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Older households can be classified into six key groups based on their main spending patterns, according to research published by the International Longevity Centre-UK (ILC-UK) and the Personal Finance Research Centre (PFRC) at the University of Bristol, which paints a fresh picture of consumers' financial wellbeing in later life. This article is copyright 2014 The Best Customer Guide.

The summary of a year of research by PFRC and ILC-UK explored issues as broad as patterns of spending, debt, financial satisfaction and quality of life in older age, based on an analysis of the 2010 Living Costs and Food Survey which explored how types and levels of expenditure vary among the over-50s.

The study, entitled Dominant Patterns of Expenditure Among Older People in the UK', was published in in the journal Population Ageing, and identified six key categories of older consumer:

  1. The Conservative Consumer
    Conservative Consumers represent the largest group, comprising 46% of older households. The striking feature about this group is that they spend far less on non-essentials than older households as a whole. Their average weekly spend on recreation and culture is £20, compared with an overall average of £33; and £10 per week on eating out compared with £19 overall. These tend to be older households: 22% of them are headed by someone aged 80 or over, compared with 15% of all older households. The majority (56%) said their main source of income was welfare benefits.
  2. Foodies
    Foodies account for 19% of older households. They have very high expenditure on food, spending on average £58 per week compared to £34 for older households generally. They may like good food and home entertaining, or they may have special dietary requirements that increase their food bills. They are relatively well off: only 18% are in the lowest household income band, and they are more likely than the average older household to live in a large house.
  3. Socialites
    Socialites comprise 12% of older households. At £405 per week, their overall average expenditure is the highest of all the groups. Their high spending on eating out, holidays and recreation (£131 per week) also marks them out. They are a fairly young group, with three-quarters aged under-65, and are also relatively well-off - more than half of these households are in the highest income band.
  4. Burdened By Bills
    Burdened by Bills account for 11% of older households. They are distinct because they spend a very high proportion on housing, fuel and power (£4 in every £10, which is twice the average). Most of this goes on housing costs, which is likely to be rent payments as 70% live in rented homes. Like the Conservative Consumers, this group tends to have low incomes.
  5. Smokers
    Smokers comprise 9% of older households. Most notably, 15% of their total average expenditure is on tobacco and alcohol, amounting to an average of £36 per week, £28 of which goes on tobacco. They are one of the younger groups, with 62% aged under-65, and they are more likely to rent their homes than own them.
  6. Recreation and Clothing
    Recreation and Clothing is the smallest group, accounting for 4% of older households. Like the Socialites, they are a high-spending group, averaging £392 per week. At £65 per week, they spend more on clothes and shoes than all the other groups combined. Their spending is also above-average on recreation and culture (£65 per week). Most of this group is aged under 70; half of them are in the highest income band.

"There is much talk of the potential spending power of the older consumer, and indeed there is a big and growing market," said David Sinclair, assistant director for ILC-UK, "But this research highlights that the over half of older consumers are either Burdened by Bills or Conservative Consumers, suggesting that relatively low levels of spending are not atypical among older people, particularly the over-80s."

The research concluded that age alone may not be the best way of segmenting older consumers. In fact, if marketers want to better understand the diversity of the older population and how to best serve this group of the population, it is critical that they seek new approaches to segmentation. According to David Hayes, author of the research paper, "This research highlights the great diversity of spending behaviours in later life and supports the idea that there is no such thing as 'the older consumer' - something that policy makers, service providers and marketers must bear in mind."