You Talkin' To Me?

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Ozzie Bechara is a proud grandpa. He also is one big missed opportunity.

You see, Bechara, 72, may not be the richest grandparent around, but he has plenty of disposable income. And the Whittier, California, resident loves to spend it on two tykes named Samantha and Sydnie, even if it's for a gift that, in his words, only brings them happiness "for a half hour." The problem is, when it comes to deciding on what to buy for his grandkids, Bechara is pretty much on his own.

He is hardly alone.

Despite much fanfare in recent years about the ever-expanding grandparent market, companies that make and sell products and services for kids still haven't caught on. With few exceptions, firms and retailers that should and could market to grandparents aren't. The result: They are losing out on a universe of consumers that is not only growing bigger by the day as the population ages, but is becoming increasingly motivated, even required, by shifts in the American family structure, to play roles in the lives of young people that grandparents historically haven't.

On the horizon are roughly 78 million baby boomers, the oldest of whom are just beginning to taste grandparenthood. Though the actual wealth of the spendthrift baby boom generation is a matter of some dispute, their sheer numbers will swell the still-unrealized $30 billion grandparent market, even if the newcomers don't spend a dime more on their grandkids then their grandparents did.

"We call it an unexplored market," says George Moschis, director of the Center for Mature Consumer Studies at Georgia State University. "It's kind of an omission on the part of companies to not realize [its] importance."

We're not just talking about toys, either.

The latest statistics from the U.S. Department of Labor and Roper Starch Worldwide indicate that grandparents are claiming an increasing percentage of spending on travel, computers, recreation, financial services, entertainment, food, and apparel. "It boggles my mind that more companies haven't [targeted them]," says Frank Conaway, president and CEO of Primelife, in Orange, California, one of a handful of companies nationwide that specializes in catering to the 50-plus market. "I have six grandchildren. I buy more for them than my daughters do." Grandparents, says Conaway, "have the wherewithal financially-more so than the younger generation-to buy and to travel and to do all those things with the grandkids that their parents wouldn't or couldn't otherwise do."

The numbers grow more intriguing with each passing year. For starters, the ranks of grandmas and grandpas keep expanding. They're living longer. They have more money than their predecessors. They are spending more. And they are spending it on a wider array of goods and services.

According to Roper: One in three Americans is a grandparent. Grandmas and grandpas in 1997 spent an average of $505 a year on their grandchildren. That's a 58 percent increase from 1992, when grandparents spent $320 a year on their grandkids, and a twofold increase from a decade ago, when that annual expenditure was $250.

At first glance, that's not a jaw-dropping figure, but remember that the age groups that include grandparents are the fastest-growing categories in the United States. According to surveys by Roper and Packaged Facts, half of 45-to-59-year-olds are already grandparents, as are more than 80 percent of those Americans 60 and over. That means there are some 60 million grandparents today. At $505 a year, that's an estimated $30 billion in annual expenditures.

By 2010, when the leading-edge baby boomers reach age 64, the number of grandparents is expected to be about 80 million. That would represent some $40.4 billion in annual expenditures-and that's assuming that the grandparents of tomorrow (read: the buy-now, pay-later baby boomers) don't spend any more on their grandkids than today's grandparents do. (Not likely.)

"For Madison Avenue advertisers to continue to worship at the altar of youth is madness," says Sallie Gear Francis of Age Wave Communications, an Emeryville, California-based company that tracks the mature market.

According to Age Wave research, the 50-plus market-in which most grandparents are found-is America's biggest, most affluent secret. It represents less than a third of the general population, but controls 70 percent of the net worth of U.S. households. Its aggregate after-tax income in 1998 was $994 billion, according to Packaged Facts. And those numbers are likely to grow as more boomers enter their golden years, in part because experts say boomers stand to inherit $10 trillion from their savings-oriented parents. That inheritance, combined with the wealth of the most well-educated generation in American history, is likely to balloon the spending power of what is currently America's wealthiest age bracket.

Already, grandparents are spending and behaving in ways their predecessors didn't.

In a 1997 Roper poll, 55 percent of grandparents surveyed said they had purchased a gift for their grandchild in the past month, up 8 percent from 1988. There was a 12 percent increase in the number who said they had sent their grandchild a greeting card. Four in ten said they had taken their grandchild out to a restaurant-an 11 percent hike from 1988. And nearly a third-29 percent-said they had gone shopping with their grandchild, representing a modest but noteworthy 3 percent jump from 1988.

They also are taking their grandkids to movies and sporting events in greater numbers, all of which has ramifications for the savvy company or retailer wanting to reach out to the grandparent market. This is particularly true for toy companies; according to Age Wave research, grandparents buy one of every four toys sold in America.

It's also worth noting that the number of grandparents in the Roper poll who said they had done "none of the above" dropped 6 percent.

Clearly, "these are not your parents' grandparents," says Roper vice president Stacy Bereck. On the whole, today's grandparents are more active spenders on their grandchildren, so many of whom come from divorced homes. "A typical kid today might have six or seven grandparents with all of the blended families," Bereck says.

Again and again, market watchers like Bereck express surprise at the reluctance of American consumer goods and services companies to take better advantage of the grandparent market. Robert Snyder, head of the mature market group for JWT Specialized Communications, a division of J. Walter Thompson, likens corporate America's reaction to the mature market in general-and the grandparents market specifically-to a slumbering bear that is stretching and yawning and beginning to wake up. "The market is totally undertapped. There have been lots of folks kicking this around for a while, but very few have actually made a move," says Snyder, whose mature market group was formed in 1996, the year the first baby boomers turned 50.

Of course, marketers haven't done badly by targeting their primary market, and they've spent a lot of money to do it: Ad spending on toys and games last year topped $870 million, according to Competitive Media Reporting in New York City, and the lion's share of the ads were aimed at kids and their parents. That was probably a good thing, critics say, because the mature market in general has been badly misunderstood.

After all, no self-respecting marketer would dare lump 30-to-50-year-olds into the same demographic group, yet they haven't thought twice about categorizing 50-to-70-year-olds in one homogenous lump.

"There are a lot of myths and misperceptions about the mature market," says Primelife's Conaway. "What advertising people do is think about their own grandparents and...often people of that age...were poor. But overall, this is a very affluent market.

"Another misperception," Conaway adds, "is that they're all in poor health. Only 5 percent of the mature market ever goes into nursing homes. It's only the oldest part of the market that is in poor health."

Add to that the generation gap between people who are in charge of marketing and advertising for corporate America, and those in the market they are seeking to capture, and what you get is one heck of a misunderstanding. Even within his own firm, Snyder says, twentysomething and thirtysomething copywriters and artists struggle with trying to apply Generation X values to Kennedy-era grandparents.

Ageism is another problem, Snyder says, pointing to commercials that depict seniors as lovably befuddled hillbillies who can't for the life of them understand how to operate high-tech equipment, as one ad for a computer printer did several years ago. That's simply not going to fly with the new breed of grandparents, many of whom are Internet regulars. According to a recent survey by SeniorNet and Intel, the amount of time spent online per month by mature Americans is 47 percent higher than the average for all other age groups. That's a number that will only rise with tomorrow's boomer grandparents, who not only know computers like their parents did typewriters, but who will perpetually think of themselves as teenagers, no matter what their biological clock (and their grandchildren) are saying to them.

It's also the evolving nature of the grandparent-grandchild relationship that is changing the importance of seniors in the consumer marketplace; while marketers traditionally thought of kids and parents as the so-called family, many are beginning to include grandparents in that definition, says Georgia State's George Moschis.

Toys 'R' Us began recognizing this trend last Christmas, when more grandparents began asking for help in purchasing gifts for their grandkids. This prompted some soul-searching within the company, according to spokeswoman Rebecca Caruso. "It spurred us to think how we can better communicate with this audience. It's an audience that should be paid attention to." The result: The Grandparents 'R' Us program, including a splashy Web site that operates in conjunction with Third, a marketing firm that targets the active 50-plus demographic. The Grandparents 'R' Us site suggests family activities by season, as well as Web sites that old and young can can enjoy together; recommends popular toys, including a Barbie O' the Month pick; and highlights toys and games that belong on "Memory Lane," things like Play-Doh, Etch-a-Sketch, and Chutes and Ladders.

Healthtex is also reaching out to grandparents directly, with a mailing list derived from cards filled out in hospitals by new mothers. John Martin, vice president of marketing for Healthtex, says the company mailed to some 100,000 grandparents this past year. "We're realizing that this part of the market has started to bulge," he says.

And in the March edition of New Choices magazine, whose audience is the 50-plus market, a Disney ad peddling a limited edition of a Peter Pan video read, "The Quickest Way To Get Your Grandkids To Fly Right Over."

Reggie Whitehead, vice president for special markets for Walt Disney World Resorts, says the company is paying close attention to the boomer-grandparent connection. "The boomers have been the key to our success all along; they grew up with Disney," Whitehead says. So Disney now has advertisements that focus less on Disney World's Magic Kingdom and more on the resort's restaurants, water parks, and golf courses-all aimed at the more active, more fun-oriented boomers.

With good reason.

Because of their sheer numbers, boomers will carry the most economic clout of any generation to enter the mature market, experts say; 3 million to 4 million Americans annually will cross over into the mature market between 1998 and 2014. And while nobody knows exactly how their boomer credentials will alter the way this new breed of grandparents spends on their children's children, there are clues: Technically tuned in, they are likely to pony up more for high-tech items like computer hardware and software for their grandkids, according to a report by Packaged Facts released last August. With more college graduates than in any previous generation, boomers will continue to emphasize the value of education, which likely bodes well for companies that manufacture learning and educational products. Boomers also consider fun a birthright, which, some say, means that toy companies stand to benefit from their crossover into grandparenthood.

"A 50-year-old today is much different than a 50-year-old ten years ago...and we don't want to miss out on that," says Disney's Whitehead.

There are a handful of businesses that are already thriving by catering to nobody but grandparents. In the past 18 months, catalog company Genesis Direct of Secaucus, New Jersey, has aggressively marketed its Gifts for Grandkids catalog, and brand manager Teresa McCarthy says the customer base has tripled-from 25,000 to some 95,000. Annual sales have hit $5 million, four times what they were when the company began operating the catalog in 1995. And while Genesis used to mail only in the fall for the holiday season, last year it mailed seven times.

Aimed at younger, educated, more affluent grandparents, Genesis's marketing strategy includes quarterly newsletters that offer tips on how to relate to today's children, and a grandkid birthday club-the equivalent of a personal shopper. In the past few years, the catalog has begun offering items that give testimony to the evolving tastes and interests of aging boomers, including golf clubs, tennis equipment, even special potato-race sacks for grandpa and grandma to use with their grandkids. Other products offered range from infant toys to telescopes to an Allowance Kit, a three-part "money management system" for moguls-in-the-making that includes a special bank, a chore calendar and a cassette tape that expounds on the principles of sound saving and investing-a "toy" only nervous, 401(k)-hugging boomers could love. But the biggest sellers are ride-on toys, most notably a classic red fire engine, the kind of toy today's grandparent might have had (or coveted) as a child.

Prices in the Gifts for Grandkids catalog range from $20 to hundreds of dollars. The vast majority of its customers, McCarthy says, are still in the work force; 95 percent are female, college educated, and have higher-than-average household incomes. In other words, they're busy, they're smart, and they know how to shop.

"There's a whole universe of potential buyers who are media savvy, who know the difference between someone who's just trying to sell them something and someone who's trying to provide products just for them," McCarthy says.

Helena Koenig knows something about that. A grandmother herself, in 1986 Koenig started Grandtravel, a Chevy Chase, Maryland-based travel agency that caters to grandparents and their grandkids.

"People thought I was out of my mind," Koenig says. "But my phone hasn't stopped ringing."

In 1999, Grandtravel will offer 19 worldwide destinations with tours specifically designed for grandparents and grandchildren aged 7-to-17-years-old. The tours are meticulously planned, right down to meals and outings, and many are educational. A ten-day tour entitled "The Native American Culture," for instance, takes in sites in Utah, Colorado, Arizona, and New Mexico. Its highlights: a train trip, a horseback ride, "mild" whitewater rafting, and an all-terrain vehicle ride to the top of Red Mountain Pass, near Telluride. Other destinations include Alaska and Kenya, the number-one choice of Grandtravelcustomers, according to Koenig.

In part, Koenig attributes her success to the fact that grandparents are taking on a more significant role in children's lives, what with divorce, single-parent homes, and more two-parent working households. "[C]hildren need adults in their lives and they are getting less and less," Koenig says. Often it's the grandparents, she adds, who are picking up the slack. "Grandparents are living longer. Some of them have money. Most of them have time. All of them adore their grandchildren."

A study by Packaged Facts released in September notes that grandparents today are indeed taking on bigger roles in their grandchildren's lives, and that means greater spending. For example, the increase in single-parent homes means grandparents are becoming main providers of staples such as clothing. According to Mediamark Research, Americans aged 55 and up spent more than half a billion dollars on children's clothing in 1997, on everything from stretchies to sweat shirts. They also are becoming important markets for bigger-ticket items such as automobiles-a fact that has not been lost on General Motors. In the September issue of New Choices, an ad for the Chevrolet Venture minivan makes a direct appeal to grandparents: "Heck, even grandparents aren't this protective," the ad says. "Grandma and Grandpa are going to worry about the family. It's their job. So at least the Chevy Venture can help ease their minds." A GM spokesman says the company has identified the mature market as "an important" secondary market for the Venture.

Still, reaching the grandparent market is, and will continue to be, a tricky business. Experts say the key to success with the mature market at large and grandparents specifically is to recognize that even though they are included in the same 50-plus demographic, a 55-year-old is at a completely different life stage than a 75-year-old. It's a diverse group, says Conaway of Primelife. "You grow bigger in this market by targeting smaller."

In fact, there are remarkable differences today among members of the mature market. Those in their late 50s and early 60s are members of what some term the "invisible generation." Shoe-horned between members of the Depression era and the baby boom-both of whom receive a lot of attention-members of the invisible generation don't have the spend, spend, spend philosophy of most boomers, but they're not the thrifty-till-we-die Depression-era types either.

Boomers themselves can be divided into at least two distinct categories: Those who are 45 to 52 and those who are 35 to 44. The former came of age in the 60s, the so-called sex, drugs, and rock 'n' roll generation. Their values, morals, and approaches to spending (read "freewheeling") differ from the younger boomers, who have a bit more of the values attributed to the invisible generation.

"There was a time when all grandparents wanted to go to Florida and play mah-jongg," says Leda Sanford, editorial director of Age Wave Communications and publisher of Get Up and Go!, a monthly newspaper aimed at the mature market. "But you have to put the diversity factor in there now."

At stake in all this are the Ozzie Becharas of the world who would welcome help in buying for his grandchildren. When he was a kid, Bechara's grandfather bought him a fountain pen. He treasured it. Still does. But he knows that will hardly play with today's younger generation, in his case, Sydnie and Samantha. "My main object is to satisfy my urge to satisfy them. If they really want something and they desire it and I feel like that would give them happiness, I don't think twice," he says. Yet, asked if he can think of a single company that does a good job marketing to him and other grandparents, to help him make purchasing decisions for two of the most precious people in his life, Bechara shakes his head. He isn't alone. But that may be about to change.

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