Older adults are one of the world’s largest underserved populations. Those who invest now will tap unmet needs and reap the rewards.
GUEST WRITERCEO & CIO of Ping Capital Management, Ltd.
For years, consumer markets have been obsessed with youth. And as the global population continues to gray, businesses have been slow to adjust to the demographic shift. But worldwide, the 60-and-older age bracket is anticipated to more than double by 2050. Finding out what these consumers want is more important than ever.
This is especially true in the developing world, where increases in life expectancy compound the challenges of urbanization and globalization. Declining population growth and global pressures have made it increasingly difficult for traditional elder care to continue. Plus, seniors in the developing world are staying mobile and active — so they naturally represent a bigger share of the consumer market than at any time in history.
Luckily for entrepreneurs, this market remains deeply underserved. “Aging in place” is a powerful concept that should underlie any product or service marketed toward older adults. By 2030, about 60 percent of the world’s population will live in cities, and a growing share of them will be seniors. The World Health Organization’s Global Age-Friendly Cities Guide encourages public agencies and private developers to incorporate amenities that allow older seniors to stay engaged in their home communities — reducing the likelihood that healthy older adults will move to retirement villages.
Stereotypes about aging have prevented businesses from making true inroads into this untapped market. That leaves a number of wide-open gaps just waiting for the right product or service. Large middle classes are barreling toward retirement, and they need solutions built for independent older adults, not caricatures of seniors content to rock on the porch. Here are a few standout industries in which investments today are sure to pay dividends in the future.
Aging in place has major implications as a strategy, and it offers many ways for entrepreneurs to create value. Transportation is one of the most obvious sectors. If older consumers are going to give up the convenience offered by retirement communities, they’ll need convenient travel options to and from their existing homes.
In the developing world, adults who are no longer able to drive themselves often face a dearth of transit options. The older a person gets, the less likely he or she is to continue driving. This presents a clear obstacle to successfully aging in place.
Lyft and Uber offer templates in the sharing economy. But they require apps, and seniors have been slow to embrace mobile devices. In fact, only one-quarter of people older than 65 owns a smartphone. Here’s the multimillion-dollar question: How can seniors close the transport gap without needing to adopt the buying habits of younger generations? The entrepreneur who finds a workable template or creates a new way to get buy-in from seniors will tap into a significant market.
Aging in place has become more attractive in part because the Western model of retirement communities (and nursing homes, for those who need skilled care) clashes with cultural traditions around aging.
In China, for example, retirement complexes and nursing homes have been slow to develop. There were only 26 nursing-home beds per 1,000 senior citizens in 2015. The economic benefits of enrolling a parent or grandparent in such a facility are at odds with the cultural expectation that elders will be kept at the center of the family and supported in luxury.
The field is wide open for an entrepreneur with a creative solution. Innovations that make it easier to live at home for longer have the potential to capture huge revenue from older adults. Connected home technology will play a large role. Services such as Nest or Amazon’s Alexa have pioneered the smart home as a luxury service — an added convenience.
Services that are intentionally geared toward helping seniors stay safe, independent and connected are the next big step. They’ll become part of an infrastructure for extended independence, not viewed as perks. Stair-lifts and non-slip bathtubs are just two strong precedents for these innovations. Seniors in developed markets are willing to invest in such adjustments. As technology fuels another wave of senior-oriented products, the connected home is a place to bet big in emerging markets, too.
Product developers have tried for years to come up with products and services to appeal to baby boomers entering their golden years. They’ve had little success.
Ken Dychtwald, a gerontologist and psychologist, offers a crisp analysis of the problem: “I have been in meetings where I ask Fortune 500 CEOs what they would do about this market [seniors], and often their minds jump to assisted-living devices for dementia or grab bars for showers. They don’t think of Lexus convertibles. They don’t think of Amazon. They should.”
Innovators realize they need to break down commonly held misconceptions that have become almost entrenched in society. Here are a few: Seniors don’t change product loyalties, older consumers don’t want new experiences, and a 65-year-old has the same desires and needs as a 90-year-old.
Mature consumers increasingly are driving many markets in the developing world. China’s travel sector is adjusting quickly to meet increased demand from seniors who are behaving like a new leisure class. This group is expected to become the tourism sector’s main movers. Chinese seniors plan to travel abroad at previously unseen rates: 10 million per year by 2030. The airlines, cruise lines, hotels and package tours that best meet their needs will be some of the biggest winners in coming decades.