Traditional department stores like House of Fraser, Debenhams and John Lewis are retrenching across the UK. As individual stores close (or in the case of John Lewis Grand Central in Birmingham, fail to reopen after lockdown) much attention has focused on what happens to the space they vacate (a future P-THREE Perspective will explore this further).
But relatively little thought has been given to the question of where the shoppers from these closed stores will go. To answer that we first need to understand who they are. A significant proportion of department store spend comes from older shoppers, often referred to rather vaguely as the ‘grey pound’. I prefer to be clearer and define them as shoppers over the age of 50, or 50+ for short.
The demographics and economics of this group are interesting: 50+ shoppers account for more than one-third (37%) of the UK population and for the highest weekly expenditure (around £259 per person). They have the highest amount of disposable income (around £35,000 each year for households aged 45-65) and, as a result of an ageing population, there are more of them each year (around 275,000 each year between now and 2030).
As former department store space is repurposed it is likely (for reasons we’ll cover in a future P-THREE Perspective) to appeal to a younger audience, I think it is unlikely that the spend of 50-plussers will simply transfer to other stores within the same shopping centre/development. Similarly, I think assumptions that 50+ shoppers will go online instead are also wide of the mark. Not because they aren’t tech savvy (a common misconception – last year more than half (57%) of 50+ shoppers across the whole of the EU shopped online). But because, just like younger shoppers, they want to see and touch potential purchases in the real world.
Unfortunately for 50+ consumers, retailers are increasingly taking their marketing digital, with huge pushes on social media, most notably Instagram. And while 50-plussers are competent at click and collecting, as non-digital natives it is quite possible that over time they will become disenfranchised from existing brands and unaware of new ones.
Happily, I think that there is a bricks and mortar solution that will appeal to 50+ shoppers, retailers and urban regeneration promoters alike. And it’s also good news for town and city centres. P-THREE’s focus is on commercial mixed-use community hubs (we dub them C-MUCH). I think there is an opening for retailers keen to tap into the 50+ spend to locate themselves in places that are not only local to their target audience but perceived to be safe and trustworthy.
Retailers may do so on an hourly basis, like Sook, which just opened on London’s South Molton Street, where brands/retailers can rent and personalise space by the hour to showcase products. Or within a new generation of multi-brand community store, like Neighborhood Goods, a US reinvention of the department store.
Either way, the dissipation of 50+ shoppers from former department stores should be recognised for the plus-sized opportunity it undoubtedly is.
Statistics courtesy ONS and Eurostat
Article by Hannah McNamara, Co-founder of P-THREE