Baby Boomers Will Drive Your Future Business

Even though marketers now focus primarily on analyzing finely targeted psychographic segments of the population, it still makes sense from time to time to step back and look at broad demographic trends. If you are starting a new business, moving your business or considering whether to add or change your mix of products and services, you need to see the big picture first and then refine your market segment further from there.

The big picture begins with overall population trends. In his book Who We Are Now, Sam Roberts, a reporter, columnist and editor at The New York Times, examines “The Changing Face of America in the 21st Century.” He analyzes volumes of data from the latest Federal census in 2000 and points out how our nation is changing.

Overall, this is still the land of opportunity. Every state is growing. There were 281 million Americans at the time of the census, and every 12 seconds since then the population has had a net growth of one person.

Not only are there more people to fuel our economy, but there are also more households as a percentage of the population – and a high rate of household formations translates into more housing units. In the 2000 census, the 281 million Americans made up 105 million households, meaning fewer people per household than ever before. The number of Americans living alone is now greater than the number of married couple households with children.

The Boomers' Journey
Baby boomers are still the largest segment of the population, and their values and attitudes will drive the kitchen and bath market for years to come.

As everyone knows, boomers are getting older. Americans over 60 will approximately double in the years ahead, going from 35 million to well over 65 million by 2030. And, by 2011, the number of elderly will start to increase dramatically as the first baby boomers turn 65.

Baby boomers, however, are getting older in a way that’s different from previous generations. In Rocking the Ages, the Yankelovich Report on Generational Marketing, authors J. Walker Smith and Ann Clurman caution, “You make a mistake if you assume that just because your customers are turning a certain age, they will behave in the same ways as those who turned that age before them.” Baby boomers will change their consumption as they get older, but “in ways consistent with the core values characteristic of their generation.”

So-called “retirement,” for instance, will be different. Boomers who can, or want to, retire at 62 will start leaving the workforce in 2008, just two years from now. But Peter Francese, demographic trends analyst at the agency Ogilvy & Mather, wrote recently in Advertising Age that the long-term trend to early retirement has reversed. He projects that, in 10 years, the majority of men in their late 60s will still be working.

Boomers’ core values – a sense of entitlement and the attitude that “now is more important than ever” – indicate that they’ll continue to readily spend money. All indications are they’ll continue to believe in prosperity, and to focus on self gratification.

Our market will be comprised of savvy, well-off consumers who are familiar with home renovations and looking for full service, comfort and convenience.

Where and how boomers live this next phase of their lives will be important for our industry. According to Roberts, “There is some evidence that suburban empty nesters are returning to downtowns where transportation and culture are.” In cities as diverse as Atlanta, Hartford, CT and Pittsburgh, loft conversions of industrial buildings are accelerating. The logistics of installing a kitchen or bath on the 10th floor of a high-rise are more challenging than parking your truck in a suburban driveway. Do you know how to deal with homeowner boards and infrastructures that can’t be moved?

Not all baby boomers are heading back to the cities, however. Roberts notes that self-contained retirement communities are being built “not only in predictable places like California, Florida and Arizona, but also in Georgia, North Carolina and Virginia. The old news from the census is the growth of California, Texas and Florida. What’s new is the spill over effect on neighboring states such as Nevada, Arizona and Colorado. Other states luring baby boomers, according to Roberts, are Mississippi and Alabama.

Not all boomers want to move; hence the trend to “aging in place.” That means an extensive market for renovations in highly populated and affluent areas like New Jersey. In 2000, New Jersey was the richest and most urban state in the union. It also means development of retirement communities in places like the Poconos in Pennsylvania and Jackson Township, NJ.

Multiple Homes
The New York Times recently wrote about baby boomers as “Splitters” or “Double Nesters.” These are upper-middle-class couples in their late 50s and 60s who – thanks to technology, empty nests and the desire to continue working (although at a different pace) – divide their time somewhat equally between two or more homes. Typically, each of those homes has an elaborate kitchen, home office, entertainment area and plenty of bedrooms and guest baths. Some are condos, but many are detached, single-family homes. In other words, second homes are being used in a new way – not as vacation homes, retirement homes or rentals, but as part-time residences.

If you appeal to this segment, you may find yourself doing second (or even more) homes for a client. Can your business travel with your clients from Chicago to Florida or Georgia? From Indianapolis to Tucson? Your competition may change from the firm down the street to the designer in a town far away. Can you work remotely? Find trades people in another area? Set up a satellite office? Partner with a designer in another state?

No matter which segment of the boomers you serve, seize the opportunity now. When this group of 78 million, now aged 41-59, passes through the market, it will leave a significant void.

For all of the hoopla that surrounds “Generation X” (right behind the boomers), its numbers are small. What’s more, Gen Xers are living with their parents longer, and buying homes later, so they won’t be important to our industry for a while yet.

“[Boomers] will continue to expect to be the center of attention,” say Smith and Clurman. By strategically targeting them with effective, relevant marketing campaigns that speak to their core values, you should be able to ride the boomer wave for years to come.