Inside Track by him!, the research and consultantcy firm
In April, private equity firm Terra Firma paid £276m for 128 centres through its acquisition of The Garden Centre Group to add to its portfolio of wind farms, Odeon cinemas and property. It is believed that the Guy Hands-led group was interested in the stability of garden centres’ sales and profits.
“The target audience tends to be the well-off over-45s market. There’s a stability you don’t get on the high street,” says a spokesman.
With a market that is so volatile that operators are now struggling to forecast a day’s trading performance – let alone a week’s – stability, and indeed reliability, are becoming the holy grail for the sector.
Those aged over 45 – and especially the so-called grey-pound consumers – are proving to be that reliable source of revenue. Their importance to marketers has never been in doubt and is set to continue, becoming one of the most lucrative markets in the coming years.
The number of people aged over 65 will increase by 33% between 2005 and 2020. It is a group that often has a purchasing power higher than the average, as well as excellent loyalty to those brands that meet their specific needs. It is also a relatively non-competitive arena, as a growing number of new brands continue to target an ever-shrinking youth market.
A recent him! survey, which polled c770 adults across the UK, revealed that the 55-64 age group spend more on dinner than any other at £16.70 a head, closely followed by 65+ at £16.44 and 45-54 at £15.42. The 45-54 age group were shown to spend the most on average on lunches out at £9.27, closely followed by over-65s at £8.69 and 55-64-year-olds at £8.37. All these age groups were spending a nearly £2 more on lunch out than those under 45.
“Older demographics typically have larger amounts of disposable income to spend on eating out as they no longer have the financial burden of families to support, are typically mortgage-free and have significant amounts of free time,” says Horizons director of services Paul Backman.
“Retired populations may be willing to visit foodservice establishments outside peak hours, providing opportunities for operators to increase their non-core hour revenues.”
The importance of the market has been heralded for a number of years and several operators have already made strategic acquisitions/operational moves to make sure they are more “grey-pound facing”.
In 2005, The Restaurant Group (TRG) paid CI Traders £27m for its Bluebeckers restaurant chain. TRG chairman Alan Jackson said at the time that the purchase had broadened its customer base by giving the company an entrée into the grey market.
“This is a market that has got more money and more time on its hands,” he said. “They’re the sort of people who like to drive out to the country to a nice location where they can park easily and have a good quality meal in relaxed, pleasant surroundings.”
TRG was not alone in targeting the new-wave grey pound, however. Other restaurant and pub groups also placed the market sector in their sights. Mitchells & Butlers’ Vintage Inns brand, for example, has long been a favourite with the over-50s and 60s. The Vintage locations are often rural or semi-rural and they cater for the mid-spend, destination diners as described by Jackson.
Whether it’s by rewarding regular custom, tailoring marketing activity more carefully or tweaking opening hours – by offering lunch and dinner earlier for example – operators of all sizes can make changes to draw in the older generation.
“As the industry struggles against multiple headwinds, it is a mistake to overlook the range of opportunities this healthier ageing population provides,” says Mike Saul, head of hospitality and leisure at Barclays Corporate. “This doesn’t necessarily demand a major overhaul of operations. Simple considerations that take this group into account will go a long way towards securing their spend.”
Over-45s are also less swayed by discounting when it comes to eating out – another added bonus for operators stuck on the deals treadmill. The him! research found that 39% of 45 to 54-year-olds go out to lunch or dinner more frequently as a direct result of having discount vouchers, followed by 34% of 55 to 64-year-olds and 37% of over-65s. This is in stark contrast to 65% of 18 to 24-year-olds, 58% of 25 to 34-year-olds and 51% of those aged 35 to 44. Over-45s are also less likely to look for money-off vouchers when eating out, according to the research.
However, there still remains a disconnect between the amount of times the over-45 age group eat out and how much they are willing to spend. The report from him! found that two-thirds of consumers say they intend to spend the same amount of money on eating out over the coming 12 months as they did in the previous year, with more than 40% of 18 to 24-year-olds saying they will spend more.
The research found 19% of 18 to 24-year-olds expecting to spend more on eating out over the coming year, while 22% expect to spend less. In the 25 to 34-year-old group, 27% expect to spend more on eating out, with 51% expecting to spend the same.
Over-35s are more cash-conscious. Of those aged 35-44, 26% plan to spend less and 57% the same, while 26% of those aged 45 to 54 expect to spend less and 62% the same. Just under 70% of 55-64 year olds expect to spend the same, with the remainder of that age group equally split: 16% plan to spend either less or more.
The UK population is ageing rapidly and with trading likely to remain volatile for the coming year at least, operators will have to weigh up whether to ignore the tortoise-like over-45s (reliable source of income, more visits/less spend) or continue to pin hopes on hare-like under-45s (fewer visits/more spend, less brand loyalty). That’s one to test the old brain cells.
