Silver Economy in Chinese Luxury Market
Why should luxury brands not ignore the potential of grey-haired consumers?
China launched its 7th national population census this May. The latest result shows that the country’s population is growing slowly and the total population has increased to 1.41 billion in 2020. Another noticeable fact is that its citizens more than 60 years old account for more than 18% of its population, which is 5.44 percentage points higher than the previous census result in 2010. It is estimated that China has an elderly population of more than 260 million people. This makes the world’s second-largest economy one of the biggest markets of older consumers. However, this group of people has been ignored by mainstream marketing strategies that usually only target younger generations. As it is expected that the Chinese elderly market will continue to grow in the future, the silver economy of China is highly potential and promising. As a result, brands should start to rethink their strategy to explore this blue ocean.
Older generation, an ignored marketing segment
Regardless of the huge population of older people in China, only a few luxury brands have begun to target them. It is because the country’s premium goods consumers are relatively young. More than 50% of high-end product buyers are under 30. Their average age is 28 years old, which is 10 years younger than their counterparts in other countries. Gen Zs are expected to generate more than 20% of the global personal luxury sales by 2025. And most of them will be Chinese as China is estimated to become the largest high-end goods market and generate 28% of the global luxury product revenue by the same year. Therefore, the Chinese Gen Zs are regarded as the next major driving force in the luxury business, which makes them become the prioritized marketing target of most brands. To attract those valuable consumers, premium goods companies are always trying to keep their image fresh and dynamic. Thus, they design their marketing strategies mainly based on the young generation’s consumption behavior and social media using habits. Some of the players in the luxury industry even think the strategy focusing on older people could damage their image. Even though most brands tend to create collections that suit people of all ages, senior people are often excluded from corporations’ marketing plans. However, ignoring those clients means companies will miss huge commercial opportunities.
Growing silver-haired population
The elderly population seems to be a stably growing community in China from a demographic standpoint. In 2020, China reported its lowest fertility rate since 1949, which is equivalent to a 15% decrease in the total number of registered newborns in 2019. The Chinese government had already noticed the pitfalls of low birth rate and therefore implemented the two-child policy in 2016 to replace its one-child policy coming into effect in 1979. Given the fact that the fertility rate didn’t rebound, China has even expanded the birth quota to three kids this year. However, this action is believed to have little impact on this demographic challenge. The United Nations even predicts that the Chinese population will start to decline in 2030. Meanwhile, the average life expectancy has been increasing to nearly 77 years old in China. The falling birth rate and extending life expectancy will make the percentage of older people in the country continue to grow.
Potential of silver economy in Chinese luxury market
The greying population of China is bringing underlying concerns to the country’s future development, but it also shows potential opportunities for the luxury industry. Most people over 60 are retired. Normally, they have more capital than their younger counterparts. It is estimated that the silver economy in China will reach more than 880 million USD by 2021. As they are leading a relatively stable life with less pressure, they are more willing to spend money on leisure activities, traveling, or fashion. Tmall Global indicates that female users over 55 years old increased their purchases of imported products by 59% in 2020. Moreover, clothing is becoming more and more popular for senior consumers. According to JD Big Data Research Institute, among the products exclusively for older people, clothing is the most searched query on JD.com in the recent 3 years. Additionally, elder people are less sensitive to price. Thus, they are more likely to buy premium goods at higher prices. The increasing demand for garment products and lower price consciousness makes this group of people highly potential for the luxury industry.
Benefit of emotional connection building
For fear of losing attractiveness for young consumers, many luxury brands are reluctant to target the older generation. In fact, including grey-haired people in the marketing strategy will help companies not only sell products to the senior cohort but also build more intimate connections with the youth. A research of Age of Majority, a marketing research firm targeting people over 55 years old, shows that the campaign featuring older people has little impact on young people’s buying decisions: 55% of young consumers said their purchase intentions would not be affected by this kind of marketing. In addition, the emerging trend of sustainability is bringing positive impacts to the development of elderly-centric marketing. People, especially young generations, are more aware of the diversity of beauty. This means consumers are expecting to see brands breaking the existing esthetic stereotypes by including more types of beauty regardless of sex, sexuality, or age. Creating communication plans aimed at older people can indeed meet this trend. The same research of Age of Majority indicates that 8% of the respondents under 55 stated that this kind of marketing could even increase their willingness of buying.
Increasing digital engagement of older people
Many luxury companies are hesitating to include retirees in their communication plans because this group of people seems to be absent from the existing digital touchpoints. However, this cliché actually contradicts reality. The internet penetration rate is increasing in the Chinese elderly community. In 2020, people aged 50 and above account for 26.3% of the total number of internet users in China, which is about 10 percentage points higher than in 2019. The Chinese government is also helping its senior citizens adapt to digital life. In 2020, China launched a new initiative aiming to bridge the digital gap for the older generation. According to Ali Research, on Taobao, the number of monthly active users aged 60 and above has increased the most rapidly during the pandemic period: 29.7 percentage points higher than other age groups. Therefore, it is expected that aged Chinese people will become more and more present and active in the online world in the future.
Potential of elderly influencers
The marketing aimed at older people can also reach young consumers because some parts of their digital journeys are overlapped. For example, Douyin is the video platform with the second-highest penetration rate in the Chinese elderly cohort and is also the social media on which this group of people spends the most time even though about 50% of its users are under 30 years old. This means brands can reach both young and older consumers via this video-based platform. Influencers, especially elderly influencers, are one of the most efficient ways to simultaneously target those two communities. There are already many older Douyin KOLs (key opinion leaders, equivalent to Chinese online celebrities and influencers) who are even followed by teenagers. And those aged online celebrities are as influential as their younger counterparts. @GrandmaWangWhoOnlyWearsHighHeels (@只穿高跟鞋的汪奶奶), for instance, an 80-year-old grandma with more than 16 million followers on this video UGC platform, has once sold more than 2 million USD in her live-stream. Moreover, silver-haired KOLs can be a highly potential means for high-end fashion brands to address the rising population of Guochao, a vintage fashion consumption trend focusing on Chinese culture-centric products. This is because the retro clothing suits perfectly senior people, which reinforces the attractiveness of nostalgia. @FashionGrandmaGroup (@时尚奶奶团), a Duoyin account featuring a group of Chinese women aged more than 60, has gained their popularity by tapping into this vintage fashion trend. They became famous for making videos in which they wear traditional costumes and walk on the street to turn the whole city into their fashion catwalk. The combination of retro garments and modern landscape has quickly helped them catch the attention of the public. Within 2 years, they have accumulated more than 4 million followers on Douyin. As a result, the popularity of elderly influencers can also be leveraged by luxury corporations to not only exploit the market of older consumers but also reach younger generations through those aged but active social media users.
While most players in the luxury industry are actively trying to attract young consumers, the commercial potential of their senior counterparts is also bringing new opportunities. They are highly profitable from a business standpoint but are often ignored. Also, the marketing strategy featuring those grey-haired people will help corporations optimize their images and attract more youths. Given the fact that it is still a blue ocean for the premium goods market, brands should start to think about how to seize this opportunity.
Rising popularity of elderly influencers
Senior influencers are also becoming more and more popular on other social media and in other countries. Here are several examples from other Asian countries.
Park Mak-rye, 74 years old from Korea, became famous after her granddaughter uploaded a video of her daily life. Her popularity comes from her sense of humor and natural interactions with others. Her channel, Korea Grandma, has now more than 1.3 million fans. She is therefore considered one of the most successful elderly Korean Youtubers.
Hamako Mori, a 91-year-old Japanese grandma, has a YouTube channel with more than 510 thousand followers. Her channel is called Gamer Grandma. She is popular for her video game live-stream. She entered the Guinness Book of Records as the oldest videogame YouTuber.
WAN Ji and XIU E are a Taiwanese couple over 80 years old. They have been running a laundry shop for more than 70 years. With the help of their grandson, they start to reuse the forgotten clothing in their shop and create an Instagram account (@wantshowasyoung) featuring their vintage style wearing. After being reported by several media, like BBC and Vogue, their account has acquired more than 650 thousand followers within 1 year.
