Consumer Packaged Goods for the “Silver Economy”
If you frequently read my blog, you know that traveling, reading and observing people often leads to new articles and views. This blog entry was influenced by a recent article, from FTWeekend, that I had the pleasure to read on my way to the San Francisco Bay Area.
When I subscribed to a VIP shopping club, in order to get special sales offers, the outlet store asked me for my household income. They also asked which age group I belong to. At that point, I realized that I had, again, entered into a new buyer age group. This fact inspired me to write this blog.
According to the Financial Times, aging populations in many countries are driving economic growth by creating markets for new products and services. This phenomenon is often referred to as the “Silver Economy.”
To achieve Commerce Relevancy, you must make your products relevant to the “Silver Economy” group.
Baby-Boomers Power new age of Spending
By 2020, the silver economy’s spending power will reach 15tn USD, writes FT. In the USA, AT Kearney says that in 2013, consumers aged 55+ contributed to 30% of US clothing sales. In 2013 as well, In the UK, those figures for consumers 65+, accounted for 15% of the fashion and footwear market. Boston Consulting Group says: “We are still waiting for fundamentally new products to meet the desire of this older group”.
Two Main Challenges
CPG companies and analysts see two main challenges when addressing the golden generation.
- Packaging: Will packaging need to change? If so, how? What risks are related to changing the packaging? Everyone agrees, testing will be essential in order to make the right decisions.
- Marketing: Baby-Boomers and members of the “Silver Economy” group do not consider themselves as being old. Then, how can be find the right tone of voice when running successful marketing campaigns while also aiming not to upset clients?
Brands and retailers are already adopting marketing strategy changes by having celebrities participate in the brand experience of personal goods. In addition, they also started working with new faces of fashion like Charlotte Rampling, Jessica Lange, Twiggy and Lauren Hutton.
“60-year-olds and 40-year-olds are dressing very similar”, said Simon Wolfson, CEO of retailer Next, to FT. I can confirm this, as I’ve experienced myself with my father in law. Very often I see him wear shoes or a jacket, that I could see myself wearing and that makes me jealous. Can it be true? Has my father in law adopted a fashion style similar to mine? With that in mind, were his purchase decision influenced by the same marketing campaign that would have attracted me?
Same Same but Different
The same products can be marketed differently. In order to better target those finding themselves in the Silver Economy group it might be necessary to build “references” to icons or music that relate to their past. Personally, I believe this is what commerce relevancy is all about, it’s about increase marketing relevancy in regards to customers. An example, triggering an emotional response from my father in law with a song that relates to his youth, whereas this song leaves me indifferent, is a clever way to highlight to him being older.
For example, in Asia where the demographic shifts is the biggest, the region’s biggest retailer, Aeon, built malls with wider aisles and plenty of seating area, to accommodate this change.
New Challenges for Information Management
Marketing the same products to different target groups will lead to increased complexity in from the perspective of product information. The same item can be available in two or three different kind of packaging. Other colors, just different haptic and more.
However, the key will be building intelligent connections between products and target personas. Baby-Boomers are using different touch points and information sources, then younger people. For retailers and CPG companies this means that it is becoming progressively challenging to serve all channels with the consistent and the relevant information across all their target groups. Just one use case for Commerce Relevancy.