Retailers' holiday happiness hinges on the G-factor
How well many retailers perform this holiday season in store and online will be determined by the shopping preferences of a demographic group that doesn’t typically get a lot of love from marketers.
Marketers invest heavily in researching highly desirable segments, such as Millennials or the growing U.S. Hispanic population, to uncover actionable insights and develop sales strategies. However, that isn’t the case with grandparents, which is a huge miss for brands and retailers clawing for every last share point. There are approximately 70 million grandparents in the U.S. and they will spend an estimated $52 billion on their grandchildren this year, including $17 billion on gifts, according to the American Grandparents Association.
That’s a lot of spending power, but capturing those dollars requires a deeper understanding of grandparents’ behavior relative to parents and other shoppers. Using the intelligent polling and consumer insights platform at CivicScience, we looked at 737,608 respondents who in the last year (September 3, 2013 to September 3, 2014) answered a question about their parental status; 25% of respondents said they were grandparents – and 22% of these grandparents were under the age of 55. From there, numerous shopping-related questions running across CivicScience’s polling network were posed to consumer respondents and were analyzed to develop a strong picture of both general and holiday shopping behaviors of grandparents and where they differ from the general population.
The biggest area of difference between older and younger consumers: online shopping. Online buying is still slow to catch on with the grandparents segment. Seventy-one percent of grandparents say that the majority or all of their shopping (outside of grocery or pharmacy shopping) is done at a physical store – compare this to 61% for parents.
That said, when we compared the respondents from the grandparents segment from one year ago to that of today, we see slight shifts in spending from physical stores towards online. Among the most recent grandparent respondents, 68% said they do most of their shopping at bricks-and-mortar locations vs. 73% one year ago, and those who say they split their spending equally with online shopping grew from 13% a year ago to 17% today.
This growth could be the result of a number of different factors, including a greater number of older adults recognizing the convenience benefits of online shopping, particularly if they have physical limitations that make it difficult to navigate large stores or malls, push through crowds, or visit numerous individual locations. Because many of them may be retired, they are also at home more often to accept package deliveries. Also, younger grandparents who are still working full time may simply like the time-saving benefits afforded by online shopping as they seek to manage their busy schedules and empty-nester social lives.
Regardless of the grandparent’s age, the holiday season brings with it the opportunity to treat the grandkids to some nice gifts or other surprises. When 5,069 grandparents were asked to characterize their gift-giving practices toward their grandchildren, most (54%) feel they are pretty well balanced in how much they purchase. The “spoilers” who say they enjoy giving the youngsters lots of gifts and/or money account for 16%, and 23% are the “selective gifters” who say their practice is to buy a few high-quality items. A small percentage (nearly 8%) instead focus on doing other things for their grandchildren that don’t involve giving gifts or money, perhaps due to being more cash-strapped and/or on fixed incomes. We had thought the data would show a higher percentage for “spoilers,” since the poll question was answered voluntarily and anonymously, but perhaps the definition of spoiling is viewed differently by grandparents vs. non-grandparents.
The self-admitted spoilers were more likely than other gifting types to have an annual household income of $150,000 or more, come from a family where they were the only child, take their vehicles to dealerships for repairs, and watch six or more hours of TV per day. These attributes may help explain some of the spoiling behavior, since these folks have more in disposable income and are perhaps accustomed to, in their own upbringing, receiving larger gift volumes. And with the amount of TV this micro-segment is more likely to be watching, TV advertising can play a nice role here.
Regardless of how many gifts are purchased, grandparents are less likely to flock to large sales events like Black Friday. While 15% of parents and 13% of the general population say they wait for Black Friday to start most of their shopping, only 8% of grandparents say this.
For the 2014 holiday shopping season, grandparents look very similar to the general population in plans for gift expenses: Only 12% say they will spend more on gifts this year, 39% will spend less, 35% will spend about the same, and 14% won’t spend any money on gifts. Many older adults are on fixed incomes, so that certainly plays a role with this segment, as they are 55% more likely than the general population to say they will spend no money on holiday gifts this year.
Despite how much they will spend, there are key difference in where they will spend those gift dollars. Grandparents indicate they are more likely to spend most of their holiday gift budget at larger discount stores like Walmart or Target (42% said this, compared to 34% for the general population and 39% for parents). They are also more likely than parents to shop at small, locally-owned stores (16% vs. 9% of parents), but far less likely to spend big at specialty retail chains like The Gap or Best Buy – only 1% of them will spend most of their money here.
Due to the sizable spending power of this consumer group, retail marketers should take note of the grandparents segment. It’s important to take away that grandparents differ from the general population of U.S. adult consumers in several key areas: they are more likely to stretch out their holiday shopping and avoid major sales events or days; spend most of their holiday shopping money at discount superstores; and are starting to show some uptick in online shopping. Their incomes are a factor in their gift-giving decisions for grandchildren as well.
These types of insights can certainly be leveraged by retailers to formulate segment-based promotions, in-store and online services, and even specialized offerings that cater to the attributes seen more in these older family members.
Jennifer Sikora is vice president of marketing at CivicScience, a real-time consumer research technology firm that mines consumer insights data via polling applications that run on hundreds of U.S. publisher websites.