55 PLUS POPULATION TRENDS
People 55 years of age and older comprise a little more than a quarter of the U.S. population, but they control roughly two-thirds of the equity in single-family homes. For most of these households, their home is their largest asset. A 65-year-old who bought the “average” house at age 30 has seen the value of that house increase 3.7 times since then. The size of this population and their housing wealth guarantees that they will play a big role in shaping the housing opportunities available to the generations that follow them. Older Americans are much more likely to be or have been married than those under 55. Fully 42% of the population under 55 has never married; only 8% of the 55+ population has never married. More than half of the 55+ group has lived in the same residence for ten years or more; only a quarter of the under-55 population has lived in the same place this long.
Attitudes towards current and future housing options were uncovered in a survey commissioned by Freddie Mac and carried out by market research organization GfK in early 2016. Some results:
More than two-thirds want to age-in-place in their current residence. The majority are very satisfied with both their community and their home.
Almost a quarter indicate they are going to need to make major renovations in order to stay in their current home for the rest of their lives. Other studies indicate this number may be unrealistically low.
However, many who plan to age-in-place in their home intend to buy another home more suited to doing so. They’re looking for community affordability, amenities and less maintenance.
More than three-quarters of homeowner respondents are very or somewhat confident that they will have a financially comfortable retirement. However, less than half of the renters were somewhat confident they will be financially comfortable.
More than a third still have a mortgage, and a majority of those have more than ten years until their loan is paid off.
Only 15% of homeowners 55+ have children over 18 living with them, and very few think it is likely children will move in with them over the next five years.
THE CHANGING BASIS OF CONSUMER STATUS
Trend Report notes that the basis of consumer status has shifted from affluence to self-realization. In effect, it’s no longer about “what I have,” but much more about “who I am: creative, connected, tasteful, smart, ethical.” People want to demonstrate that they are ethically conscious, and one of the ways they can do that is to engage with brands that have what they consider to be the right values when it comes to social issues. An interesting example is Starbucks, who came under fire for briefly ordering baristas to write “Race Together” on cups; people viewed it as pushy and intrusive. However, in March Starbucks partnered with Queens Community House to provide on-site training in retail and customer service to young people in New York's Jamaica Queens neighborhood. The community training program has proved so successful it’s rolling out across 14 additional locations across the U.S.
RETAIL SHOPPING TRENDS
Chain Store Age reports that one of the most puzzling dilemmas facing retailers today is how to attract and appeal to millennials without alienating older customers. 58% of millennials find it easy to shop on mobile devices compared to just 30% of boomers. But Accenture research also shows that millennials exhibit less homogeneous behavior, most likely reflecting the wider variety of socioeconomic, educational and parenting trends that were in place while they were growing up. Millennials are more open to receiving advice than older peers. Retailers try to address this by personalizing messages for them; but older customers may find this type of communication to be “creepy” and “invasive.” 58% of millennials think getting design advice based on their purchase patterns in-store would be “cool;” only about 25% of boomers agree. And the fact that 85% of millennials shop online can be deceiving; 30% of millennials expect to make more of their purchases in stores in the future compared to just 19% of boomers. Analysts speculate that it is second nature for millennials to do their shopping homework online, but then they may be more likely to go to the store and check things out in person. 54% of boomers would like to be able to check online to see if something they are interested in is in stock before going into the store; only 44% of millennials want that option. Millennials are more likely (55% to 30%) than boomers to use new fulfilment options like Instacart, which creates fulfillment and margin issues for retailers. Accenture senior managing director Jill Standish noted that as customer expectations around free shipping and free returns grow, retail margins get squeezed, which is creating a need for retailers to figure out how to manage growing fulfillment costs.
RETAILER LOYALTY PROGRAMS
Customers who belong to a retailer’s loyalty program spend between 12% and 18% more than those who do not, based on an Accenture Interactive survey of U.S. retailers across several channels. The research company noted that it was surprising that retailers generally evaluated the success of their loyalty programs by program growth rates and share of transactions by members rather than looking at the ROI of the program itself. Retailers say the biggest challenges they face are keeping up with the underlying technology and investing enough in technology (40%), keeping up with competing programs (33%) and managing the liability and complexity of the program (33%).
LOWER RETAIL PRICES IMPACT SUPPLIERS
The migration of shoppers to online has forced retailers to lower prices, and is squeezing factories and other intermediaries. Li & Fung, one of the world’s largest factory middlemen, contracts with more than 15,000 factories globally to produce goods for Western retailers. Their CEO blamed a 50% drop in net income and 6.4% drop in revenue to weakness in the global economy and heavy discounting by retailers. However, the CEO of Connor Group, which sources $2 billion in products annually, said that as more shoppers go online, demand is growing for unique private-label products, which creates opportunities for factories and middlemen. As shoppers switch online, brands are also placing smaller orders, which also cuts into middlemen profits.
SELF-SERVICE CHECKOUTS PROMOTE THEFT
The lack of human contact at self-service checkouts promotes theft, especially during the payment stage, according to a comprehensive study of retailer transaction in the United States, Great Britain and other European countries conducted by the University of Leicester. Loss includes both deliberate non-scanning and non-malicious loss through errors and items that customers accidentally miss while checking out. The study noted that the atmosphere of self-checkout can encourage theft because there is no human interaction during the checkout process. The benefits of self-checkout are numerous, and potentially could make shopping easier and quicker. The study of one million shopping trips found that 4% of the total value of purchases went unscanned.
CONSUMER VALUES AFFECT SHOPPING
A new study from financial services company Synchrony Financial showed that more than 40% of consumers surveyed prefer to shop at stores that reflect their personal values. Many retailers are tailoring marketing efforts to convey a lifestyle or experience rather than just sell products. Target’s recent switch to featuring products in home-like settings and Lowe’s move to creating seasonal displays that incorporate products from many different departments are examples of this philosophy in action.
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