Trends about retirees

Brands selling products and services to retired people should plan their marketing around four distinct consumer segments, research suggests. The report by Experian Marketing Services claims that the UK’s elderly population is becoming increasingly diverse, with experiences varying according to factors such as geography, disposable income, health and technological awareness.

It notes that the retirement age population has grown considerably in recent years, with the Office for National Statistics (ONS) reporting that one in six people in England and Wales were aged 65 and over in 2011 – the highest proportion in any census. In addition, the number of over-90s surged from 340,000 in 2001 to 430,000 five years ago

Distinct groups

Experian has used its geo-demographic segmentation model Mosaic to create four groups of retirees: ‘diamond days’, the most affluent retirees; ‘smarties’, market town retirees; ‘senior security’, seaside retirees; and ‘vintage value’, the poorest group of retirees.

Senior security is the largest group, accounting for 4.9 million of the UK’s retired population. The report defines this segment as a more “traditional” type of retiree, comprising elderly people who live independently in comfortable homes that they own, often having chosen to retire to the seaside.

In a warning to brands, the findings suggest that these people are “more home-oriented and risk-averse” than some of the other segments. It also finds that while the senior security segment is familiar with the internet, “they are less likely to invest in new digital technology”. Bournemouth, Eastbourne and Hempstead Valley are the top three locations in which this segment resides.

Vintage value is the next largest group, covering 4 million retired people. These people mostly live alone, either in social or private housing that is often built with elderly needs in mind. Levels of independence vary across the segment, though a significant proportion require regular care. This group is also least confident with using technology. Cities in the north-east of England and Scotland have a high penetration of this segment.


Retirees’ spending power

Beyond these established groups, the report points to a rising trend of better-off retirees who, instead of staying in the family home or moving to the coast, are downsizing and starting new lives in attractive towns or villages across the UK. The smarties segment accounts for 1.3 million retired people in the UK, with Evesham, Dorchester and Yeovil the top three locations for this group.

“We can see diverging sets of older people and retiree areas – a consequence of life expectancy, mobility, health and patterns of care and consumption,” explains Richard Jenkings, lead consultant at Experian Marketing Services.

“Although retirement presents a varied set of circumstances for different people living in the UK, the power of the ‘grey pound’ is undeniable.”

Smarties are also defined as being active, in good health and having comparatively high pensions and savings. The Mosaic model suggests that these people tend to shop in higher end convenience stores and local independent shops in the market towns and villages in which they live.

“Retailers and consumer brands can draw on this data to help them to identify the most appropriate locations for their stores, where to target particular services or marketing offers,” claims Jenkings.

The diamond days segment is the smallest but most affluent group of retirees. This segment of around 520,000 people in the UK refers to retirees who have stepped down from high earning roles to enjoy a comfortable retirement in large, mortgage-free houses that were once home to their families.

This group has a high disposable income and lives in desirable four or five bedroom homes, typically in the south-east of England. Epsom, Maidenhead and Guildford are the towns featuring the highest proportion of these retirees.

The segment is also defined by its propensity to travel and spend big sums on trips abroad. The Experian report notes that the over-65s now spend £1.3bn more on travel per year than they did 10 years ago. By contrast, people aged under 35 spend around £920m less on travelling than they did a decade ago.

Jenkings believes that the most adept brands will understand the different needs of retired people, rather than viewing them as one homogenous group. Many companies continue to miss out on sales opportunities by failing to properly segment their customers, he suggests.

“It’s possible that brands are missing a trick when trying to engage with this key consumer group,” he says. “We are now seeing an increasingly tech-savvy group of over 65-year-olds, with a huge amount of disposable income, demanding more from brands in terms of tailored products and offers tailored to their needs.”