No, it’s actually Baby Boomers. Surprised? The Baby Boomer generation tends to be overlooked, but they are an important consumer segment.
This population — born between 1946 and 1964 — are 74 million strong and have more disposable income than any other generation. They are more likely to be in the upper-income group. According to Pew Research, 27 percent of boomers are in the upper income group, which is the highest figure of all generations. Principal economist at Kantar Retail, Doug Hermanson, notes:
“Upper-income Boomers can sustain their pre-recession spending and be a strong driver of the consumer economy over the next five to 10 years. They have the money to spend. It’s a different mindset of saving before and now saying, ‘I’ve got to spend it while I’m here.’”
Let’s dig into these mass affluent Baby Boomers. These are defined as those who have $100,000-$250,000 in household income and over $250,000 in savings. They are an optimistic bunch, with 77 percent saying their goal is to have an interesting life.
Over 80 percent say they live a healthy lifestyle, and they are much more likely to give to charities. Pew Research reports that Boomers are living longer, with an average life expectancy of 80 years old, up from 68 in 1950. Many are now entering their retirement years. While about half of all adults say they feel younger than their actual age, 61 percent of Boomers are feeling more spry than their age would imply.
So what drives spending for this important segment? Quality is important to the mass affluent Boomer, with nine out of 10 saying they are more likely to value quality over brand name. They also like to shop within brands they feel an emotional connection with. And over 70 percent of Boomers across all income levels say the fact that they “like” a retailer is a driver of retail selection.
So, now that we have seen how they like to spend money, let’s take a look at what this generation plans to spend money on. About a quarter of Baby Boomers in the mass affluent category say they will spend more money in general in the coming year. Baby Boomers at the higher income level are more likely to prefer experiences over things: 73 percent of them say they prefer to spend money on experiences, vs. 69 percent of Millennials. Their spend categories emphasize travel, home improvement and charities.
Additionally, Synchrony Financial consumer surveys reveal the following:
- The highest category of future spend will be travel. About 40 percent of mass affluent Boomers plan to spend more on travel next year. AARP estimates Baby Boomers spend more than $120 billion annually on leisure travel.
- The second highest spend category is home improvement, with 32 percent of Boomers spending more on home improvement in the coming year, and 22 percent spending more on home furnishings.
- Boomers are much more likely to say that they give to charitable causes, with 79 percent saying they plan in increase their charitable giving.
The Digital Divide: Boomers and Technology
Let’s take a look at the most talked-about difference between Baby Boomers and younger generations — digital technology. The reality is that the Baby Boomer population is on-par with younger generations when it comes to smartphone ownership, online shopping and social media access. Three out of four Baby Boomers own a smartphone, up 19 percent from a year ago. The generational divide exists in the usage of digital devices. Synchrony Financial’s research studies show that Boomers are much less likely than Millennials to use their smartphone for a multitude of tasks — from shopping to texting to social media postings.
But contrary to what some may think, Boomers have a great deal of access and interaction with social media. Ninety-two percent of Boomers say they have access to a social media channel — mainly Facebook (82 percent of Boomers have access to Facebook, up from 76 percent only a year ago). But they not influenced by social media for purchases. Only one third say they purchased a product after seeing it on social media, which is a significantly lower figure than that of younger generations: For Millennials, that number tops 70 percent.
How well does your business cater to this large and important segment of the population? Generalizations are difficult for any population of this size, but in general, Boomers are optimistic, secure and not done spending. Brands who provide a great shopping experience, high quality and seamless digital technology will go far in attracting this important segment.
Sources: All data is sourced from the following three studies, unless otherwise noted: Synchrony Financial 2016 Loyalty Study, Synchrony Financial 2016 Affluent Survey and Synchrony Financial 2016 Digital Study. All references to consumers and population refer to the survey respondents.
Note: The views expressed in this blog are those of the blogger and not necessarily of Synchrony Financial.