The impact of population aging on consumption is often overlooked. Yet it is real and can already explain some activity declines.
By Frédéric SERRIERE
These phenomena are currently hidden in large part by the economic crisis, explanation often “partial” to reductions or variations of activities. Now this is a profound consumption’s restructuring that we are seeing with the population aging and therefore consumers. Here are 13 important impacts of demographic aging:
A greater number of generations. We go from from 4 or 5 to 6 generations alive at the same time. This phenomenon strongly impacts many sectors with evolving and more complex and varied situations: intergenerational recreation, child / elderly parents … The relations between generations and intergenerational financial transfers also causes profound changes.
A change in consumption patterns. As we age, needs, desires, reports consumer change. For example, a 55 year old couple with a frail elderly relative will have different behaviour than a couple whose parents are in good health. The stages of life have an impact on consumption are many: buying a home, family, birth of children, departure of children, periods of unemployment, retirement, divorce, health problems …
Stagnation (or even decline) of overall consumption. The different European and American studies show a stagnation in consumption and a drop in overall consumption in aging countries over the next 25 years without any change in immigration or the birth rate. In France, the INSEE paper on age and generation effects, indicating a stabilization of total consumption, however, sectors are rising and others falling. In countries with an accelerated aging, such as Germany, consumption could fall by 2.5 to 3% by 2025 due to the only demographic factor.
Sectors increase: health, leisure, home expenses, services … As we age, the consumption is changing. Some expenses are rising such as health and house expenditures with people who are usually at home. Thus, electricity consumption is expected to grow 1.3% in 2025 solely on the basis of the factor of aging. Other factors to consider such as generational factors. A generation can over-consum a product. This is the case of boomers (50/65 years) who make some sector grown the consumer electronics, tourism and wellness.
Sectors falling: equipment, transportation, clothing, food … In contrast, some sectors are declining: equipment goods, transportation, clothing, or the main power supply. But these strong trends are currently hidden by the economic crisis. For example, in 2006-2007, in Japan, the “oldest” country, the automotive market lowered to 4% per year, due to the aging population.
An increase in refresh cycles. Some studies show significant changes among boomers: they buy better quality products that have a longer lifespan. Thus, the renewal cycles increase. Because of this phenomenon, the automobile market is expected to decrease by 12.5% ??by 2025 and appliance sector 8.6% without any factor related to the economic crisis.
Higher savings. The French savings rate rose in 2011 to 16.8%, its highest level since 1983, particularly due to the economic crisis. In addition, concerns about the future tend to encourage savings. Now these fears increase with age. Thus, the savings rate in Europe is expected to grow 1.2% in 2025 pushed by Seniors in anticipation of inheritance and potential health problems.
The decline in work-related expenses. Spending supplies, clothing, transport work-related are down in an aging population with more and more people retired and a number of assets which are reduced. The employment rate fell sharply from 56% in 1975 to 51% today. With the retirement of the largest generation, productivity gains and other factors, the employment rate is expected to decline in Europe. With a scheduled decrease in the number of assets, certain types of consumption will decrease.
Towards a takeover of boomers. The generation of “baby boom” was the business center of interest since the 1950s until the mid 1980s after an oversight that lasted 15 years, Boomers again become very important customers: some 15 million, have a higher purchasing power than the average of 30-40% and reach retirement with more recreation time.
However, this generation is the one that has practiced longer the consumer society. Recent studies indicate that they are reaching the end of a cycle: more and more boomers are becoming aware of the “futility” of some of their purchases. In other words, they begin to abandon purchases related exclusively to an “immediate compulsive pleasure.” Between 2008 and 2010, according to a study by Focalyst, impulse purchases fell by 41% in the US in this generation.
The increase in free time. Demographic aging results in a growing number of retirees and so the number of people with free time. According to INSEE, the number of 65 and over will increase from 10.1 million in 2012 to over 13 million in 2020 and 16 million in 2030. This is a unique opportunity. Note, however, that the retirement age differs in European countries and declining in most countries.
Towards heterogeneity of needs. Studies in sociology show when aging, a person makes decisions, uses, and is more than its own needs and what is important to her and less with respect to a mode. Thus, the individualization of requests increases and generates a necessary stronger heterogeneity. This phenomenon is further amplified by a generational factor of 50/65 years who are tied to the value of freedom of choice and individualism.
Towards increasing of the cost to acquire a customer. The heterogeneity of demands and the need to offer more individualized offerings through a larger number of distribution channels significantly increase the customer acquisition costs in many sectors. The figure of 30/35% is often cited by tourism stakeholders in relation to older Seniors.
Towards sustainability values ??of authenticity, respect for the environment. The maturity of generations and generational factors of 50-65 redistribute important values. Although the economic crisis tends to moderate this phenomenon, we are seeing a rise in values ??of sustainability, authenticity and respect for the environment.
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