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Economic Report

Economic reports, briefs and video-clips issued by Samsung Economic Research Institute

'New Seniors' Become Consumer Force

'New Seniors' Become Consumer Force

Ahn Shin-Hyun

Apr. 4, 2011

Transcript

Welcome to our video program. I'm Shin-Hyun Ahn from the technology and industry research department.

In March, the American rock band the Eagles, well known worldwide for their hit "Hotel California," had their first concert in Seoul. Despite high ticket prices starting at $270, tickets sold out. Most of the audience was in their 40s and 50s.

Old Korean pop music is also gaining in popularity. "C'est Si Bon Friends," referring to a number of iconic singers from the 70's singer songwriter boom, have recently found themselves at the center of attention as people in their twenties and thirties as well as older people tune in to their music. Their free-spirit and creativity is giving a refreshing boost to a music industry that has become stagnant.

These illustrate the importance of the senior generation in today's culture industry. I'd like to comment on what is behind this trend.

The "new senior generation" refers to baby boomers born in the mid 1950's. Physical health, plenty of time, money to spend, and buying power defines this generation. They are different from preceding generations in that they are more affluent, thus are able to spend more.

New seniors are the first generation that experienced prosperity both in pop culture and in the socioeconomic arena. They spent their youth in the 60s and 70s when Korean pop culture radically evolved in terms of creativity and diversity. They cherish youth and creativity, and have a strong cultural sensitivity. Just as they drove the nation's remarkable economic growth when they were younger, they are eager to learn things and be proud of themselves.

As their retirement looms, industries are keen to capture opportunities that come with the new seniors' extra time and money. People in their 50s provide wonderful market opportunities. If you do not want to miss this chance, you need to see them as a mainstream market, rather than a niche market.

Then, how do you make this possible?

First, you need to understand that seniors pursue youth. New seniors are demanding products that make them look younger. In the beauty and fashion industries, their demand is leading to big profits. Sales of anti-aging cosmetics have surged more than 30% in recent years, and the number of new senior customers who visit young casual wear stores are on the rise. In 2010, Lotte department store saw their share in total young casual wear sales increase 22% over the previous year. Ladies wear brand LEBEIGE strategically introduced younger-looking clothes and grossed 30 billion won or about US$27 million in sales last year, compared with 12 billion won or US$11 million in 2009.

Then what do new seniors hate the most? They loathe aging. They hate any expressions that conjure up the image of becoming old. It's not just physical health that new seniors think is important. They also think mental health is crucial. Businesses marketing to seniors need to keep this in mind when establishing a marketing strategy. Choose words and expressions that conceal age and emphasize youth, for example, go for "champion tour" instead of "senior tour," and certainly use expressions like "look 10 years younger with makeup," rather than "makeup tips for those over 50."

What is the second ingredient to please new seniors? It's nostalgia for their youth. As I said earlier, old school culture that appeals to new seniors' memory of their past is creating a blue ocean in the culture industry. This year alone, musicians who new seniors are familiar with (including Eric Clapton and Carlos Santana) had concerts in Korea.

A theatrical play titled "Blown away like dandelions," featuring a conversation between a middle aged man and his late wife, has attracted more than 100,000 viewers since first opening on stage in 2008, receiving a strong reception from middle aged fans. The movie "I Love You" which portrays senior romance has also attracted more than one million viewers.

New seniors once had to suppress their thirst for cultural activities as they needed to concentrate on building the economy during the nation's rapid growth phase. Today, they are quenching their thirst after retirement. Businesses that cater to the memories, culture and values of their youth can target this demographic in existing products and marketing campaigns.

There is one more tip to embrace this new consumer group.

A sense of achievement is very important to new seniors who enabled Korea's astonishing economic development, and they are eager to learn new things. In fact, even after retirement, they continue to invest in self development. The portion of seniors over 50 among customers signing up for cultural lectures at department stores jumped to 30.5% in the spring of 2010, compared to 20.1% in 2006. Senior-exclusive housing compounds like "The Classic 500" and "The Heritage" provide residents with culture, sports, leisure and club activities to assist their self development and social interactions.

I've talked about three factors that matter in the new senior market. For businesses, they will need to learn to tap new seniors' expertise and wisdom. A case in point is the "Innovation School for Small-and Medium-sized Companies," or the "SME Cooperation Center" under the Federation of Korean Industries where senior people who were once corporate executives advise SMEs. In a 2008 satisfaction poll, 67% of SMEs helped by new senior management consultants responded that the advice helped improve their management system and to tap into new sales channels.

Author Hye-Seong Jeon noted in her book "how to age gracefully" that "we don't need to feel sad about becoming old. What we need to be sad about is the value of our life degrading as we become older." Korea is experiencing the fastest population aging in the world. Rather than thinking of it as a crisis, we need to think about how we can make our society a place where we can age gracefully, based on the understanding of the new senior generation.

Thank you for watching. I'm Shin-Hyun Ahn.

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