A question of age
New research released recently by Barclays shows that the over 65s added £37 billion to the UK economy through spending in the Hospitality & Leisure sector in the last year. This contribution equates to over a third (36%) more than the average consumer and 27% higher than the 35-54 year olds, who are the second biggest spending generation.
Barclays Corporate Banking’s recent report – An ageing population: the untapped potential for hospitality and leisure businesses – reveals that the UK Hospitality & Leisure Sector has missed out on at least a further £16billion in additional revenues by under-estimating the spending power of the older generation in the last year.
Sector must innovate and re-focus to capitalise
Just five per cent of businesses within the sector see the ‘overlooked generation’ (those aged 65 and over) as the most important demographic in terms of sales and revenue for their company. In fact only one in five businesses (22%) ranked over 65s in their top three target age groups. While a significant number of Hotel and Travel businesses are alert to the fact that the over 65s spend more per customer than any other group (38% and 44% respectively), more than a third (37%) of businesses in the sector perceive 34-44 year olds as their priority target market, despite these consumers spending less money on average.
Furthermore, more than three quarters of businesses (76%) have no plans to introduce products or services that specifically target the over 65s. Of these, 37% have not even considered targeting this age group and 28% see little financial opportunity in catering to them.
Without action, this missed opportunity is only set to increase in line with the UK’s ageing population. The total annual spend of over 65s could grow to at least £57 billion by 2025, based on the projected 34% growth in the population of over 65s. This could be even higher considering the increased mobility and active lifestyles the over 65s are now living.
Tapping in to the grey pound
Mike Saul, Head of Hospitality and Leisure at Barclays said: “It is clear from the Report that the over 65 age group is a huge and untapped opportunity for the Hospitality and Leisure Sector in the UK. There appears to be a gulf between the perception and reality of the spending power of over 65s. By not fully focusing on the needs of this generation, and the revenue growth opportunity they represent, businesses may risk missing out on their share of £16 billion this year alone.
“We have found that almost two-fifths of businesses in the sector expect that the proportion of their turnover generated by over 65s will increase over the next five years. Yet more needs to be done to start planning and accommodating for the currently ‘overlooked generation’. Through investment in targeting these customers now, businesses can pre-empt the effects of an ageing population, ensuring they are able to meet and capitalise on the increasing demand.”
Loyalty grows with age
The report shows that not only are the over 65s bigger spenders than the younger generations, but they are also the most loyal customers – offering an even greater opportunity for businesses in the sector. When asked, over 65s are much more likely (41%) to mention a company they were loyal to than younger age groups; this drops to just 19% among 18-34 year olds.
Overall, the most important factors for loyalty are level of service (46%), value for money/prices (31%) and rewards/incentives schemes (23%). There is a generational difference here though, for those aged 65 and over, level of service, value for money/price are key, while rewards programmes or incentives appeal more to younger age groups.
A question of taste
Santa Maria Foodservice, the world food and flavouring division of the Paulig Group, has published the first Age Cohort Report that establishes the eating habits and tastes of four generations. The report provides insight into what flavours make consumers tick, how that changes with age and its effect on the eating-out market
The research, conducted on behalf of Santa Maria by Allegra Foodservice, explored the eating habits and flavour preferences of 2000 consumers across four different generations: the Millennials, aged between 18-34; Generation X aged between 35-49; Baby Boomers aged between 50-64 and the War Babies aged 65+.
The report shows that the generations have distinct differences in their eating-out habits and flavour preferences.
- Millennials eat out three times as much as War Babies. And they’re eating everywhere: at home, at work, out and about. Twenty one per cent see eating out as the new going out. They like to try something new, especially food that is sweet, salty or sour. They are the most cost conscious, with 47% more Millennials putting off trying something new because of the cost
- Generation X has a relatively higher household income and likes strong, savoury flavours. Over a quarter like to regularly try something new when they go out
- Baby Boomers are a savoury stronghold. They love a medium/hot curry the most and are more adventurous with hot and spicy food than any other generation
- War Babies are comparatively less well-off, with a third having an income of less than £20,000. Almost half prefer to eat British cuisine when eating out and top choices are familiar cafés, pubs and independent restaurants.
A consistent trend is that as age increases, respondents become more aware of what they like and are less likely to choose new dishes on the menu or try new foods at home. 60% of War Babies said the menu description was the most important factor to encourage them to try new dishes, while a third of Millennials said social media recommendations and foodie interests drive their choice.
Catering for taste
Eimear Owens, country sales manager, UK & Ireland, Santa Maria Foodservice, commented: “Demographic changes will have a huge impact on the eating out market in the coming years. By 2025, 23% of the world’s population will be over 65. Our report shows that one size detinitely doesn’t fit all when it comes to menu and concept development. Operators will have to be more flexible, and depending on their brand profile, will need to understand how to exploit the growth in ‘seniors’ who prefer familiar foods they know and love and capitalise on younger diners who see eating out as the new going out.”
The report found that respondents across all age groups prefer bolder and spicier flavours more now than three years ago. Nearly half of all Millennials said they liked spicy food more now than three years ago and Baby Boomers led the field, with 80% saying they enjoy spicy foods, with Indian food in their top three cuisines when eating out.
Visit www.santamariafoodservice.com/uk/insights for a copy of the report highlights.