Wednesday, July 22, 2009

Baby boomers in their 60s generally shop more frequently and more often at smaller format stores

Representing half of total U.S. spending power, baby boomers are one the largest demographics in the United States. The oldest among this group are now 63 years old, and their purchase patterns are shifting as they approach retirement age. The latest IRI research, “Baby Boomers II: Preparing for the Upcoming Wave of Aging Shopper Growth,” examines the broad range of baby boomer lifestyle changes and identifies top-indexing food and non-food categories, recession-driven shopping patterns and key opportunities for private label and health and wellness products.

“Each baby boomer segment will experience a broad range of lifestyle changes in the coming years that will dramatically change where they shop and what they buy,” says IRI Consulting & Innovation President Thom Blischok. “Many retailer strategies today assume that boomers are a homogeneous group, and, as a result, their strategies are too general to be effective. The IRI report will help retailers understand current and future spending shifts of the different boomer segments across categories and channels. This approach will also help retailers develop strategies that effectively segment the boomer population in specific markets and meet their changing needs.”

Channel and Category Insights

Baby boomers—Americans born between 1946 and 1964—are a very large consumer segment with an age range that spans nearly 20 years. IRI breaks the group down into LBJ (aged 34-43), Kennedy (aged 44-52) and Truman Boomer (aged 53-62) segments to capture their distinct cultural experiences, current lifestyles and attitudes. The following is a glimpse of channel and category insights found in the IRI report:

  • When consumers age into their 60s, they shop more frequently and a greater share of their total CPG spending is done at smaller format stores, including drug stores and dollar stores, at the expense of grocery, mass and supercenters. For instance, Truman Boomers make 15 trips to drug stores annually versus 11 trips by LBJs.
  • Food preferences also change with age. Truman Boomers lead the way in categories, such as snack nuts/seeds/corn nuts, ice cream/sherbet and chocolate candy. However, consumption is lower than other boomers for cold cereal, salty snacks and frozen pizza.
  • Across major beverage categories, it’s clear that shoppers in their 60s prefer non-carbonated drinks, which causes them to make trade-offs, such as consuming less beer but more wine and spirits and drinking more coffee than soft drinks.
  • Aging shoppers rely heavily on many over-the-counter (OTC) products, such as vitamins and gastrointestinal tablets but purchase less personal items, including deodorant and shampoo, than their younger counterparts.

"Boomers are being impacted by a number of current trends,” says IRI Consulting & Innovation Senior Vice President Sean Seitzinger. “The various boomer micro-segments are being impacted in different ways and are making their own distinct choices. Today’s retail and CPG community must work hard to understand the unique opportunities being created by this large and diverse consumer segment. Different micro-segments will define the market growth opportunities in health and wellness and the next generation of products and brands.”

Shopper Attitudes: The Economy

The current recession is also having an enormous financial and emotional impact on baby boomers. Many have seen their personal wealth and disposable income drop precipitously, forcing many baby boomers to postpone retirement and some previously retired boomers to re-enter the workforce. Additional economic insights include:

  • Aging shoppers are most concerned with “immediate personal impact” areas of the economy, including price of gasoline (72 percent), home utilities (70 percent) and food costs (77 percent) versus home value (41 percent) and access to personal credit (16 percent).
  • Across all boomer segments, fewer than 25 percent have cut back spending on essentials, such as food, beverages and household cleaning supplies. In contrast, they have pulled back spending significantly on discretionary. purchases, such as auto care (52 percent) and entertainment (51 percent).
  • More than 85 percent of all boomers still make unplanned purchases.

Private Label Performance

Even after the economy begins to recover, private label growth is expected to continue well into the next decade for boomers entering their 50s and 60s. A few highlights from IRI research include:

  • 83 percent of Truman Boomers vs. 70 percent of Kennedy Boomers say store brands are of excellent quality. At the same time, 79 percent of the younger LBJs like store brands.
  • 66 percent of Truman Boomers buy store brands instead of name brands.
  • Truman Boomers purchase more private label bottled water, ice cream and snack nuts than younger boomers.
  • The propensity to buy private label in food and beverages does not carry over to nonfood categories, including OTC medications.

Health and Wellness

As boomers age into their 60s and 70s, a growing number of shoppers are adjusting their diets to manage a range of ailments, such as high blood pressure and diabetes, and there is a growing concern about their weight. Attitudes about health and wellness include:

  • 84 percent of Truman Boomers eat for nutrition versus 79 percent of Kennedy Boomers; 61 percent of Truman Boomers eat to manage a specific health condition versus 46 percent of LBJs.
  • When compared with meals and snacks, aging shoppers place less emphasis on finding healthier options in beverages.
  • Older shoppers consider organic to be a less important attribute in maintaining good health.

“The IRI report offers fact-based support for impactful boomer shopper segmentation and other initiatives that retailers can implement across both traditional and non-traditional retail channels,” adds Seitzinger. “Retailers who leverage these new insights about baby boomer segments will reap the benefits with new center store growth.”

IRI Baby Boomer Webinar

IRI is offering a free webinar, entitled “Preparing for the Upcoming Wave of Shopper Growth” on July 22 at 1 p.m. CT. To register for the webinar, hosted by consumer trends and private label expert Sean Seitzinger, please visit:

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