A striking demographic change is taking place worldwide, as people live longer than ever before and fertility rates fall in many regions. Globally, the number of those aged 65 and over is growing at about twice the rate of the overall population. This age cohort is now the fastest growing primary segment of the world’s population, and its growth rate is outstripped only by that of an even older sub-group—those aged 80 and above.
Business is largely optimistic about the implications of this phenomenon. A large majority of executives (71%) in a recent global survey view longevity as an opportunity, compared with 43% who consider it a risk. However, only a few firms see older consumers as a rapidly evolving market. Just 5% think sales to this group will increase by 25% or more in the coming five years.
"A silver opportunity? Rising Longevity and its Implications for Business," report published by the Economist Intelligence Unit and sponsored by AXA notes that healthcare and pharmaceuticals, leisure and tourism, and financial services are the key industries likely to benefit from this phenomenon. The report adds that consumer goods, food and beverages, retail and technology companies are just some of the others also expected to find new opportunities, especially those able to help older consumers achieve more independent lifestyles.
For some specialised companies, longevity already offers significant growth opportunities.
Companies that already sell primarily to older consumers, such as health and medical device manufacturers, see a bonanza coming. One example is Smith & Nephew, which sells replacement hip and knee joints, largely to an older population, and lists ageing populations as one of its key growth drivers.
The report finds that small and midsize businesses (with revenues of US$500 million or less) seem more responsive than larger ones (with revenues of US$1bn or more) in terms of creating new products. Bigger firms with greater resources are better able to market to specific niches and train their sales teams appropriately. Many, however, still consider longevity an issue for the distant future, rather than something pressing for today.
But the biggest worry on executives’ minds is the impact of increased longevity on firms’ pension and healthcare obligations. North American firms are most concerned about rising financial liabilities, such as for healthcare, followed by the loss of skills as their baby boomer generation prepares to retire. European firms also worry most about liabilities, largely for pensions, but in contrast with their North America peers are then most concerned about insufficiently understanding the needs of older consumers.
The report also highlights that outdated human resources policies are the weakest link for many firms. Executives highlight some striking weaknesses within firms. Nearly one in three (29%) say their firms are not at all effective at targeted HR strategies to older workers. One in four (26%) say the same about their ability to transfer knowledge from retiring staff to younger staff. Only 18% say that their firms have a policy in place to deal with the rising number of older workers.
Meanwhile, executives are overwhelmingly interested in working as long as they can, providing their work is flexible. Some eight out of ten (79%) executives polled are willing to do so, suggesting a striking appetite for appropriate policies. However, they are cautious about enforcing this: only 43% advocate a higher official retirement age. And the need to earn money is not the main reason for this, despite the recent recession: only one-third of those polled (all of whom are managers) worry about supporting their retirement financially.
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