Earlier this year, Barclays conducted research into how the over 65 demographic engages with hospitality and leisure businesses across the UK.
What it highlighted was the golden opportunity offered by the ‘grey pound’ – an opportunity that is largely untapped.
One fifth of UK income in the hospitality and leisure industry is generated by the over 65s, yet only 7% of Scottish businesses operating within the sector consider them to be their most important demographic in terms of revenue, with many focusing on 35 to 44 year olds instead.
Last year alone, an estimated £37 billion was generated by over 65s UK-wide and research indicates that the sector could be missing out on at least a further £16bn by underestimating the spending power of the older generation.
Thanks to high levels of disposable income and more free time, the 65+ age group is spending an average of £3371 per annum on hospitality and leisure services compared to £2486 across all age groups. With the total annual spend of over 65s predicted to grow to at least £57 billion by 2025, the time to act is now – but how?
Of the Scottish companies surveyed, 87% believe they are already engaged with the over 65s and 42% of companies target products and services specifically at this age group.
These are encouraging figures, but that leaves more than half of businesses with no products catering to the ‘overlooked generation’.
Of those companies with no plans to introduce new products and services, the main reasons include never having considered it before (33%), or that they see little financial opportunity in the age group (27%) highlighting again the lack of awareness of just how lucrative the over 65 demographic really is.
Almost three quarters (72%) of Scottish operators believe competition in the over 65s space will increase in the next five years.
To ensure you are best placed to win their business, consider the following:
• Have personalised conversations with your audience. Successful use of big data allows companies to have specific conversations with each demographic that will be entirely relevant to them.
• Businesses should regularly review their product and service offerings. Our research revealed that consumers were less satisfied with the products and services offered for their specific age groups, particularly the over 65s.
• In the digital age, businesses must adapt to the multi-channel future. Consumers are increasingly using the internet for various stages of the purchasing journey; if businesses make this process as easy as possible it will be of long-term benefit. That said, the over 65s are still inclined to be influenced by print advertising and editorial so be sure to vary the approach across age groups to achieve maximum impact.
• Operators must capitalise on brand loyalty. In the hospitality and leisure sector loyalty is strong, and increases with age – 41% of those aged 65 and over were loyal to particular brands, compared to 19% of those aged 18 to 34.
• The top three factors in driving loyalty among over 65s are level of service, value for money and rewards and incentives in that order. Prioritise these areas to tap into their increased brand loyalty.
The Scottish hospitality and leisure sector is well-positioned to capitalise on the growing future spending power of the older generation – but the first step is to recognise the huge potential that is already sitting there untapped.
• Paul Smith is corporate development director at Barclays Corporate Banking, Scotland.