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What is required now is that the industry stay focused on boomers as they reach 50 and older. This is where the big opportunity lies. While previous generations dialed down their lives in the second half of life, boomers may very well ratchet up theirs.
Boomers have redefined every stage of their lives and they have generated record business for those companies that have aligned themselves with their needs and desires. Everything from the soft drink, movie and music industries to alternative and complementary therapies in healthcare has grown exponentially as the boomers have progressed through their lifespan.
They now are ready to enter a new era — the retirement life stage.
Remember, this life stage begins with pre-retirement in our 50s and extends through our 60s, 70s and beyond. The boomers will redefine what it means to be “retired” in America and throughout the developed world.
To begin with, even if “jobs” end for retiring boomers, research indicates that the vast majority of boomers will continue to work. This life stage transformation will extend into every aspect of retirement behavior.
Just as Del Webb brilliantly predicted the lifestyle that would appeal most to the retiring Great Depression and World War II generations, the opportunity now exists for innovative builders to define this stage of life for their boomer buyers. There is no “flagship” currently defining the new route for 80 million upcoming retirees. Therein lies the jackpot for both builders and consumers.
NAHB: How are boomer buyers different than buyers from other generations?
Goldstein: Boomers are different buyers because they are different people. What I mean is that every generation comes of age during different times. As a result, they each have differing values. Boomers have been defined by their “generation gap” with previous generations. First and foremost, values must be considered when targeting different generations.
Beyond generational values, boomers are more savvy, educated, affluent and demanding than previous generations at the same stage of life. They prefer an educational/experiential approach to marketing. Especially after the stock market crash of 2000, these consumers are averse to traditional marketing. They are looking for straight talk and informational marketing.
It is also important to remember that boomers are convenience-driven consumers. They grew up in the era of fast food, ATMs and the microwave. Imagine trying to rent a car to this client without the remote check-in device that transformed the car rental business. Our research shows that the majority of boomers would prefer more time than money.
Wasting these consumers’ time is worse than wasting their money.
This goes hand-in-hand with boomers’ appreciation for personalized service. They enjoy doing business with companies with a high standard for customer service, and they know when it is lacking.
Finally, boomers are the most litigious of all consumers. Builders who meet boomers’ quality standards will gain the big prize. Companies that “cut corners” and have poor follow-up will find themselves slapped with hefty lawsuits.
NAHB: How should builders adapt their marketing approaches to reach these buyers, especially the affluent ones? What marketing strategies work best on these buyers?
Goldstein: Boomers are entering a stage of life — retirement — that currently is being redefined. The previous institution is outdated and no longer relevant to the needs of retiring boomers. Its new definition is not yet in place. Savvy marketers and builders have the unique opportunity to share in this redefinition.
Recent research indicates that the prime difference in baby boom retirement involves the role of work. Around 84% of boomers plan to work beyond their “retirement,” and one in three will work for other than financial reasons.
This indicates that the contribution phase of life will extend beyond retirement. This is not only important to retirees, but to society as a whole. With the largest American generation entering retirement, it is critical that these people contribute as long as possible.
Since the very definition of retirement has traditionally revolved around the end of work, this new approach will change every aspect of how people define their retirement. This new definition will influence all of the major industries that cater to retirees. For older adults, home and community are second only to health and financial stability. Because the building industry touches both of these worlds, you have a rare opportunity to capitalize on this reinvention of retirement.
NAHB: Do boomers want a different product than other consumers? If so, what are they looking for in terms of features and amenities?
Goldstein: Just as the auto industry targeted boomers with a new product (the SUV), those in the building industry can create a “boomerized” version of their product.
Of course, there are certain design features and amenities that appeal to boomers. One of the most important features is specialty rooms. While not a lure with previous generations of retirees, home offices or media rooms are gaining popularity. Some boomers also will want a fitness room.
Boomers also will seek more high-tech homes in the coming years. Currently, 34% of builders offer structured wiring packages as a standard or optional amenity.
It also will be important for later-life homes to be able to keep up with the changing physiographic needs of its occupants. Aging in place will be the battle cry of the future. This presents a monumental challenge for marketers who must learn how to communicate these design features without implying that their customers are becoming old.
This new product shouldn’t just be a house: it has to be a lifestyle that is reflected in the home and even more so in the community.
When designing and marketing to an experientially-driven consumer, always showcase the experience being offered. Builders should provide plenty of opportunities for boomers to socialize with neighbors while maintaining privacy when they want solitude.
Another challenge concerns the age make-up of the community. Although most boomers do not choose to live in age-qualified communities, they prefer the amenities and lifestyle that those communities offer. The challenge is to offer communities that are all-age inclusive, yet still have the ambiance of an active adult or seniors community.
NAHB: In the past, most "seniors" retired to warm-weather states like Arizona and Florida. How can I get them to buy a new home in my community?
Goldstein: The sun-driven seniors of the past were motivated by two key factors. First, the sun itself was an amenity that suggested recreation, health and vitality. Secondly, the Del Webb marketing campaigns of the 1960s suggested that sunshine was synonymous with the ideal retirement.
Today, some perceive the sun as an enemy to aging. Boomers have had a love affair with the sun since the first Annette Funicello movies and early Beach Boys tunes.
It would be a mistake to assume that the sun will not play a role in boomer retirement. However, it would be an even greater mistake to assume that the role of sunshine and warm weather will not be redefined.
Most sunshine states become undesirable when the temperature exceeds the comfort zone. Moderate weather may replace the tropics and desert as best location.
A sense of community may replace location as the key driver for retirement living. It will depend largely on the experience created in the community and communicated in the marketing materials.
Boomers will want access to venues where they can fill their days with a sense of purpose. For example, savvy builders will combine the elements of retirement living and college or university life to have a winning formula. You must ask yourself, what “experience” does my community offer?
Even an area such as Seattle, with its substantial rainfall, offers an extraordinary lifestyle and unique experience. Capture that experience and market it in line with the key drivers that boomers seek.
Most sunshine states become undesirable when the temperature exceeds the comfort zone. Moderate weather may replace the tropics and desert as best location.
A sense of community may replace location as the key driver for retirement living. It will depend largely on the experience created in the community and communicated in the marketing materials.
NAHB: I’ve heard that boomer women play a major role in the home buying process. How can I make an impression with these buyers?
Goldstein: It would be wise for the housing industry to learn from the mistakes of the auto industry. The auto industry always has had a gender bias towards males. Recent research has shown that nearly one out of every two new car buyers is a woman. The industry has not recognized that women do more than choose a car’s color. The auto industry finally has become aware of these unprecedented demographic shifts, but it still struggles to comprehend the psychographics of this new consumer.
The auto industry’s first error was in not recognizing the changing demographics of the American family, no longer dominated by the “Leave It to Beaver” nuclear family of the 1950s. Actually, the number of married couples with children is down by nearly one-third since the 1970s. However, there has been a substantial rise in the number of single-person households (up by 40%) and single-parent households (up by more than 70%). America’s demographic make-up is changing before our eyes.
Another mistake involves not recognizing the evolutionary role of women in today’s society. Since the 1960s, the percentage of men entering the workforce has diminished. During this same period, the percentage of working women has increased substantially. Today, women are educated, employed, empowered and independent.
A recent profile of home buyers and sellers from the National Association of Realtors® (NAR) reveals that 27% of all U.S. home buyers in 1999 were single. Single women accounted for the second-largest segment of home buyers, accounting for 21% of transactions, after married couples who bought 59% of homes. NAR also estimates that 47% of condominium owners are single women.
Women are responsible for most spending decisions, including home purchases. Panelists at the Urban Land Institute noted that women are choosing to live in communities that emphasize social interaction and convenience, enabling them to simultaneously nurture and multi-task. The experience of community is a key driver for women as well as the proximity to jobs and public transportation. As for home amenities, women are very focused on security. They are attracted to high-tech home security systems as well as automated home lighting systems.
Women are just as busy as men and they appreciate anything that saves time. Convenience, in terms of location and saving time and effort, are a big plus with female home buyers. They also look to have amenities that play into the needs of children. Shared areas are critical to community life as well as nearby stores, parks and recreational areas. Communities centered on a single amenity (i.e., golf clubhouse) are perceived as less welcoming for women and children.
NAHB: How has retirement changed? How do the majority of boomers view retirement?
Goldstein: It is not so much how retirement has changed as how it will change. Perhaps the most significant change involves demographics. In seven years, boomers will retire at a rate of 10,000 per day and continue retiring at that rate for the better part of two decades. This will be an unprecedented explosion in the retirement population. All businesses that serve this market have the opportunity to produce dramatic results if they position themselves to be aligned with this trend.
The number of retirees is only half of the equation. Not only will the number of retirees double over the next few decades, but the duration of the retirement life stage also will grow. Due to medical advances over the past century, people are living longer and will enjoy longer retirements. Many people will spend one-third of their lives after retirement, a departure from previous generations when people routinely died within 18 months after retirement.
Even more significant than the demographics of retirement are the psychographics. The numbers indicate there will be a significant expansion of old age taking place. Actually, this is not quite correct.
What is expanding is mid-life lifestyle. To put it bluntly, people are staying younger longer. Today, 50 years old is quite young and 60 is still part of mid-life for many people. We will see the retirement life stage become a part of mid-life as opposed to later life.
This shift is very significant for businesses as mid-life is a much more active period than later life. Many people will begin new careers, remarry, go back to school or simply engage in active, purposeful lifestyles during their retirement years.
NAHB: The boomer market is very diverse. How can builders appeal to different market segments such as affluent, affordable, ethnic, etc.?
Goldstein: The boomer market segment is following a trend in the American marketplace; with each new generation, the role of diversity is magnified. The younger the generation, the more diversity becomes a key driver. Gen Xers are more diversity-driven than baby boomers.
Remember, diversity extends beyond ethnicity to include all aspects of American life. This trend towards diversity in our culture is seen in the marketplace as well. Boomers had two basic kinds of tennis shoes: high-tops and low-tops. Gen Xers have 47 different kinds of sneakers to fit every one of their activities.
Just as Nike has played into America’s need for options, the building industry would do well to enhance its alignment with this important driver. Obviously, a home has numerous opportunities to accommodate the buyer’s need for options and control. Every time we are able to target a product with consumer drivers, we increase the likelihood of success.
Our company has been in the business of defining the numerous consumer segments and their key drivers for more than 25 years. A day doesn’t go by that we don’t run into additional data related to this topic.
We have created a segmentation tool called the Life Change/Life Choice Matrix. It allows us to look at consumers in an ever-changing variety of segments.
Builders should follow the same process that we have used for decades. First, determine the segment, and then determine the key drivers of that segment. Finally, target those drivers in your product design and marketing communications.
NAHB: How can I capitalize on the boomer market and be successful?
Goldstein: Think of the boomer generation as an 80 million-pound elephant lumbering across the lifespan. Around 90% of businesses wait for the elephant to pass and then shoot arrows at its behind. But 10% get in front of the elephant and dig a hole.
The best way to capitalize on this large consumer base is to get in front of the trend and position your business to be aligned with where it is going.
I cannot overemphasize the need to do your “homework.” Never skimp on the discovery phase of a new campaign.
You will be greatly rewarded if you understand the boomer generation as it migrates into the later stages of life. And then make sure that you communicate this understanding throughout your organization. Every person who earns a paycheck from your company should be able to understand and communicate the company’s position.
There is no better role model than Nordstrom, which targeted its customer service policies to affluent older shoppers. Nordstrom then empowered each employee to respond to customer needs and made customer satisfaction the company’s No. 1 priority. The rest is history. Many department stores have imitated Nordstrom’s customer service policy, but consumers recognize that Nordstrom has set the standard.
Mark Goldstein can be reached by e-mail, or at 925-735-9120.
'Boomers on the Horizon' Available at BuilderBooks.com
Capitalize on the niches, needs and opportunities of the rapidly growing 55+ market by learning their preferences in "Boomers on the Horizon: Housing Preferences of the 55+ Market", available at BuilderBooks.com. To view or purchase this publication online, click here, or call 800-223-2665 to order.
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