Demographic Tsunami
April 3, 2017
A dramatic trend in US demography caught our attention this week. This trend will have a significant impact on our economy and the markets. As you have probably guessed, the change is all about the aging of our population. Specifically the free spending, fun loving Baby Boomer generation is moving deeper into retirement. For example, over the next 15 years the number of people in the US over the age of 70 will double to 64 million. That means 32 million Baby Boomers will be entering retirement age. This shift will create many opportunities.
The statistic was part of a report on the explosion in the need for senior housing but the ripple effects of a change like this will not be confined to that sector. The Baby Boomers were lucky to have the Greatest Generation as their parents, a group who were generally conservative savers adept at accumulating wealth. The Baby Boomers will be the beneficiaries of that wealth, which is probably a good thing given Boomers are known to like their stuff and believe they will be young forever.
This demographic shift suggests we are in for an interesting next 15 years as spending habits change. The impact of the retiring Baby Boomers will be worth watching as their lifestyles develop. We can expect them to be looking for new products to consume, and for new services to meet the heavy demands of age.
Industries that cater to the aging Boomers will see opportunity in areas such as the provision of home services. Demand for health care, meal delivery, and socialization will only increase and evolve. For example, many doctors have changed their practices to a “concierge” service to enable more and frequent service to clients who can afford it. Some practices are even reintroducing the long lost practice of making house calls.
Boomers with money to spend love convenience, ease of access, and being made to feel special. Their demand for more home services goes hand-in-hand with the way technology is supporting efficient support for delivery to the home. For example, after some early missteps, there has been successful growth in designer food delivery services. There is no longer a need to shop, or even cook. Companies will deliver everything from a cup of sugar to a full four-course dinner to your home. The service might seem pricy to some, and certainly costs more than fast food, but it is cheaper than going out to a fine restaurant. Companies like Blue Apron are at the forefront of these new services.
This development of home delivery service is very powerful and Boomers love it. Is it any wonder that Jeff Bezos, the founder of Amazon which is the paragon of home delivery service, was declared this week to be the second richest person in the world? Do not ignore the aging of our population as this major trend carries with it the changing demands of 32 million consumers.
Carl Gambrell
