Retirees to boost retail spending on health, gambling, books and entertainment

A new study has revealed that retailers in sectors such as health insurance, gambling, electronics and travel will benefit from the explosion in retirees as baby boomers start leaving the workforce in the next decade.

A new study has revealed that retailers in sectors such as health insurance, gambling, electronics and travel will benefit from the explosion in retirees as baby boomers start leaving the workforce in the next decade.

The Business and Population Monitor, researched by Access Economics for accounting and advisory firm PKF, reveals a number of areas where retirees will spend up big, including health insurance, gambling, books, home improvements, travel, electrical goods and communications.

PKF’s national chairman, enterprise advisers, Chris Allen, says companies need to start getting ahead of these trends now by, for example, ensuring they have staff of a similar age who can deal with retiree customers.

Allen says the standout sector is really health and associated industries. He says this looms as a big area of discretionary spending for retirees, who may spend up on operations (such as knee or hip replacements) that will help them enjoy retirement more.

“There needs to be continued investment in procedures and technology. The health sector should be looking at providing a range of products and services as they can.”

But it’s not all good news. The report finds a retiree’s retail spending drops by up to 40% in their first year of retirement as compared with the last year of work. This means retirees will be cutting back in spending in a range of areas, including clothing and footwear, cars, fast food and restaurants, alcohol and homewares.

“They have to rationalise what they do and don’t spend their money on. They will spend more on the necessities,” Allen says.

The report also examines population flows and highlights a growing divide between what it calls the fast-growing “sun belt” states of Queensland, Western Australia and the Northern Territory and the rest of the nation. The report says these states will continue to enjoy strong growth and migration rates, which will keep driving economic development.

“It’s reflective of this two-paced economy that we’ve got at the moment,” Allen says. “For businesses of a reasonable size, failure to go into those boom states comes at your own peril. “

Matt Field, national director, enterprise advisers, says companies need to adapt to the changing demographics. In states such as Victoria, New South Wales and South Australia, the ageing population should focus business on areas like health, tourism and recreation. In the “sun belt” states, infrastructure and construction should be a focus.

“It’s got to be horses for courses,” Field says.

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