The key is looking ahead, looking over the horizon to see how our customers are changing and targeting the emerging types of ‘power consumers’. In this section we look at three emerging ‘power consumer’ types who will drive consumption over the next decade. Once thought of as niche markets, the demographic, economic and social changes washing across the world mean that these former niches are becoming big enough that no business will be able to ignore them.

Three emerging ‘power consumer’ types

The three emerging power consumer groups that will drive purchasing over the next decade are:

• Wealth-driven Upshifters
• Quality-driven Downshifters
• Active and affluent retirees

For each of these groups there are four essential questions for small business owners:

1. Who are they?
2. How many of them are there?
3. How much do they have to spend?
4. What are they buying?

Our Small Business Futures workshops explore these groups in detail. We present customised information, focusing on the district that hosts each workshop, on each group’s presence and importance in the area, the local impact and how local businesses can reach these emerging markets.

Wealth-driven Upshifters

Upshifters are career oriented people working in highly paid jobs – often professional or para-professional or entrepreneurs in a range of industries. Upshifters include the ‘mobile singles’ and DINKs (households with dual incomes and no kids).

Upshifters work long hours, including weekends, and there are many of them – for example 30% of men in full-time jobs work more than 50hrs/wk and 15% work more than 60 hrs/wk. There are many self-employed Upshifters too, with 22% of small business operators working over 50 hours a week and 4% working over 75 hours a week.

Some 13% of Australian households had incomes over $2,000 per week in 2003-04 – up from 9% (adjusted for inflation) 10 years earlier. And what do they spend it on? The latest ABS Household Expenditure Survey indicates that in 2003-04, the richest 20% of households spent a sizeable $1,480 per week. That amount is half as much again as the whole average weekly full-time male wage of just over $1,000. And it was an increase of over $300 per week over the 1998-99 figures (over $80 per week taking inflation into account). The main expenditure items were food and drink ($153 pw), transport ($139 pw), housing ($135 pw) and recreation ($113 pw).

Time is the luxury good for Upshifters, who are big buyers in service-related industries including: cleaners, gardeners, decorators, landscapers, nannies, in-home caterers, fitness coaches, and of course restaurants. Value-adding to their busy lives is the key.

Too busy to cook, but need the kudos?
www.dreamdinners.com, for 12 to 24 guests ...

Implications for small business

Who are your high-value customers?

Why do they come to you?

Do they recommend your business without hesitation?

Quality-Driven Downshifters

Downshifters have turned away from the rat race to ‘downshift’ to a slower paced lifestyle, often out of cities. But they not ‘new-age dreamers’ that have ‘opted out’, having made the change for personal not philosophical reasons. They often run their own white collar business, or enjoy contracting their time to a portfolio of clients. The internet helps them locate out of the corporate headquarters, and seek their own balance to life, work, friends, family and spirit.

The surge of big business outsourcing in the 1990s created an opportunity for Downshifters to move out of the fringes of society and into the mainstream. A survey by The Australia Institute found that 23% of adults in the 30-59 age range have downshifted over the last 10 years – excluding people who had started their own business, turned down a promotion, returned to study, retired or had babies

Downshifters actively balance their income with other aspects of their lifestyle. But in true late baby boomer and Generation X style they want it all, the goodies and the lifestyle. The Australia Institute survey found that Downshifters generally eat out less and spend less when they do, no longer have costly holidays, nor buy expensive clothes for work, and are generally less interested in luxury goods or symbols of status. But ‘having a less materialistic lifestyle’ was important to only 5% of Downshifters.

Quality goods and services are the key, in areas like: cooking and healthy food; physical activities; musical, hobby and recreational pursuits; community, club and learning activities.

Downshifters can be fussy people – they have the time and income to exercise great discretion about what they buy and where they buy it. Downshifters look as much for what’s behind the product, service or seller, as they do at what’s up front – and are driven by values as much as value. Reputation and referrals are crucial – Downshifters have the time to find you – and an internet presence doesn’t hurt!

Implications for small business

How would you change your business if a quarter of your customers were more focused on quality than price?

Do your customers see your business as credible and authoritative?

Do your products and services have a unique quality or experiential edge?

Active and Affluent Retirees

As we saw earlier, the leading edge of the baby boomers is just starting to move into retirement. Now that they have the numbers, and many of them have key roles in public life, they are changing the definitions of retirement as they go. 50 is the new 30, 65 is becoming the new 50, and it won’t be long before 75 is the new 60.

This group is more active than any other retiree group before them. They are fitter and busier, have more peers around them and some have the wealth behind them to be a very significant market segment. Some active retirees are even overlapping with Upshifters – known as SKINs (Spend Kids Inheritance Now).

There are currently some 3 ½ million Australians over 60, and ABS population projections expect this number is to double over the next 25 years. As the leading edge of the baby boomer demographic bulge moves towards retirement, the number of Australians turning 65 will double in just 20 years. The number of 64 year olds in Australia was 145,000 in 2000 and is 171,000 this year. By 2010 it will have increased to 216,000, by 2015 it will be 257,000, by 2020 it will be 275,000, and by 2025 it will have more doubled the Year 2000 number at 304,000. That’s a lot of birthday candles.

While the baby boomer generation is wealthier than previous generations of retirees (the average wealth of 50 to 64 year-olds in 2002 at $240,000 was almost double that of ten years earlier according to AMP-NATSEM Report 2), retiree wealth and spending power will be highly polarised. In its 2002 report Live Long and Prosper AMP-NATSEM noted that the richest ¼ of 50 to 64 year olds owned 58% of the total wealth of that age group. That richest ¼ had average pre-retirement wealth of $559,000 per person, more than double that of the next ¼ and nearly 12 times that of the poorest quarter.

Over 60s may not all be big spenders individually, and our ageing population is usually cast in terms of economic doom and gloom. But The Australia Institute discovered that only 3.5% of Australians over 65 require assistance with daily living – the other 96.5% are living independently. And with the number of over 60s expected to double, and with a good proportion of them retiring with a sizeable pool of assets, they are expected to account for much of the forecast growth in retail spending (Access Economics).

Active retirees are good consumers of ‘something to do’. Things like: musical concerts, theatres and art galleries; holidays, books, magazines and communications; outdoor activities such as golf; learning and skills building; home comforts and healthy foods.

Active retirees are living independently, and are buying in the services they need to maintain their independence. And they are active too. The Perisher Blue ski resort offers a discounted season pass to over 65s, but the real discount now doesn’t kick in until buyers are over 70 – as too many 66 year olds were claiming a discount, taking up space on the slopes and keeping dollars out of the resort’s bottom line!

Implications for small business

What proportion of your sales are to customers over 60?

How prepared is your business for double the number of customers over 60?

How would you change your product or service mix to appeal to active, affluent retirees?

Top of Page