By continuing to spend $Trillions each year as consumers, the baby boomers haven’t finished shaping U.S. households and spending patterns. With 10,000 baby boomers turning 65 and migrating into retirement every day through 2030, their lifestyle choices strongly remain the second most powerful consumer economic force. There are clear indications that millennials will never achieve the economic clout that their parents once ruled consumer markets with. As a result, retailers and home developers must adapt to the changing needs, desires, and demands of baby boomers for at least another decade.
Of particular interest is the convergence of demands from both millennials and baby boomers. In the broadest sense, this is a demand for convenience, experiences, and flexibility. Baby boomers have long embraced how technology meets and enhances these demands. After boomers ushered in the age of personal computers and the Amazon retail experience, millennials took the ball by dramatically expanding technology to the smartphone, smarthome, and countless apps in the cloud. Today, boomers are free to pick and choose which automation best fits with their later lives.
In the age of Uber, Lyft, and other car services, aging drivers have less need to own a car. If they don’t own a car, they don’t need a garage. Although the parents of boomers prided themselves on a well-procured home library, today every book is available in the cloud and is read from a single Kindle or notepad. Hence, no need for a home library. Still, the semiretired do like having a home office. Community-based living means having a clubhouse with all the amenities available for entertaining. The overall result is less need for a large home.
It seems peculiar that developers continue under-emphasizing the market for smaller homes. While starter homes are less profitable, that’s not the case with smaller but expensive upscale homes. Recent U.S. Census data shows strong demand for the more than 100,000 newly built homes that were less than 1,800 square feet and the more than 20,000 that were less than 1,400 sq. ft. This doesn’t mean boomers are willing to accept fewer conveniences in smaller houses. What it does mean is an opportunity for product manufacturers and retailers to pack more luxury and functionality into smaller furniture and appliances.
Mall owners as well as brick and mortar retailers still have a role in the life of boomers. Although it’s well known that old fashion/traditional malls are closing in mass across the country, according to Urban Land Magazine those converting to “lifestyle centers” are achieving new revenue highs. The point is that people are renting experiences outside of the home rather than making homeownership the center of retirement.
Another important part of the housing equation is the move towards renting instead of buying. In the past 15 years, family home rentals have grown from 9 million to well over 44 million. A big explanation for this (but only partly true) is that houses have become much more difficult to purchase. The other big factor is that people prefer renting. The desire to experience more often means owning less. People may say they want a home gourmet kitchen, but the fact is they are eating in restaurants more and more. They want an Asian experience for lunch and Italian for dinner. They want to rent a Jaguar to drive to a country club wedding reception and a BMW SUV to ferry a group of friends to professional ball games. People are now renting many more cars, which used to be their second biggest purchase after their home. The need for 3-car garages is disappearing.
Retiring boomers are also happily paying brick and mortar retailers that are willing to make changes not only survive but to thrive. Many retirees continue to have ample income. They have company pensions, 401Ks, social security, and continue taking on consumer debt. Although eating out more, these people also spend freely at neighborhood grocery stores for perishables, pharmaceuticals, toiletries, and a host of other consumer goods. Hip replacements and walkers aren’t compatible with warehouse-size stores. Aging boomers may be willing to navigate stadium-size hardware stores once every 5 years to plan a home remodeling, but they aren’t going to do their weekly shopping in megastores. The smaller neighborhood grocery store that widens aisles for walkers and lowers the top shelve for accessibility is where boomers prefer shopping. Large print signage, convenient call buttons, and technology to place orders from home for pick up at the store parking lot are only a few changes successful retailers make to accommodate our senior population.
Coming soon are self-driving cars to get the elderly to medical appointments, social gatherings, and any other place they want to go outside of their smaller homes. Baby boomers are still blazing a trail to experience everything while owning much less.
Please comment with your vision of how living choices are changing.
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