In case you missed it because you were too busy putting away the noisemakers or watching college football, the first day of 2011 was not just another New Year’s Day. It was a significant generational milestone: The first members of the Baby Boom generation turned 65.
If you’re a retailer, you certainly understand the significance of this milestone; this influential group of around 77 million, both literally and figuratively, controls the purse strings. Baby Boomers now control more than 80% of personal financial assets in the United States and are responsible for around half of all consumer spending. Did you know that spending by consumers over the age of 50 has gone up 45% just in the last decade, while spending by the under-50 crowd has only increased by 6%? That’s a big difference!
I’ve been thinking about this a lot and have found myself asking the question: Why have so many retailers geared toward such a promising demographic not performed well? Because the reality is that women’s fashion in particular -- Talbots, J. Jill, Orchard Brands -- have all struggled. I think the issue is style -- or lack thereof. In my opinion, this is a demographic that has not been particularly well-served in terms of fashion or styling. Over-50 doesn’t have to mean conservative, dowdy or frumpy. The inability of certain retailers to understand that has been problematic.
From a retail real estate perspective, I think the current challenges in this sector will actually be good in the long run. It is a sector in transition right now, especially for apparel retailers. Teen apparel retailers can simply move on to the next generation of teenagers, but Boomer-focused retailers have to deal with the same aging customer base whose style, taste and preferences are changing over time. Some designer brands are doing well, but some big names have really floundered. I think we’re likely to see some of the more successful designers expanding their store base and/or even generating new store formats, while others will likely have more closings in the immediate future. The good news about those closings is that it will free up some real estate for new concepts, and hopefully those new concepts will be able to do a better job of understanding the Boomer customer.
To me, it’s actually a good thing that those who couldn’t keep up with fashion and sizing have fallen back. It’s allowed those who have been more adaptive to prosper. In the same way that a tree falling in the forest opens up a sunlit gap in the canopy for aspiring newcomers, lean times in retail can prompt big moves forward. I think that once this sector perks back up, we’ll see a lot of those “newcomers” wanting in. Boomers are shopping with minimal alternatives right now; imagine the dollars they would spend if they had better options!
I’ll leave you with one last Boomer factoid to ponder: When the last of the baby boomers turn 65 in 2030, the percentage of the population that is 65 or older will have grown from 13% to 18%. Makes me wonder how apparel retail will be doing then.
What do you think? Email me at firstname.lastname@example.org.
Jeff Green is president and CEO of Phoenix-based Jeff Green Partners (jeffgreenpartners.com), a leading consulting firm specializing in retail real estate feasibility, retail expansion planning, medical retail planning, location analysis and commercial land use.