Longevity offers opportunities to
business but not in the short term according to new research from the
Economist Intelligence Unit.
A striking demographic change is
taking place worldwide, as people live longer than ever before and fertility
rates fall in many regions. Globally, the number of those aged 65 and over is
growing at about twice the rate of the overall population. This age cohort is
now the fastest growing primary segment of the world’s population, and its
growth rate is outstripped only by that of an even older sub-group—those aged 80
Business is largely optimistic about
the implications of this phenomenon. A large majority of executives (71%) in a
recent survey view longevity as an opportunity, compared with 43% who consider
it a risk. However, only a few firms see older consumers as a rapidly evolving
market. Just 5% think sales to this group will increase by 25% or more in the
coming five years.
The survey was conducted for a new
A silver opportunity? Rising longevity and its implications for business,
(pdf), published by the Economist Intelligence Unit and sponsored by AXA. The
global survey of 583 executives was conducted in January and February 2011 and
covered a wide range of sectors and company sizes.
Other key findings of the research
include the following:
pharmaceuticals, leisure and tourism, and financial services are the key
industries likely to benefit. They will not
be alone: consumer goods, food and beverages, retail and technology
companies are just some of the others also expected to find new
opportunities, especially those able to help older consumers achieve more
specialised companies, longevity already offers significant growth
opportunities. Companies that already sell
primarily to older consumers, such as health and medical device
manufacturers, see a bonanza coming. One example is Smith & Nephew, which
sells replacement hip and knee joints, largely to an older population, and
lists ageing populations as one of its key growth drivers.
Small and midsize
businesses (with revenues of US$500m or less) seem more responsive than
larger ones (with revenues of US$1bn or more) in terms of creating new
products. Bigger firms with greater resources
are better able to market to specific niches and train their sales teams
appropriately. Many, however, still consider longevity an issue for the
distant future, rather than something pressing for today.
Firms face several
looming demographic risks to their workforces, prompting nearly half to
consider the potential impact of longevity on their staffing.
Companies will not only be hit by rising numbers of retiring older
workers—with an associated loss of skills—but also a decline in the
availability of younger workers, and a decline in average productivity as
the median age of workers rises.
longevity is often considered in terms of its impact on firms’ pension and
healthcare obligations; this is the biggest worry on executives’ minds.
North American firms are most concerned about rising financial liabilities,
such as for healthcare, followed by the loss of skills as their baby boomer
generation prepares to retire. European firms also worry most about
liabilities, largely for pensions, but in contrast with their North America
peers are then most concerned about insufficiently understanding the needs
of older consumers.
resources policies are the weakest link for many firms.
Executives highlight some striking weaknesses within firms. Nearly one in
three (29%) say their firms are not at all effective at targeted HR
strategies to older workers. One in four (26%) say the same about their
ability to transfer knowledge from retiring staff to younger staff. Only 18%
say that their firms have a policy in place to deal with the rising number
of older workers.
overwhelmingly interested in working as long as they can, providing their
work is flexible. Some eight out of ten (79%)
executives polled are willing to do so, suggesting a striking appetite for
appropriate policies. However, they are cautious about enforcing this: only
43% advocate a higher official retirement age. And the need to earn money is
not the main reason for this, despite the recent recession: only one-third
of those polled (all of whom are managers) worry about supporting their
A silver opportunity?
Rising longevity and its implications for business is
an Economist Intelligence Unit report, sponsored by AXA and it looks at the
risks and opportunities faced by businesses as they start to grapple with
changing demographics, both in terms of their internal workforces as well as the
changing nature of consumer demand. To support the study, the Economist
Intelligence Unit conducted a global survey of 583 executives during January and
February 2011. The survey was global: 36% of respondents were based in Europe,
33% in Asia-Pacific, and 18% in North America, with 13% from the rest of the
It covered a wide range of sectors, including financial services, IT and
technology, healthcare, pharmaceuticals, and professional services, among
others. All company sizes were represented: 56% had annual revenues of less than
US$500m, while 35% had revenues of at least US$1bn. All respondents hailed from
management functions, with just over half (55%) representing the C-suite or
board. The majority (62%) were aged between 35 and 54, but 24% were aged 55 and
over, with 14% under 34. To complement the survey findings, the Economist
Intelligence Unit also conducted wide-ranging desk research and in-depth
interviews with a range of experts and executives.