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The Stats Guy: Grey nomads, growth industries and some educated guesswork

From caravans to nappies – marketers need demographics to work out what will sell.

From caravans to nappies – marketers need demographics to work out what will sell. Photo: TND

This week we are engaging in the one of the most basic forms of demographic forecasting to see shifts in consumer markets. Measuring population growth by age allows us to roughly estimate changing market sizes for age-specific products and services.  

We are looking at population change in absolute numbers as well as in relative terms. Sometimes it’s preferable to have shifts in market sizes estimated in percentages (i.e. retirement living facilities have a growth potential of 44 per cent in the coming decade) while at other times the absolute size of a market helps drives home the magnitude of change (Australia will have 1.4 million additional people of retirement age).  

The most recent official population forecasts in Australia come from the Centre for Population – essentially a bunch of demographers in Canberra tasked with feeding the treasurer with decent population data for his budgets. I expect the most recent data to be spot on – we might even see more growth in the under-40 cohort.

For today we will take these forecasts at face value. Australia will grow by 3.5 million people over the next 10 years, but some age groups will grow at higher rates than others. 

Let’s think through a few products that are clearly targeted at specific age cohorts and see how demand might change in the coming decade. 

 

The 85-plus cohort is going through the roof. As I wrote previously, demographers obsess about the age of 85. Half of us won’t reach that age. Half of the lucky half that lives past 85 needs care. In the coming decade we grow that cohort by 60 per cent (or 330,000 people). We need to find ways of caring for an additional 165,000 additional humans.

Any products enabling our oldest cohort to live independently for longer will boom. I am thinking of home modifications (wider doors to allow wheelchair access), wearable technology (like Apple Watches alerting kids and emergency services if an ageing parent has a fall), and other mobility aides (electric recliners or lifts).  

The 75-84 cohort grows by a whooping 44 per cent. That is exactly the age of residents in retirement living (rather than aged care) facilities. Demand for this niche property segment will be very strong. 

Are you selling caravans? Prepare for tears of joy. I think of the 65-74 cohort as newbie retirees. As a group they tend to have both time and money – a dream come true for any marketer. They spend lots of money on their grandchildren and on travel. This group will grow by 17 per cent. Doesn’t sound like much? That’s an additional 420,000 people (pushing the market size to 2.9 million people) who will haul caravans of your lot faster than you can tap their credit cards. 

Thinking of buying a Harley-Davidson? You are most likely aged 45 to 54. That’s by far the largest customer segment for the world’s most iconic motorcycle.

The fact that this age segment grows by 12 per cent should be good news for the company. I might go as far as speculating that the average Harley buyer will be older in the coming decade. During their 40s and early 50s, most parents will have less time and money to spare for expensive nice-to-haves like a Harley. Will potential Harley drivers give up on their dream or will they just postpone their purchase?  

The younger half of the millennial generation (born 1982-99) finds themselves aged 33 to 42 in the coming decade. These are peak baby making years. Maternity clothes will need to cater to Millennial fashions and values. Expect an even stronger focus on sustainability in this product category. Relative growth of 10 per cent is below national average but in total numbers this market segment is booming. Plenty of opportunities for new niche players.

More millennials starting families will also be seen as good news by car dealerships. A new family member often means car-free households cave in and buy a car – after all they just left their hipster inner-city apartment and moved to the urban fringe to secure a three-bedroom house. Depending on the working situation, young families often buy a second car. Car dealers will be happy chaps but will likely see massive competition from online car sellers as millennials will be more likely to a $30,000-plus transaction online than older generations. 

At 25 per cent growth, young adults aged 18 to 24 are a goldmine for certain businesses. These additional 552,000 people (total market size of 2.8 million) will overwhelmingly move to our inner-cities, half of them will be university students. Running an affordably priced inner-city pub, managing purpose-built student accommodation, selling or servicing bicycles, and providing travel services will be lucrative. Since this is roughly the sex, drugs, and rock’n’roll phase of the lifecycle certain other products should also benefit. 

By now you understand the pretty simple logic behind eyeballing future market opportunities from a top-level demographic perspective.  

To gain a deeper understanding of market shifts we will obviously need to factor in more datapoints (wealth, shifting consumer values, geography, politics and more). Today’s quick and dirty method goes a long way in anchoring your predictions in facts though. 

What services or products has your employer your business on offer? I am sure some of these offerings focus on a narrow age group. Can you utilise this data to help you position your offering in a more productive way? More importantly, are there any products that you know of that are only consumed by a very narrow age group? If so, do us a favour and share them in the comments – I am sure there are a few quirky gems out there. 

Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. Follow Simon on Twitter, Facebook, LinkedIn for daily data insights in short format. 

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