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Friday, April 18, 2014
News Making Money

Using demographic changes as a market opportunity

Written by Daan Harmsen, FINANCIAL MANAGER, GEOCAPITAL MICROFINANCE ORGANIZATION

09/12/2012 22:49 (494 Day 12:01 minutes ago)

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The FINANCIAL -- Between 2002 and 2012, Georgia witnessed a 60% increase in the number of people over 75 years old, while the general population grew by less than 3%. This amounts to 108 thousand people, or a city approximately the size of Rustavi. This is mainly caused by an increase in life expectancy: while in 1985-6, the average Georgian could expect to live less than 72 years, life expectancy at birth has reached 74.5 years this year.

Because of advances in health care, and a generally low birth rate (12.9 per thousand people last year, barely higher than the mortality rate), we can expect the elderly population to increase even more, both in absolute numbers and as a percentage of the population. This means that the importance of the elderly as a consumer group will grow.

This is all happening against the backdrop of a change in household composition: whereas before, elderly parents would often live with their adult children, this is changing: more and more older people and their offspring choose to live separately. Many Georgians used to live in so-called “intergenerational households” because of economic necessity: the costs of living separately were simply too high. Now that Georgia’s economy is growing, and people’s incomes have gone up, this is starting to be less of a problem: people can now afford to live separately, and grandparents don’t need to take care of their grandchildren full-time, because parents can often afford child care.

The stereotype of grandparents living with their children, taking care of their grandchildren, and watching television all day, will thus start to become less common. Also, as people become more affluent, retirement will become a more realistic option for the elderly, who often work until a very old age now, just to make ends meet.

The elderly will start to demand housing that fits their needs: they don’t want to climb stairs, and they want living spaces that will continue to serve them, even if they start to experience mobility problems.

Not only do the elderly need appropriate housing, they will also need more (health) care to keep them going, both in the form of regular daily care, and irregular medical procedures. A lot of daily care will be taken out of the hands of adult children, and performed by professional caretakers.

And let’s not forget that the elderly, especially as they got more wealth y, consume more than just housing and care: companies have been mostly focusing on targeting the young consumer, but the elderly will become an important consumer demographic as well.. They too want to have a good time with their friends, attend fun events, or eat at good restaurants. Doing nothing after retiring can be fun for a while, but as my own grandmother put it, “after a few months it gets a bit boring”. Companies need to find ways to cater to retirees with disposable income, who have a lot of time on their hands.

All of this smells like opportunity: life expectancy is increasing, and the population is aging. Fewer elderly people are living with their children, and elderly care is a massive market in the West. If their families no longer take care of them, the elderly need housing and specialty care, health care and entertainment, among other things. Meeting this growing demand could be the opportunity of a lifetime.

 

 

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