On the 25th of December 2019, a whole group of baby boomers enjoyed Christmas lunch with their family and friends sharing their dreams of retirement in the coming year. Today, for many of these baby boomers their retirement plans are in tatters. Almost every form of investment vehicle they were counting on to provide them with their retirement has been devastated. If its shares, they are down 40%. If it’s investment property, tenants have stopped paying rent or asked for rent reduction and you can’t evict them.
Visa predicted that baby boomers will outspend millennials for the next 10 years. In fact, baby boomers were expected to drive consumer spending growth over that period. So, what happens now when the millennials are unemployed and the baby boomers have had their wealth decimated or are even financially stressed because of their high levels of debt? If you have a strategy that is reliant on baby boomers as a target segment, it would pay to have a closer look at this segment and ask yourself the following questions:
- How essential is my product or service to a baby boomer’s everyday life? The segment is likely to reduce non essential expenditure as they tighten their belts
- Do I require baby boomers to spend their leisure time? More baby boomers are going to stay in work longer, to compensate for their loss of wealth or to pay their debts.
- Is there a lower cost substitute for my product? Rather than buying a Mercedes they might opt for a Volkswagen or a Volvo.
- Do I rely on baby boomers to fill my premium capacity? Baby boomers may continue to travel but opt for cheaper options like premium economy instead of business class.
In the medium term, demand for all segments is surely going to be lower than it was before, but creating insight into your customers and their motivations for purchase, will enable you to create strategies to reduce the impact.
by Regan Yan, the CEO of Digital Alchemy.
Regan is a subject-matter expert in analytical database marketing and customer relationship marketing, as well as an in-demand presenter and keynote speaker at national and international events. He also authors thought leadership pieces on data-driven marketing that can be found on the DA Blog.