a new chapter: the joy of empty nesting

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Somewhere in America, seven baby boomers will turn 50 every minute from now until 2014. Marketers' most important customers are these newly liberated parents.

don't call Chris Klepeis "a woman of a certain age." Or, heaven forbid, a senior. If you do, chances are the 52-year-old from Smithtown, New York, might become a little ballistic. Although some marketers may rank Klepeis among the delicately phrased "mature" cohort, she doesn't consider herself "a geezer," "a fogey," or even all that mature. Rather, this human resources exec, who recently moved jobs to a dot-com, says she's in better shape now - physically, mentally, and financially - than a decade ago. Ever since their only daughter, Jill, graduated from college and moved out on her own seven years ago, the Klepeises have added about $15,000 a year to their discretionary funds. And the couple isn't shy about spending that money on life's little luxuries. On weekends, after logging in 10- to 12-hour workdays, Klepeis and her husband, Richie, a 55-year-old master printer, may hop on their motorcycles (fully loaded BMWs, with BMW clothing accessories, of course) for a road trip. Or they may go out to dinner, an activity they indulge in as often as three times a week. If they want a cozy night at home, the Klepeises settle into their home theater, just one of the perks of the estimated $40,000 the couple has spent on remodeling the house in recent years. "I'm not my mother's 52," Klepeis says. "I'm not in the second half of my life. I'm in the first chapter of a brand new book."

welcome to the golden age for the Age of Aquarius. By some estimates, 30 percent of the nation's 78 million baby boomers are - or are about to become - empty nesters this year. The rest will enter this phase over the next decade; somewhere in America, seven boomers will turn 50 every minute from now until 2014. Yet many marketers are ill-prepared to reach this new class of empty nester - consumers who have more money to spend than their parents' generation. "Empty nesters today are affluent, and they are disproportionately represented among most retailers' customer bases," says Sandra Gudat, president of Denver-based Customer Communications Group, which designs relationship marketing programs for companies. "It's typical for a company to say the average customer is 40 years old, has two kids, and makes $40,000 a year. Once you drill down and look at the customer base, it's illuminating. Their most important customers are the empty nesters."

This generation isn't the first to see its discretionary income rise when the kids are grown and out of the house. The median household income of married couples without children at home has grown 25 percent since 1974, after adjusting for inflation, according to American Incomes: Demographics of Who Has Money (New Strategist Publications, 3rd edition). Historically, previous generations have squirreled away that money for retirement. But by all accounts, boomers will have more money and use it differently than their predecessors - even if some of their kids end up moving back home. That's because this group is expected to stay in the workforce longer. They may "retire" from a particular profession when the children are grown, but they're unlikely to give up work completely. These income trends will only intensify in the coming years, according to Age Wave IMPACT of Emeryville, California. About 84.5 percent of the empty-nest parents the company surveyed experienced a boost in discretionary income when the kids left home; more than one-third reported a rise of $10,000 or more.

But few marketers have figured out how to best target the new empty-nest boomer. Perhaps that's because trying to neatly define the boomer's empty-nest psyche is proving as vexing as trying to discern the messages hidden in the Beatles White Album. While one empty nester might be gearing up to test his or her entrepreneurial spirit by starting a business, others might be taking early retirement, thanks to some wisely planned investments. Still others, like Chris Klepeis, a former airline executive, have changed careers and plan to work well past the traditional retirement age. Marketing products to this tie-dye mix of consumers may prove challenging. But ignoring this market may prove even more costly. Says Bill Burkart, CEO of Age Wave: "The empty-nester boomer represents a real marketing opportunity."

Scudder Investment Services Inc. is one company that recognized the potential of empty nesters early. Now it's poised for high growth as boomers enter this stage of life. The financial services firm, in association with the AARP, in 1986 created an investment portfolio geared to the over-50 market. Last year, Scudder surveyed 5,000 boomers and found that 69 percent felt their financial situation will be even better in five years. According to the survey, more boomers (82 percent) feared that they would have deteriorating physical health than not have enough money (66 percent).

But the real change in the maturing population is their will to keep on working: According to Scudder's survey, 53 percent see retirement as an opportunity to dabble in a new career. "That was our wake-up call," says Laura Trumble, a Scudder spokeswoman. "These people don't want to agonize about investing. All the research shows they want to travel and have fun." Adds Marilyn Capelli Dimitroff, a boomer and president of Capelli Financial Services Inc. in Bloomfield, Michigan: "The boomers as a whole, and the empty nesters as a subset, will continue to set trends for the rest of the population."

besides making more money, empty-nest boomers will be looking for places to spend it. Finance, travel, and home remodeling are only some of the sectors that are likely to benefit from the boomers' aging process. Those who want to be successful at marketing to this group should recognize its need for value, says Communications Group's Gudat, who helps design marketing programs that reward "best customers" with special services such as pre-sale notices, special shopping hours, newsletters, and handwritten thank-you notes. The typical results: sales increases ranging from 8 percent to 15 percent, says Gudat, who has created relationship marketing programs for companies such as Pier I Imports and Macy's. "Some companies have just begun to realize that empty nesters represent a disproportionate amount of their profits," she says.

Take Mary and Jim Parsons of Wadsworth, Ohio. The couple's daughter, Tangee, graduated from college last year. Since then, the Wadsworths have added about $15,000 a year to their discretionary income. Mary, a hospital marketing executive, and Jim, a rep for a tool-and-die company, so far have invested the money. But they're not opposed to spending it on travel and other luxuries, Mary says. Their first big-ticket purchase is likely to be a new condo, with all the maintenance-free perks that come with luxury living. "I'm basically going to be looking at a mortgage as large as the house I'm selling," she says. "But, oh well."

That "oh well" factor is what all industries, including the housing and remodeling market, can count on. Last year's $135 billion home improvement market is likely to grow to $150 billion by the end of the year, thanks partly to boomers' propensity for comfortable and maintenance-free homes, according to the National Association of the Remodeling Industry (NARI). During 1996 and 1997, 47 percent of the 2.8 million new homes built in the United States were purchased by baby boomers.

Cynthia Latta, chief U.S. economist for Standard & Poor's DRI, a division of McGraw-Hill, expects the trend to continue for at least the next five years. "This is a move-up market," Latta says. "Even in previous generations, after the children left, parents got bigger ornicer homes. They're not inclined to buy down."

Spotting a demographic shift is just the first step in eventually profiting from it. Although these empty nesters are the least homogenous of any cohort, there are certain factors that help define who they are and what they want, explains Jock Bickert, president and chief executive of Denver-based marketing research firm, Looking Glass. His recommendation for an effective marketing strategy: "Don't talk down to these people," says Bickert, who believes the generational stereotype of the "sweet, saccharine older couple" is the kiss of death for marketers who want to tap the empty-nester market. "Although empty nesters are all over the map in terms of what they want, the common factor is these people aren't getting older no matter what the calendar says. Empty nesters and boomers will be young forever."

Allergan, Inc., a $1.5 billion pharmaceutical company, is focusing some of its efforts on helping aging boomers stay youthful. The company already manufacturers Botox, a drug plastic surgeons and dermatologists use to minimize wrinkles. Last year, sales topped $175 million from $12.6 million just eight years ago. In 1995, the company launched a line of over-the-counter skin care products called MD Forte. Priced higher than traditional drugstore brands, MD Forte is exclusively sold through doctors' offices - an important component for this demographic. "Baby boomers are the drivers," says Chris Dax, director of marketing for Allergan's skin care line. "They want the latest, greatest, most technologically advanced ingredients. But most of all, they want something that works. This is an educated cohort who wants value for their dollar."

Aside from being well educated and increasingly well preserved, empty nesters are becoming more techno-savvy, especially the affluent 45-to-54-year-olds with annual incomes of $50,000 and up. The youngest and the most affluent empty nesters, according to Bickert, will continue to use online capabilities for everything from the drudgery of e-mail to the high-stakes game of investing. Most of these empty nesters will also use the Net for shopping, information, and news-gathering research on financial markets, general education, medical services, and health and wellness information. "Two or three years ago, if you were over 30 you just didn't get the Internet," says Bickert. "Now everybody is on the Net, and the people who have embraced the technology are the middle-aged." Bickert expects the love affair to continue for one simple reason: "Empty nesters don't want to be bothered with the mundane. The Net simplifies their lives, so they can go on about the business of living."

Steak and Ale Restaurants recently realized it could grow its business by feasting on the aging boomer market. For now, fewer than 20 percent of the Dallas-based company's customers are true empty nesters. But they represent a far greater share of sales volume, says Bill Watson, vice president of marketing. "Frankly, it's going to require us to continue to reshape the proposition and image of our brand," he says. "We need to catch this next wave."

Reshaping the brand means that Watson and company are creating new offerings, like the nine-pepper filet and other exotic sauces to pique the taste buds of the 45-plus crowd. But food, says Watson, is just one part of the equation. With large disposable incomes and many choices in dining experiences, Steak and Ale wants to create an atmosphere, too. According to the National Restaurant Association (NRA), per-capita households consisting of only a husband and wife spent the most amount of money ($981) on food - 65 percent higher than the $596 per capita expenditures of couples with children. And the NRA expects that to continue in the near future. "The reasons we've seen baby boomers eat out more often than most other age groups is due to convenience and the exploding economy," says Michael Mount, NRA spokesperson. "People are making more money and are not as worried about the costs of dining out."

they're not worried about the cost of travel, either. According to the Travel Industry Association of America (TIA), one-half of all U.S. adults (nearly 98 million) took an adventure vacation within the past five years. Some 56 percent of these travelers were boomers. The TIA projects the rate of travel by Americans will rise 7 percent by 2002, fueled largely by the boomers. Says TIA spokesperson, Cathy Keefe: "Boomers are important to the travel industry because, along with the current rock-solid economy, many will continue to have much higher discretionary income due to solid financial retirement plans, increased individual investing, and the rise in stock options. With many planning early retirement, they'll have more time to travel."

You don't need to tell that to Kerry Touloumis. As supervisor of Traveltips, a travel organization based in Flushing, New York, he's already begun to see a shift in the kind of trips people want. About half of the group's 40,000 members are baby boomers, including empty nesters who are "sick and tired" of cruise ships. Instead, they're looking for "the great adventure."

To help fill the bill, Touloumis is booking vacations on working freighters - cargo ships that go to exotic ports-of-call and provide clients with a thrill a minute. "The passengers love it," says Touloumis. "They get to go to such cool places. We're not getting the calls for the seven-day trips to Mexico. We're getting boomers who want the 21-day trip to Fiji or Australia."

The cool factor is also helping to drive the business of Harley Davidson, especially among the boomer cohort. Buyers of the "king of the road" have a median age of 44.6 years old (91 percent are male, 9 percent female), with a household income of $73,800. "A lot of our buyers are baby boomers, and of that segment a lot are empty nesters," says Paul James, director of communications for Harley Davidson. "Some owned motorcycles in the past and got rid of them because of family duties. Now they're coming into the fold." It's the Harley mystique, says James, that's luring these buyers. "It's about the open road, the camaraderie, the individualism," he says. And it doesn't hurt that there are bunches of Harley accessories, too, that can set your Hog apart from everybody else's motorcycle. "If they want to be the Terminator, they can be the Terminator. If they want Easy Rider, we can do that, too," says James. At a price that's affordable and value-driven. Boomers want individualism and freedom, notes James, but they're "too savvy" to throw money away.

There's no doubt that empty nesters and marketers are at the early stages of what promises to be a long-term and lucrative love affair. Just as boomers have transformed every other stage of their lives, they'll do the same in this new phase. Smart marketers can bet on one ubiquitous theme: Now that the kids are away, the empty nesters are going to play.

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