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Retailers should focus on aging baby boomers, not millennials, as profit centers

Joseph Coughlin says college towns are drawing older people.
Published Aug. 23, 2016

ORLANDO — Retailers be on alert: Millennials may be getting all the buzz but it's aging baby boomers who have the bucks.

That's one reason why, as Florida keeps getting older, smart developers are paying more attention to older shoppers, said Joseph Coughlin, founder and director of the AgeLab at the Massachusetts Institute of Technology.

Coughlin was in Orlando on Monday for the International Council of Shopping Centers Florida Conference, offering tips to 4,000 attendees who work in the retail and commercial real estate industries. He told them their marketing dollars would be better spent targeting aging generations rather than younger ones.

And he had the research to back it up.

Fewer people are having kids. As a result, there will be more people in the world in the over-60 age group than there will be in the 1-15 age group by 2047.

"That's never happened before," Coughlin said. "Japan is selling more adult diapers than diapers for children. Think about that for a minute."

Local economic development groups have cited recruiting and retaining millennials as a top priority and called for a more attractive work and play environment here for them. The Tampa Hillsborough Economic Development Corp. has even formed a "millennial council" with area entrepreneurs to share their insights.

Yet nearly 70 percent of all disposable income in the economy right now is controlled by Americans in the 50 and up demographic. And while 70 percent of those still live in suburban communities, there is a recent push that shows some are moving into more urban areas, often in smaller metropolitan cities usually tied to a major university.

"College towns are the No. 1 retirement communities," Coughlin said. It's worth noting that Orlando and Tampa took the top two rankings in an analysis of the top places to retire released by WalletHub earlier this month. Tampa Bay's low cost of living and wide ranging recreational offerings helped boost it to the No. 2 spot. Not to mention the long list of nearby universities and colleges. "It's creating cultural epicenters for multiple generations with great medical research that are virtual assisted living facilities," Coughlin added.

All of this is music to the ears of real estate developers in Florida. Empty nesters are buying condos in urban areas such as Bayshore Boulevard in Tampa and in downtown St. Petersburg fast enough to spur demand for new development and to jack up the prices.

That's the case even in downtown Tampa, where Tampa Bay Lightning owner Jeff Vinik and Cascade Investment's real estate firm plan to redevelop 40 acres of the urban core. The partners hope to lure a mix of empty nesters and millennials, but anticipate a higher density of wealthy empty nesters. The $2 billion revitalization of downtown Tampa includes a new mix of retail and restaurant offerings, apartments and condominiums and it's the site of the new University of South Florida Morsani College of Medicine and Heart Institute, which is under construction.

Despite conventional wisdom, Coughlin said baby boomers and Generation Xers are among the first to invest in new technology, whether they're comfortable with it or not.

"Who buys a Mercedes, a luxury product that is high-tech and high price?" Coughlin asked. "It's bought by an older driver."

So as major retail chains continue to experiment and invest in technology aimed at millennials, it's the older generations that will benefit from it.

"Grocery stores and drugstores will own elder care," Coughlin said. "Retailers are leveraging technology to go from being product providers to service providers. New digital tools will make this easier for the next generations."

This shift is already driving some of the recent changes in tenant mix at shopping centers in Florida. Health, beauty and fitness are the largest growing categories for new business in traditional shopping centers, said Ron Wheeler, CEO of Sembler Inc., a St. Petersburg-based real estate developer.

That means urgent care centers, doctor's offices, gyms and hair salons that are usually in a plaza anchored by a grocery store like Publix.

"What's in high demand is Internet proof," Wheeler said. "It's all experiences you can't get online."

Contact Justine Griffin at jgriffin@tampabay.com or (727) 893-8467. Follow @SunBizGriffin.

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