with a consumer.
By the numbers
- Seniors are the fastest-growing age group, a trend expected to continue for several decades
- The net worth of families age 65 and older was $303,167 in 2005, up from $238,060 in 1999
- From 1996 to 2006, average after-tax income of married senior couples rose 18 per cent to $48,300 from $40,900
- The proportion of seniors with low income (after taxes) dropped to five per cent in 2006, from 10 per cent in 1996.
- More seniors are working after retirement. In 2007, 366,400 Canadians over 65 were in the labour force (working or ready to work)
- The percentage of seniors in B.C. is predicted to reach 23.8 per cent by 2036, up from 15 per cent in 2010.
- In Greater Victoria in 2010, there were 64,104 seniors in a total population of 372,339, representing 17.2 per cent of the total. By 2020, it's predicted seniors will make up 23.1 per cent of the population.