A new HKTDC survey has found that China’s older middle-class consumers are not averse to spending.
China is becoming an increasingly aged society. As of 2014, nearly 140 million people in the Chinese mainland were aged 65 or older. As a percentage of the nation's total population, this demographic increased from 7.7 per cent in 2005 to 10.1 per cent last year. The United Nations predicts that the mainland's over-65 population will, on average, increase by about seven million annually over the next two decades, accounting for nearly 20 per cent of the country's total population by 2035. As the elderly population expands, their particular consumer requirements will also grow. The value of the so-called silver market is expected to rise from Rmb4 trillion in 2014 to about Rmb106 trillion in 2050, according to the China Report on the Development of the Silver Hair Industry 2014.
To better understand the attitudes and preferences of elderly middle-class consumers, HKTDC Research, in April 2015, commissioned focus group discussions in four major cities on the Chinese mainland: Beijing, Shanghai, Guangzhou and Wuhan, with two workshops held in each city. The target respondents were adults aged 65 or above (men and women in equal proportions) and caregivers of people 65 years of age or older either at home or nursing homes. The respondents had a monthly household income of Rmb12,000 or more in Beijing, Shanghai and Guangdong, and Rmb8,000 or more in Wuhan. The average monthly spending level of the over-65 respondents was Rmb3,300 or more, and all the respondents had bought senior-specific products or services in the last six months. The main product types covered in the survey include: daily necessities (clothing, shoes and home appliances that can help older adults perform self-care tasks at home); food (supplements and healthcare products); and healthcare and rehabilitation supplies. The services mainly covered nursing home service, domestic service, and culture and recreation services (including tourism).
Based on the survey, some key observations can be made about the mainland elderly market:
Older Consumers Choose and Pay for their Own Purchases
The study found that senior citizens in the mainland are not passive consumers. While many caregiver respondents said they often bought items for their parents or paid for their purchases, many elderly respondents said that they chose what they like and paid for most of their own purchases. The reasons may be summed up as follows: (1) Older consumers have the ability to pay; and (2) most of the products bought are either recommended by close relatives and friends or have been tried out by the respondents themselves. Some elderly people on the mainland, especially those who used to work in government offices or public institutions, receive a sizeable pension each month and have considerable spending power.
Doctors' Views and Word-of-mouth
Many products, especially healthcare items, are targeted directly at the mainland’s elderly consumers. Advertisements for senior-specific products, such as healthcare goods and medical devices, abound in the media, including on TV and in newspapers. But older consumers surveyed indicated that doctors' recommendations and word-of-mouth are key factors influencing their purchases, largely because they are concerned and cautious about their effectiveness. Elderly consumers feel most confident when buying things recommended by relatives and friends after use or if doctors have told them that something is good for them.
Brand Loyalty can Shift
Older people tend to be loyal to brands they trust. "Results-oriented" is an important factor in buying healthcare products and medical and rehabilitation devices. However, it is also because of this results-oriented focus that older consumers are prone to switch their loyalty based on recommendation by doctors or others they trust. During the focus groups, it was not uncommon for senior respondents to give different evaluations for the same type of healthcare or rehabilitation product. As the products are not standardised, a minor additional feature or modification may produce very different results. The desire of older people to constantly look for new product features that better meet their needs leaves considerable scope for new market entrants.
Free Trials and Attentive Service are Key Influencers
When trying new products, older people are most concerned about whether or not they will produce "actual results." They remain skeptical no matter how well product specifications are written, mainly because elderly people are wary of unsubstantiated claims based on previous experience.
During the workshops, many respondents said they purchased large physiotherapy units after repeated free trials. Although many elderly people are interested in buying rehabilitation devices, they are inclined to try things out several times before purchase, although they can usually be persuaded to ultimately commit. In the course of testing such products, attentive customer service are important in wooing older consumers to buy.
Not Averse to Spending
Elderly people are generally conservative spenders, especially those who have seen financial hardships. The focus groups, however, found that older consumers were more than willing to invest in products that can improve their health, such as frequency spectrum saunas and trainers, even those costing more than Rmb800. While this generation’s senior citizens do not generally pursue famous brands, they are not reluctant to buy quality products that, while relatively expensive, benefit them.
Medium Priced and Higher-end Daily Essentials have Greater Market Potential
Respondents said they look for improved products in certain product categories, reflecting their desire to have more stylish products with greater technology content. They also appeared willing to pay higher prices for such items. When it came to clothing, for instance, elderly respondents said they look for better quality cotton or other new materials that are lighter and more comfortable to wear. They also prefer a wider choice of stylish clothing. Both elderly and their children said that they want to see more smart healthcare and rehabilitation devices on the market.
No Blind Faith in Healthcare Products
While elderly people also look for healthcare products that could slow down or even reverse the onset of senility, they do not consume such products blindly.
Most elderly people have a limited demand for nutritional and non-staple food. The favoured varieties are milk powder, oatmeal and healthcare products. Healthcare products are typically divided into traditional herbal diet therapies and western health supplements, including American ginseng, dendrobium and sea cucumber, while the latter comprises deep-sea fish oil, protein powder, lecithin and vitamins. There are numerous brands of healthcare products to choose from in the mainland market.
Intelligent Products
Intelligent products and equipment that can monitor and analyse a patient’s condition and suggest treatment options; dementia support systems; intelligent reminders (such as for taking medicine and turning off gas supplies); automatic flush toilets; and robotic assistance aid are all set to become increasingly popular among the older population. These types of smart products are also areas that children of elderly people who participated in the workshops are most willing to invest. However, elderly people find devices with too many buttons a nuisance, even though they are attracted by their multiple functions.
Infrequent Online Shoppers
Older people prefer to buy what they need in physical shops, partly because they have plenty of time to browse and want to avoid the trouble of having to return unsuitable purchases. Older consumers in Shanghai, however, differ from their peers in other cities. The city’s local shopping channel, Oriental TV Shopping, for instance, is extremely popular with older consumers. Many respondents agreed that it is cheaper to buy things on the official website of Oriental TV Shopping. This partly explains why elderly people in Shanghai are inclined to shop online, unlike their counterparts in other cities. Their penchant for online shopping has gradually spread to other platforms, such as Taobao.com and JD.com, although these “silver surfers” tend only to buy from online shops recommended by relatives and friends.
Market Positioning of Nursing Homes and Elderly Care Services
Senior care is generally unsophisticated in the mainland at present with considerable variation in service standards, resulting in a rather negative overall public perception of the sector. Market demand, though, remains considerable, largely because many people prefer not to leave elderly parents at home unattended or entrust them to “senior nannies.” Based on the findings of the focus groups and market analysis, the senior care market needs effective segmentation and more accurate market positioning when it comes to targeting segmented demand. Infirmaries for elderly people with disabilities or major illnesses, for example, should best be located in cities within the vicinity of hospitals. By contrast, nursing homes for elderly people who are healthy and demand a good living environment may open in suburbs and offer shuttle bus services to take them back to their children in the city on weekends. Clear positioning will help senior care establishments become more competitive and raise their professional image.
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