Senior Strength

November 11, 2008
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Perhaps this year’s best advice for marketing to seniors comes from a buyer at a supermarket chain who happens to be a senior himself:

“There’s a misconception that seniors are on fixed incomes and strapped for cash. There is an affluence factor, or net-worth factor, that eludes other demographic groups. Their house is paid for; their car is paid for. Plus, they have time. They have time and money.”

Although today’s economic turmoil has affected everyone, manufacturers and retailers that study the senior market say the media has made too much of the plight of those receiving Social Security checks and so-called meager pensions. In the words of Jane Schmidt, who works in sales support at Triad Pharmaceuticals, part of The Triad Group of Hartland, Wis., “We sell hemorrhoid cream. That’s pretty recession-proof.”

It’s true: Seniors purchase a substantial amount of typical home health care “necessities.” But today’s senior demographic refuses to be pigeonholed as buying only low-cost, low-quality home items. In fact, today’s seniors have money to spend, and they want the best.

The Power of Packaging

Schmidt notes that even though her company’s hemorrhoid treatment products are not subject to the vagaries of the economy, she’s seeing changes in her marketplace. Most prevalent is the trend toward packaging that it easier to open - what she calls “friendlier.”

Packaging that is easy to read and easy to open is a clear opportunity for marketers hoping to gain the loyalty of the burgeoning senior market.

“One of my competitors is putting magnifying glasses on a chain on shelf tag molding,” says one retailer who asked not to be identified. “It’s a great idea and we should be doing it. From a packaging standpoint, we aren’t really addressing the aging of America.”

He does add that management at his company’s retail outlet is assessing typeface for readability and the size of the type on the primary panel and side panels.

The print on product packaging often is too small for seniors to read. But simply enlarging the font size isn’t a solution. Manufacturers complain there is too much “must-have” info that needs to be on product package - much of it dictated by the federal government, whether it be a nutrition panel on food or warnings and side effects on over-the-counter medications.

Retailers aren’t very sensitive to those complaints, either. Whoever can figure out a way to make the type readable and still get info on the label will win the loyalty of a huge group of people, says one retailer in the southern United States who asked not to be identified.

Package labeling is a huge and controversial issue, says Bob Anderson, former vice president and general merchandise manager of proprietary food products at Bentonville, Ark.-based Wal-Mart. 

“I was a major proponent of labeling food items ‘100 calories’ so that people would know how much they were eating,” he says. “People need to know that three cookies or nine cheese puffs are a full serving size. It was hard to do; suppliers didn’t want to do it.” 

Also in an effort to accommodate the senior consumer by way of product packaging, another retailer says he’s started measuring the torque it takes to open vacuum-sealed jars.

“You can’t imagine what it takes to open these jars,” he says. “We’re studying how wide the top should be; is the jar too small to grip; is it too large; could it have a better handle; is it lightweight but strong? Packaging is an area in private label where we can really stand out from national brands.”

In addition to making the package more readable and easier to open, marketers need to eliminate unnecessary and wasteful packaging to gain the loyalty of this segment.

“Seniors are more environmentally conscious than younger customers,” Schmidt says, “maybe because they’ve been around long enough to see a change in the environment, in air quality and so on.”

In fact, a report published in August 2007 by Rockville, Md.-based Packaged Facts noted, “The likelihood of someone being an eco-shopper actually trends sharper with age. Seniors - 65 and older - are the only age group to show a markedly above-average score among all eco-shoppers.”

Those 75 and older index even higher - 144 - than those 65 to 74, who index at 124. The average is an index of 100. Surprisingly, shoppers in the 18-to-24 age group index the lowest - 87 - in the data, meaning they care less about products that use recycled paper, banning pollution, buying environmentally friendly products and looking for natural and organic foods when shopping.

Schmidt says her company recently spoke to retailers about removing a sealed jar of medicated pads from the cardboard carton.

“They said yes, partly because without the carton, we can price the item better,” she says.

But that’s not the only reason to re-think your packaging (although it probably is the reason behind such thinking). Schmidt says less packaging means the product is easier to open, and consumers end up with less garbage to carry out to the street and less material that has to be recycled.

An Underserved Market

Private label manufacturers and those who market their products would do well to heed the nuances of this market. Investment house BMO Capital Markets in Canada and New York noted in a report after the latest FMI show, “Food companies need to focus products, packaging and marketing on older consumers, as the group controls 70 percent of overall disposable income.”

The BMO report goes into further detail: “Successful packaged food companies will increasingly align new products, packaging and marketing with older consumers as consumers in the 55-plus demographic continue to become increasingly more important/ relevant. The 55-plus market … is larger than the combined Hispanic and African-American markets and presents tremendous opportunity.”

Although the report identifies great market potential for retailers and manufacturers, it wags its finger at the retail grocery industry.

“Despite the size and spending power, this segment continues to be underserved by the packaged food [industry] and food retailers as companies have made feeble efforts to fulfill the unique needs of this important market,” the report states.

Is this true? Perhaps, says Tom Stephens, founder of the Canadian consulting firm Brand Strategy Consultants. Stephens formerly was executive vice president of President’s Choice International and was responsible for development of the President’s Choice program for Loblaw Brands Limited in the United States and Bermuda.

When asked why manufacturers and retailers don’t mine this market, he says a lot of marketers just don’t use the data available to them.

“The number of retailers who use the data to segment customers, including the 55-plus customer, is dismal,” Stephens says. “You simply don’t see segmentation on the shelf. There is a lot of opportunity out there.

“Why do you think the 55-plus customer goes to specialty food outlets? That consumer doesn’t want to shop in a 100,000-foot store,” he adds. “Why do you think Trader Joe’s is doing so well? It isn’t a one-stop store, but people shop there anyway.”

Customized to Satisfy

More than one consultant in the senior age group mentioned that bread, specifically large loaves of bread, make them angry. And large jars of spaghetti sauce, too.

“This market - where most of the money is and most of the people are - doesn’t want offerings packaged for a family of six,” one consultant complains.

Stephens says Tesco and Wal-Mart are testing a couple of smaller store formats in the United States, but he isn’t sure of their success yet. He also points to a new format in Canada that he likes: a cluster of specialty stores, including a bakery, fishmonger and cheese shop.

This design is “like a village market,” he says. And there’s no reason all of those couldn’t be operated by the same retailer, breaking down a 100,000-foot store into 10 smaller, quainter and more manageable units.

“If your shopper has failing knees or is short of breath, parking 100 yards from the store and then going into this massive space is not a good shopping experience,” Stephens says.

He admits that he may be dreaming about the quaint village market concept, but says a number of retailers are getting the formula right for senior-oriented private label, including Safeway and Kroger.

“Safeway’s Eating Right is a great program, a very successful store brand,” he says.

There’s no question that the senior care market gravitates toward more healthful food offerings and items to keep seniors’ growing set of maladies, aches and pains in check. Data from The Nielsen Co., New York, show a growing use of terms on labels such as excellent source of fiber, good source of fiber, low-salt and reduced-salt.

And private label is picking up on these customized ingredient trends that are focused on improving or maintaining health. According to Nielsen, private label salt substitutes were up 7.4 percent in 2007, and private label sugar substitutes were up 34.4 percent. These numbers show tremendous strength in store brands, as sales of all salt substitutes and all sugar substitutes were up just 2.1 and 1.7 percent, respectively.

It’s clear that private label opportunities exist in the market for products seniors perceive as “healthier.” High blood pressure, which often appears with advancing age and can lead to heart disease or stroke, usually is treated with a lower-sodium diet. Type 2 (or adult-onset) diabetes is a growing problem among overweight and aging adults, and sugar substitutes are increasingly their sweetener of choice.

Pain relievers, especially for arthritis, also are seeing significant growth. According to Nielsen Homescan data, senior couples and senior singles account for 13 percent of all commodity volume (ACV). Their index for arthritis pain remedies is a whopping 316 for senior couples - the average being 100 - and 148 for senior singles. (For other categories popular with the senior segment, see the sidebar on p. 121.)

U.S. Census data reveal that about 80 percent of seniors have at least one chronic health condition, and 50 percent have at least two. Arthritis, hypertension, heart disease, diabetes and respiratory disorders are some of the diseases that show up most often. It’s no wonder that getting this customer into the store with the promise of cheap prescriptions is a well-worn store strategy.

A Growing Market

You’d have to be living under a rock to not know that the senior market is booming and predicted to get even bigger, but some of the data are so impressive, it’s hard to imagine what an impact seniors soon are going to have on the retail market. The first of the baby boomers hasn’t even hit 65 yet - that won’t happen for another two years and “change.”

According to the American Association of Retired Persons, which gets much of its data from the U.S. Census, 70 million Americans will be over 65 by 2030 - one in every five Americans. Moreover, more than 7,000 Americans turn 65 each day. By 2011 (less than three years from now), 10,000 people will turn 65 each day. Currently, the over-65 group makes up just 12 percent of the total population, so it makes sense that they account for about 13 percent of ACV.

We know a lot about this demographic - we know what ails them; we know that they hope to keep looking, acting and feeling young; and we know the types of products they want and the types they need. Yet retailers still have a tendency to target younger consumers with products and advertising.

“What we need is true leadership at some of the big food companies. Sometimes you have to lead consumers, get ahead of the curve,” Anderson says. “Tell your R&D people to step up to the plate. These companies can have an impact on our nation’s health, on how well we are able to function when we get older. I just don’t see them doing it.”

But companies that truly study the senior care market - those that ponder what product improvements can be made, that segment the senior care market into logical groups (a 56-year-old and a 76-year-old do not buy the same things), that create larger and easier-to-open packaging - are the ones who are going to win the game and laugh all the way to the bank.

Sidebar: What Do Seniors Want?

Retailers, private label manufacturers, consultants, analysts and others who study the senior care market shared a number of complaints and observations and ideas related to that market. Read on for a few of these observations.

“Why is everything so hard to reach? ... Prices are hard to read … If your package is easy to open, tell me so in big type on the front of the package.”

Seniors buy wild bird food at more than twice the rate of the average American, and they buy almost three times the number of home permanents. Senior couples buy a lot of scotch, gin and cocktail onions, and senior singles buy a lot of cat food.

Senior males are stepping up to the grooming plate and seeking to “look good for their age.” A report from New York-based Datamonitor, a worldwide trend watcher, showed that seniors “spend more time preening than the average teenager.” Witness the success of Touch of Gray, a hair-color product for men that allows users to fine-tune the shade of gray in their hair. Sales are expected to reach $20 million in its first year on the shelf.

Supplement sales will continue to grow, and “superfoods” could do well, too. Seniors are seeking products that help with joint health (glucosamine, chondroitin); digestive health (probiotics, prebiotics and enzymes); formulas and foods that promise to improve immunity, eye health, sleep or brain health (not just omega-3 and antioxidants, but also crossword puzzles, Sudoku puzzles and word search puzzles). And, of course, products and foods that promise a healthier heart also will increase in popularity.

The adult incontinence market is expected to grow significantly, and observers expect private label to continue to claim a large share of the segment.

Other opportunities include kitchen tools that are ergonomically designed, as well as easier-to-open jars, cans, bottles or other packages.

Pain relief also is a huge market-driver, with private label brands leading in some analgesics categories, especially those in which the consumer already knows the generic name (such as ibuprofen, naproxen and acetaminophen).

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