It’s the mother of all untapped markets: the world’s 65-plus population. Already at a historical high of over 600 million people, it’s projected to hit a full billion by 2030, and 1.6 billion by 2050.
And unlike many other fast-growing markets, this expansion will take place primarily in wealthy countries. As a result, the sheer amount of money involved nearly defies comprehension. In the U.S. alone, the spending of Americans ages 50 and up in 2015 accounted for nearly $8 trillion worth of economic activity. The Boston Consulting Group projects that by 2030, the U.S. 55-plus population will have accounted for half of all domestic consumer spending growth since the Great Recession, a number that rises to 67% in Japan and 86% in Germany.
The obvious response to a predictably growing market is to produce more of what that market is already buying. But sometimes, the appearance of certainty breeds complacency.
Take the senior housing market. To talk to anyone in the real estate investment community just a few years ago, money could find no safer resting place than senior housing. But despite the burgeoning older population, senior-housing occupancy is currently at its lowest since 2011.
It’s possible that the bulk of the demand is still incoming—baby boomers have yet to replace the Silent Generation class of residents—but there’s more to it than that. Many older adults, increasingly aided and connected by such tech services as Uber, Amazon.com , TaskRabbit, and social media, are finding it easier to remain in their homes instead of moving to a specialized setting. And for those who would prefer to move, the staid offerings of traditional elder communities pale in comparison to special-interest communities aimed at their wants. Jimmy Buffett’s Latitude Margaritaville retirement community in Daytona Beach, Fla., which opened in 2017, with an ethos built on booze, guitars, and boats, is reportedly selling units far faster than its developer originally anticipated.
Housing isn’t the only longevity sector mutating before our eyes—and that should alarm anyone who thinks “senior” means “a sure thing.” Tried-and-true technologies long aimed at older adults, such as personal emergency pendants worn around the neck and oversize cellphones with limited functionality, already stand in the danger zone. The later your birth year, the more likely you are to be comfortable with consumer technology, and that simple fact portends the end of the uneasy alliance between “senior phones” and senior people. Meanwhile, the bulk of the functionality of emergency pendants—often worn only under protest—has recently been tucked away inside a far more appealing package: the Apple Watch.
Why is the older market suddenly changing its tastes just at the moment that it’s also mushrooming in size? In fact, older people have always balked at the bland and the utilitarian; in 1955, for instance, consumers roundly rejected Heinz’s mushy, canned “Senior Foods.” But in many other cases, where there was no alternative to the staid products on offer, older people learned to live with what was available.
Today’s and tomorrow’s older adults, however, are different. In addition to an unheralded facility with consumer technology, they are wealthier than prior generations on average, and more highly educated. And most important, they’re accustomed to having their every whim catered to by businesses.
Older consumers will no longer put up with companies that address only basic physiological or safety needs. New demands in the older market are arising from higher-level drives, such as goals, aspirations, aesthetic preferences, social needs, and talents. From the consumer’s perspective, products that seem to deny the importance of such considerations (for instance, by implying that the consumer is infirm) may soon find themselves foundering, not propelled by the prevailing demographic tailwinds so much as capsized.
The rise of the longevity economy remains the most important yet predictable market event facing the investment community today, but selling more of the same old solutions is no longer a safe bet. How can you be sure a company is serving up what older people actually want? The sorts of products that tomorrow’s older consumers will avoid at all costs have one thing in common: They treat older people as a problem to be solved—often at the expense of their choice of home, community, accessories, fashion, activities, and, yes, fun.
Companies worthy of investment will not try to solve their consumers, but rather their consumers’ problems—as those consumers define them. They will view older adults in a new light: as pioneers to be championed as they break new ground in our ever-evolving life span.