One section of our society still has money to spend

Apr 29 2009 by Bill Midgley, The Journal

TO see a North East restaurant absolutely packed out with people on a Monday night in April could well give rise to the question, where is the recession?

On closer examination of the diners, however, the average age was well demonstrated by the colour of the hair on view, particularly as far as the men were concerned and far be it from me to pass any comment on the ladies!

The so called “grey brigade”, at least those who benefit from pensions, at this stage seem immune to the hardships being experienced by the broader community. That is, of course, those who have been employed in the public sector, who continue – and will continue – to benefit from index-linked pensions, and those former employees of the private sector who benefit from a final salary scheme, and on this I must declare a personal interest.

Many companies are realising that one of the most valuable markets in these difficult times is the elderly who have no mortgage repayments to concern them and high disposable income. With an increasingly active lifestyle, and with people living longer, the age of 60 really is the new 40, and whereas not so many years ago this age group tended to save and not spend, the reverse is now the case. So, it is a real opportunity for entrepreneurial businesses to provide services that are being looked for.

However, there has to be a considerable word of caution in that other than those that retire from the public sector, pensions are likely to be much less in real terms than those currently being enjoyed. This inevitably leads to a market that will contract with the ageing process, and while there are real opportunities at present, longer term planning is a little more difficult. That is not to say that the market will disappear, and indeed a better understanding of what many people will require post-retirement is still needed.

While much marketing is targeted at the young, this might be better redirected to those who have money. Most people are active until the age of 75 or more, which creates a real opportunity for business. Those of advanced years may seem more demanding, but the price of understanding their needs is well worth paying.

Bill Midgley is a North East business executive and former chairman of the British Chambers of Commerce