Executive Summary

The Grey Market in the UK is both an exciting marketing opportunity and a daunting social challenge.

Key Note defines Greys as those aged 45 and above -- already 47.4% of the UK's total adult population. Over the next 30 years, their numbers will expand dramatically and by the year 2031, 60.4% of adults -- over the age of 19 -- will be Greys.

This trend is not confined to the UK, as throughout the EC populations are ageing. Women of child-bearing age are having fewer children and this is coinciding with a general improvement in adult mortality rates.

Greys are not one group of adults but three:

• Those aged 45 to 64 represent 27.8% of the adult population. Most of these Greys are still working and an estimated 78% are at the peak of their earning power, perhaps with reducing family commitments and with money to spend on leisure and entertainment. Within the higher earners of this group, 51.7% of those aged 40 to 49 have an average household income of over £22,000 per annum, 54.5% of those aged between 50 and 59 have an average household income of over £16,000 per annum and 47.8% of those aged between 60 and 64 have an average household income of over £12,000 per annum. This is the group providing the main marketing opportunity for consumer and leisure products and services.
• The newly retired and the retired, aged between 65 and 74, account for 11.1% of the adult population. Many of these Greys are living on a significantly reduced income. 67% of those aged 65 to 69 have average household incomes of below £12,400 -- 74.7% of the average gross weekly wage in 1994. 58.4% of those who are older, aged from 70 to 74, have average weekly household incomes of less than £8,270 per annum -- half the average gross weekly wage. Many of these Greys, particularly those aged from 65 to 70, are fit and active; they want to enjoy their retirement to the full, but are limited by the money available. The marketing opportunity is more limited and the social problem is evident through the inadequate pensions and social benefits available.
• The elderly, aged 75 and over, represent 8.5% of the adult population. Many of them have reduced health and mobility and a high percentage are living alone and struggling along at or near to subsistence level. The average household income of nearly 50% of these Greys is less than £5,000 per annum. Often they are in need of help either from their family, friends, or the State. Any marketing opportunity here must be very selective, probably focused entirely on opportunities in private healthcare, medical and geriatric products. In this group, the social problem is very acute and is growing as more Greys survive into old age.

Greys are living longer, are able to work longer and many need to continue earning past normal pension age to supplement sparse pensions. Paradoxically, however, labour markets are moving in exactly the opposite direction. Companies are retiring people earlier, creating a gap between the actual age of retirement and the age at which full pension rights become due.

Many Greys facing a situation of redundancy or early retirement try to start new careers as self-employed or take up unskilled full- or part-time occupations, but the recessionary influences of the past few years have not helped their cause. In January 1994, 24.3% of the unemployed in the UK were aged 45 and over, the age group more likely to become part of the long-term unemployed than those who are younger. The nearer to 60 those in employment are when losing their job, the more likely it is that they will stay out of work.

Greys looking for work find UK employers say they do not have specific policies on older workers, yet nearly 43% consider age an important consideration in the recruitment of staff. Research indicates older workers face discrimination when looking for re-employment and, whilst age is nowadays mentioned much less frequently in job advertisements, details provided on application forms still allow employers to `sift-out' older workers prior to the interview.

Society is changing and not all Greys have most of the family `off their hands' by the time they reach their 50s. Divorce, remarriage and cohabitation are commonplace and many find themselves at the start of a second family cycle. Over the age of 65, only half are married and nearly half of the women are widowed.

Society's ability to support and care for its growing population of older people is under serious threat and unless present practices are revised, the burden will be shouldered by a steadily reducing number of earners. In 1993, there were roughly three working adults in the UK for every pensioner, but by the year 2031 there will be around two.

In a low income Grey household with a head aged 62, Key Note estimates the cost of fuel, light and power, including full VAT, will take 14% of the total available income. This is equivalent to £169 a month in a 46 year-old affluent household. Heating, light and power represent the third highest expenditure in many retired homes who are dependent on the state pension. Budgeting is so tight that around 90% of weekly expenditure goes on the provision of necessary items and even the slightest increase in costs can only be met by sacrifices of other essential items.

The present state pension is worth only 28.8% of the average weekly wage and any additional benefits available from SERPS seem likely to be equally inadequate. Many in occupational pension schemes on retirement will find their pensions, including the state pension, no more than 62% of the earnings they enjoyed whilst at work. Personal pensions are available for anyone not in an occupational scheme, but estimates show that only 36% of social grades ABC1 and C2s, able to invest in them, have actually done so. This shows the potential for pensions providers to make the public, non-Greys and Greys alike, more aware of what is on offer by way of personal pensions.

When shopping for food Greys tend to buy recognised brands from a prepared shopping list and resist impulse purchases. For household items, they like to shop around and are less influenced by special promotions than by informed and courteous service. Greys like to read last thing at night from a book often borrowed from the library rather than purchased. White wine is a favourite drink, followed by bitter and whisky.

As might be expected, most Greys disagree with the present Government policy on pensions and changing the retirement age for women to 65. Over half of Greys feel the standards of care given to the elderly by the Social Services is not high enough and four out of five do not want to live in a retirement home.

Their favourite leisure interests are reading, gardening, travel, music, TV, DIY and eating out. As Greys pass 45, there is a marked decline in their ability to participate in the more frenetic sports, but many continue to enjoy swimming, cycling, golf, fishing, snooker, darts and keep fit well into their 60s. The one activity which becomes increasingly popular with age is bowling. Male Greys continue in active sports longer than females.

Increased health and more money has encouraged some of the more affluent Greys to travel more. Of these, many are taking two or more holidays a year and there is an increase in travel abroad. On average, the over-55s tend to spend more on a holiday than younger people.

As life expectancy increases, more Greys are realising that exercise and diet make a difference, but at least one health and fitness survey finds many well below their target fitness level. One in four male Greys aged 45 to 64 drink more than 22 units of alcohol a week, but only 13% drink more than 36 units. From the age of 65 and over, only 14% drink more than 21 units a week. 30% of Greys aged 50 and over smoke cigarettes, slightly fewer than younger age groups, and after 60 this drops to 20%.

Elderly Greys are on the increase, signalling a major healthcare problem of the future. By the year 2031, there will be roughly three times as many aged 85 and over as was the case in 1981. The National Health Service provides around 90% of the total healthcare, supplemented by institutions in the private sector. One estimate suggests a further 87,000 places in long-term care homes will be needed by the end of the 1990s. Over the same period, the number of subscribers to private medical insurance is predicted to grow to 17% of the UK population.

In summary, the number of Greys is set to increase in the long-term, which would suggest that any marketing initiatives in private healthcare, finance, travel, etc. should pay additional attention to the Grey market and their needs.

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