The grey pound – consumer trends

With falling birth rates, slowing population growth and greater longevity over the next 20 years, the older demographic is growing rapidly as a proportion of the population, and the total number of people aged 65 or older will almost double from 600m to 1.1bn globally. The effects of this shift will be strongly felt in developed countries such as the UK, where the ‘grey pound’ now accounts for £320bn of annual household spending and the over-50s hold over three-quarters of the nation’s financial wealth. Adding in the potential impact of pension reform and impending interest rate rises, this increasingly large and wealthy demographic represents a big opportunity for consumer businesses and retailers.

Older people are living active lifestyles for longer, while also becoming increasingly active and confident online, and both trends are having positive effect on several markets. Online retail, including grocery delivery, is becoming increasingly popular as a more internet-savvy generation of retirees move into old age, with convenience being the primary driver of purchasing goods online. According to a recent study, 86% of over-55s spend regularly online and more than half now shop online for their groceries – a proportion that is only likely to rise in line with growth in greater internet usage and smartphone penetration. Growth in tablet devices are one key driver that is making ‘silver surfers’ the fastest growing age group for internet adoption: tablet numbers among over-55s in the UK have grown sevenfold since 2012, and nearly a third of tablet owners in the UK now belong to this demographic.1 Secondly, more active lifestyles among older consumers are likely to draw larger numbers out of their homes for leisure activities such as eating out, and restaurants stand to benefit from this: CEBR forecasts a 6% increase in over-50s spending on food and non-alcoholic drinks to £54.6bn by 2018, as greater leisure time and expendable savings also drive the tendency to dine out more frequently. It could also be argued that these fundamentals are underpinned by a generational shift in attitudes towards eating out, as more profligate baby boomers replace those whose spending mentality remains influenced by the frugality of wartime rationing.

Over the last decade, ‘grey pound’ consumer spending among over-50s grew on average 4.4% a year – faster than any other demographic – and in addition to being the biggest spenders, they are also the fastest-growing and highest-earning segment of the population.2 Increasing disposable income is likely to be further supported by recent pension reforms and impending interest rate rises: since 2015, savers have been given greater freedom to withdraw lump sums from their pension pots from the age of 55, and it has been suggested that a rate rise could happen as early as Q1 next year – a positive sign for a demographic that tend to be net savers. These factors have huge implications for consumer-focussed businesses, yet despite the size of the opportunity, the ‘silver-segment’ remains relatively underserved; historically the majority of advertising spend has been targeted at a younger demographic, and this remains the case today. However, as baby boomers head into retirement, over-55s are expected to contribute nearly two-thirds of retail sales growth over the next decade3 clearly, for companies that take the time to understand the different needs and attitudes of segments within this consumer group, and can alter their propositions accordingly, the rewards will be great.

In Germany and Japan, the two countries with the highest proportion of old people in the world, commerce is increasingly adapting to the needs of the elderly, from specially-designed shopping malls offering pension-day discounts in Japan to magnifying glasses, wider aisles and non-slip floors in German supermarkets. The UK is not too far behind in the ageing stakes, so which consumer sectors stand to benefit most by adapting their offering to the needs of older generations? Older people tend to spend more heavily on services, such as tourism and healthcare. Two of ECI’s investments fall into these respective categories, Great Rail Journeys and Premier Care, which have thrived by developing propositions that play to the needs of an older demographic. GRJ’s core customer base of affluent over-55s are attracted to their content-rich rail itineraries that have a cultural slant and take the organisational hassle out of traveling. Premier Care provides specially adapted baths and showers for elderly people with mobility difficulties, enabling them to continue to function independently in their own homes.

As these demographic trends play out over the next decade and beyond, the grey pound looks set to be a good long term growth driver for investing across ecommerce, leisure and food and drink sectors, and we will continue to have a keen interest in consumer businesses that are able to capitalise on the opportunities it offers.

1 ComScore
2 ONS
3 Conlumino research


Please contact Chris Watt for further information.

About the author

Chris Watt

"I’m one of the Managing Partners at ECI and a member of our Investment Committee. Having developed something of a focus on the travel sector in my early career, over the last few years I have been involved with a broader range of investments spanning EdTech, pet food, financial services and online marketplaces."

View Full Profile
George Moss, ECI

About the author

George Moss

"I’m a Partner in the Investment Team and really enjoy leading investments into and working at board level with high growth tech-enabled businesses across a number of subsectors, for example travel, digital marketplaces and healthcare tech."

View Full Profile

ECI announce close of latest fund

Find out more