OPINION: Meeting the needs of an ageing population will assure future success
IN COUNTRY after country, the proportion of people in their 20s is strongly correlated with overall economic growth, especially consumer spending. But in Ireland, the proportion has fallen since 2007 and will continue to decline for the rest of the decade – perhaps precipitously if emigration soars.
For this reason alone, there won’t be a rapid return to the pattern of growth we witnessed in the boom days of the Celtic Tiger. So where will growth come from? If you are running a business and have ambitions to expand, where should you look for new demand?
In Ireland’s case, the baton for economic demand is being passed not from an older generation to a younger generation but rather in the other direction. It is therefore Ireland’s expanding market of 50-70 year olds who will take up the slack in numerous markets.
Within the next 40 years the 60-plus population will have doubled in size and will account for one-fifth of the world’s population. Life expectancy is growing at the rate of two years per decade and the majority of children born in the developed world today will live to be 100.
This has profound implications for society as a whole in terms of healthcare and service provision, but more importantly, it also provides us with an amazing opportunity for new businesses and products, designed explicitly for this section of the population.
The 50-plus group have 80 per cent of the wealth in the US and 75 per cent across the EU. The over-50 US consumer is expected to outspend younger adults by $1 trillion this year; they account for 54 per cent of household expenditure in the US and half of consumer spending in the EU. In Ireland those over 65 have a declared income of €6.6 billion
One would expect that this would cause a significant percentage of products to be aimed at older people, yet almost all products are targeted at the youth market. Only 10 per cent of marketing spend is aimed at the over-50s, and research has shown they find most marketing aimed at them insulting.
Sometime in the next 10 years the global population aged over 65 will outnumber the global population aged under five. Hence the inevitable concerns about healthcare, pensions and productivity. But in Ireland’s case, such concerns are 20 and more years away. Over the next number of years the main demographic momentum will reside in those middle-aged and older groups stretching from 40-70 years of age. Their numbers will grow steadily, in turn providing a stable basis for those businesses planning a sustainable recovery.
For financial service providers, the silver market is the new gold market for insurance, investment and pensions. But it isn’t all about planning for retirement. Older consumers are leading a surge of “inconspicuous consumption”, including foreign travel, antiques and so-called wellness services.
Nor are they simply spending and saving. A large number of business start-ups are driven by people in their 50s and 60s who have the experience and resources necessary to make a success of entrepreneurship. That goes for over a quarter of UK start-ups in recent years.
There are opportunities here for service development and product design. Research shows that as people grow older, their needs change and they have specific requirements that need to be understood.
Research by Nomura Equity and others has identified where many of the opportunities will be: in areas as diverse as wealth management; financial products that insure against the health and care costs of longevity; consumer goods such as cars that are self-parking; white goods with larger controls to address a reduction in dexterity; sensory technology products that enhance independent living at home.
The message to Irish businesses could not be clearer: let demography be our ally.
Gerard O’Neill is chairman of Amárach Research. He will be speaking at
The Business of Ageing – Turning Silver into Gold
, a conference on the implications and business opportunities created by the changing population profile, to be held in the Royal Hospital, Kilmainham, on March 3rd; www.businessofageing.com