The 50+ Market:Your Next Great Opportunity

International Home Furnishings Center

October 24, 2005

2IHFC October 2005

Introduction: You’re 50, so what?

What happens when you wake up and you are 50? You still have hopes and dreams and plans You are still working, living, loving Often caring for children and parents Probably in your peak earning years, and yet

You have dropped off many marketers’ radar screens -- no longer an adult 18-49

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Introduction: You’re 50, what do you want?

What do Americans 50 and older want? to continue to enjoy their lives to the fullest to have the homes and lifestyles they’ve always

wanted to be able to live in comfort

Not to be marginalized

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Why You Need To Know About This Market

It is enormous in size and wealth, and growing It is complex

3 distinct generations, not one they differ by mindset and life stage

Its growth is being fueled by Leading Edge Baby Boomers they have influenced American society, industry

and marketing since 1946 and will continue to do so as they age

they are redefining what it means to grow older

5IHFC October 2005

Myths of the Older Market

Older people think and act OLD There aren’t that many of them compared to the under

50 population, and they are dying off They don’t have that much to spend, except on health

care products and services They are brand loyal; they won’t switch brands, so why

spend money on them They’ve grown comfortable with their home furnishings

and don’t want to change They are techno-phobic and computer-illiterate

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Demographic Destiny

Currently, 292 million people in the US 82 million are 50+ -- 28% of the population by 2020, 116 million will be 50+ -- 36% of the population Median age of population is now 36

in 1980, it was 30 in 1900, it was 23

When the Boomers begin turning 65 between 2010-2020 the 65+ population will grow 35%, while the under-65 population will increase just 4%

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The Healthiest, Wealthiest Cohort

More than 90% of those 50+ have no functional limitations due to health

Americans 50+ control more than two-thirds of HH wealth income levels are 35% above the US mean they represent two-thirds of all stockholders

Poverty rate for those 65+ is at an all-time low -- fewer than 10% One in eight (13%) own more than one home They spend $30 billion per year on their grandchildren, including

home furnishings Three out of ten refurnished or remodeled their primary residences

in the past year (30%), and 17% expect to do so in the next year

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They Are Savvy, Independent Consumers

Older people (45+) are no more brand loyal than younger ones They will spend more for quality from a company they know and

trust More than 60% of consumers 50 and older have Internet access

at home Even among the oldest segment (80+), one in three has

Internet access Consumers 55+ who buy online spend more online than any

other age group They are more diverse in their thinking than younger people

since they have a lifetime of experience and knowledge which they use to make decisions

9IHFC October 2005

Beyond Demographics

It’s even more important to understand where they are “coming from”

Cohort groups are most influenced by events in their formative years -- from 8 -18

Core values are established The pull of the cohort group is redefining age

50 just isn’t what it used to be

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Three Distinct Segments

GI Generation (Born before 1925)

Silent Generation (1925-1945)

Leading Edge Baby Boomers (1946-1955)

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GI Generation

Born into a world without television; most people did not have phones or cars

Grew up during the Depression, fought in WW II and were defined by both

Believed in “the future” and the American Dream, fueled by the GI bill

Created the world we live in today -- consumerism, suburbia, discount shopping, fast food, highways

First generation to own their own homes in significant numbers

First generation to live long enough to enjoy life after work

Raising the Flag on Iwo Jima 1945

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The Silent Generation

Came of age during the Cold War, the McCarthy Era, years of conformity

Women were encouraged to marry, discouraged from having careers

Defined more by what they weren’t than what they were--neither war veterans nor boomers—like the proverbial middle child

When the turmoil of the 60s caught up with them, there was a huge backlash

Levittown, NY 1948

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Leading Edge Boomers

Leading Edge Boomers (born ‘46-‘55) are all over 50 Came of age during the first child-centric era (Dr. Spock,

Howdy Doody), the first mass consumers The 1950s was a time of unprecedented growth and

prosperity The Woodstock generation, the protest generation

Formative years were the turbulent 60s Cold War, assassinations, Vietnam Civil Rights movement, Women’s

movement, student protests

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Leading Edge Boomers

Have always embraced the new and unknown, maybe because they felt so safe and secure

Their numbers alone would be enough to change the world of aging, but it is their expectation that business and industry should meet their needs that is redefining everything “60 is the new 30” “age rebelliously” “the new middle age”

They are still trying new things, new places

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GI Generation - 10 million, 80 and older

Optimistic Patriotic, sense of history Entrepreneurial Can-do spirit Outer-directed Traditional values, family

oriented First “senior citizens”

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Silent Generation - 42 million, 60-79

More cautious Little sense of their place in

history Corporate rather than

entrepreneurial Outer-directed, mediators Highest rate of divorce Never felt “young” till they were

middle aged First beneficiaries of the

Women’s and Civil Rights Movements

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Leading Edge Boomers – 40 million, 50-59

Rebellious and self-confident Connected to the times in which they

grew up Best educated, professionals Made up their own rules Inner directed, individualistic Redefined gender roles and

relationships Married later or not at all Re-inventing aging and “retirement” The tail that has wagged the dog of

society for the past 50 years

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Generations Defined by Their Wars

GI: World War II

Silents: Korea

Boomers: Vietnam

Greatest Generation Forgotten War The Divisive War

Great national victory Stalemate Tragic national loss

Massive public support , fought on the home front

Passive public support Lack of public suppor t, anti-war demonstrations

Serving was a peak life experience

Neither home -front activities nor anti -war

demonstrations

Avoiding service was more of a bond than serving

United the country Ignored by the country Divided the country

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Communications Implications GI Generation

Watch more television Patriotic, traditional values Respond to messages showing them as independent

Silent Generation Still read newspapers regularly Value opinions of experts Respond to images of extended families, groups of friends

Baby Boomers Use the Internet for information and shopping Anti-authority, less likely to respond to testimonials Respond to nostalgic settings, especially from the sixties

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Housing Trends

Three out of four “seniors” live in conventional housing Most prefer to “age in place” rather than move to health-related

facilities More than half of Leading Edge Baby Boomers will modify their

homes over the next few years, allowing them to age in place Levers instead of door knobs Grab bars, walk-in showers in larger bathrooms Retractable chandeliers for easier access Wider doorways Skid-proof flooring materials Chairs and sofas that are easy to sit in and get up from Furniture that is easy to move for cleaning

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Housing for Older Adults

GI Generation was the first to move to Retirement Communities, starting in the early 1960s Most were age-restricted communities (55+)

Now called “Active Adult Communities,” to appeal to the younger, more active Silents

More recently, Continuing Care Communities have become popular, especially with people in their 70s and 80s

Nursing home development is slowing down, while Assisted Living and other congregate living facilities are being built

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Boomer Trends

Leading Edge Baby Boomers who want to sell the homes where they raised their families are looking for more luxurious housing They can have the homes they always wanted Separate guest suites (for visiting family) Dedicated home offices High-end, well appointed kitchens and baths Cutting-edge technology built in

They won’t be ready for congregate living facilities for another 15-20 years

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Implications for Home Furnishings

Empty Nesters may downsize in space but go upscale in quality and luxury They can redecorate without worrying about children

messing up their new furniture They can buy the homes they always wanted and

furnish them accordingly Second or vacation homes are a growing trend Products should be designed to provide maximum

comfort and accessibility

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More about the 50+ Market and Home Furnishings

Opinion 50+ is… Omnibus study among a projectable sample of 500

people per month, or 6,000 per year Quick, cost-effective way to size a market, identify

behaviors, test purchase intent, or learn about attitudes A way to track attitudes, awareness, or behavior over

time

We studied home furnishings in August

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Affluence Over 50: Second Home and Pleasure Boat Ownership

13%12%

10%

4%

12% 12%

16% 16%

Total GI Silent Boomers

Second Home/Pleasure Boat Ownership

by Generation

Own Second Home Own Pleasure Boat

Source: Opinion 50+, July/August 2005 Base=1002

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Home Furnishings

30%

17%

25%

13%

28%

15%

37%

24%

Total GI Silent Boomers

Refurnishing or Remodeling Primary Residences

Past year Next year

Source: Opinion 50+, July 2005 Base=501

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It’s time for a change, and I can afford it

8%

11%

16%

37%

My tastes have changed

New furnishings for me,not children

Can afford to makechanges I've been waiting

to do

Old furnishings worn out

Reasons for Refurnishing/Remodeling

28IHFC October 2005

Boomers’ furnishings more likely to be worn out, while GIs’ want things just for themselves

14%

10%6%

43%

10%6%

14%

41%

23%29%

33%

46%

My tastes havechanged

New furnishings forme, not children

Can afford to makechanges I've been

waiting to do

Old furnishings wornout

Reasons for Refurnishing/Remodelingby Generation

GI Silent Boomer

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People 50 and over want furnishings that are more comfortable and easier to care for

40%

27%

19% 19%

14%

7%

Morecomfortable

Easier to carefor

Moreluxurious

Affordable toreplace

More casual More formal

Kind of Decor When Redecorating

30IHFC October 2005

Affordability is most important to the oldest segment, luxury to the middle group

More than half the GIs responding said affordability was a major criterion (57%), but it’s much less important to Silents (17%) and Boomers (11%)

Boomers are more concerned about comfort (49%) than are Silents (33%) or GIs (29%)

Luxurious furnishings are more appealing to Silents (29%) than to Boomers (11%)

Ease of care is a factor for all segments

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Bedrooms and living rooms are the most likely to be redecorated in primary residences

37% 37%

29%

20% 20%

16%

2%

15%

Bedroom Living room Kitchen Den/familyroom

Bathroom Dining room Homeoffice/study

Other

Rooms Redecorated Past Year/Next Year

32IHFC October 2005

Bedrooms and living rooms are the most likely to be redecorated in primary residences

40% 40%

28%

20%

36%

42%

20%

29%

33%30%

18%22%

30%

22%

17%

20%

24%

6%

10%

0%

3%0%

24%

8%

Bedroom Living room Kitchen Den/familyroom

Bathroom Dining room Homeoffice/study

Other

Rooms Redecorated Past Year/Next Yearby Generation

GI Silent Boomer

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Flooring and wood or upholstered furniture are the most popular items when redecorating

45% 45%

33%30%

19%

Flooring/carpeting Wood/upholsteredfurniture

Lighting/lamps Window treatments Other

Products Bought for Redecorating Past Year/Next Year

34IHFC October 2005

Boomers seem to favor furniture pieces and lighting; Silents are more likely to change flooring when redecorating primary residences

20%

58%

39%

30%36%

61%

10%

27%

47%

10%

29%

36%

50%

9% 8%

Flooring Wood/UpholsteredFurniture

Lighting Window treatments Other

Products Bought for Redecorating Past Year/Next Yearby Generation

GI Silent Boomer

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On average, people spent more than $4,800, but one in eight spent more than $10,000

18%17%

13% 13%12%

13%

Under $1,000 $1,000 to $2,000 $2,001 to $3,500 $3,501 to $5,000 $5,001 to $10,000 More than $10,000

Amount Spent/Expect to Spend for Redecorating Past Year/Next Year

Mean=$4,829Median=$3,625

36IHFC October 2005

The oldest segment tends to spend the most

Segment Mean Median

GI Generation $6,914 $7,500

Silent Generation $5,170 $3,969

Leading Edge Boomers

$4,030 $2,750

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Presence of Children Under 18

9%

5%4%

18%

Total GI Silent Boomers

Children Under 18 Living In Household

Source: Opinion 50+, July 2005 Base=381

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Internet Usage

63%

34%

58%

83%

Total GI Silent Boomers

Access To The Internet

Source: Opinion 50+, July 2005 Base=501

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Internet Activities

47%

63%

52%

16%

21%

27%

16%

20%24%

11%

19%17%

5%

11%

23%21%

13%12% 11%

16%12%

E-mailing Reading

news

Booking

travel

Playing

games

Other

shopping

Healthcare

information

Financial

information

Main Activities On The Internet

GI Silent Boomers

Source: Opinion 50+, July 2005 Base=314

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Learning more about the 50+ Market

Traditional research Surveys—phone, central location, online Focus groups

Seminars and workshops Product-specific, category-specific New product development, positioning,

communications

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Main Take-Aways

Three segments in the 50+ population GI Generation (80+) Silent Generation (60-79) Baby Boomers (50-59)

They want home furnishings that are comfortable, informal but high quality, and easy to care for

Communications strategies and executions should be tailored to the segments’ “personalities”