Older generation set to be biggest spenders by 2030: Citi

Consumers aged 65 and above will clock the fastest rate of spending growth compared to other age groups in advanced economies.
Consumers aged 65 and above will clock the fastest rate of spending growth compared to other age groups in advanced economies.PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - People aged 45 to 65 across the globe are likely to lead the increase in consumer spending, said Citi in a report.

Citi expects this age group to spend the most in advanced economies (AEs), which include Singapore and Malaysia, by 2030, and account for about 4 per cent of the anticipated rise in global spending.

Consumers aged 65 and above will clock the fastest rate of spending growth compared with other age groups in AEs, added Citi.

Aggregate global spending is expected to rise by $29 trillion in 2011 purchasing parity price-weighted (PPP) terms to $95 trillion between 2019 and 2030, said Citi.

The older generation is driving consumption in AEs, due to a higher concentration of wealth among them, in the form of financial and real estate assets, noted Citi.

More interestingly, the rise of the older generation in consumption coincides with a growing trend of baby boomers spending on experiences like recreation and travel, said Citi.

While media reports often suggest millennials are driving the experiential trends, data shows that the older generation, broadly the baby boomers, have been the key drivers of experiential commerce, said Citi.

Boomers spend around twice as much as millennials on experiences and almost 50 per cent more of their disposable income, according to Citi.

When asked why the older generation will be driving the experiential commerce in AEs, Ms Nivindya Sharma, director of retail strategy and insights at WGSN Analytics, said: "The narrative is now if you're healthy, go do whatever you want and you're not supposed to just be sitting there taking care of your grandchildren and children.

 
 
 
 

"So there's more freedom, there are more lifestyle choices that this consumer group can make and they will continue to do so."

Ms Carla Hassan, Citi's global chief brand officer, agreed. She said: "(Older people) are living longer, have more disposable income and are really trying to live their life right there in the moment."

On the other hand, even though emerging markets (EMs) - including Indonesia and Thailand - will continue to outspend AEs, the amount of spending by age group will become more varied over the next decade than the previous one, said Citi.

Citi projects that people aged 45 to 65 may spend materially higher in the next decade, thanks to reduced poverty in larger EMs and the sheer number of older persons.

However, Citi said the trend of older workers driving spending appears more varied among EMs, against a "fairly uniform" picture across AEs.

"We posit this is the case as EMs are an overly-broad category of economies at differing stages of development and wealth," said Citi.

Citi noted that India and Indonesia may see increases in spending among older workers "consistent with the global and EM trends", while the 15- to 30-year-olds in India and Indonesia may also "dramatically" increase spending, outpacing consumption by workers aged 30 to 45.