Published on: August 12, 2014by Michael Sansolo
There’s a good reason why so much attention is being paid to the future of extreme value merchants such as those in the dollar store channel. In many ways, those companies are likely to experience a long period of growth.
Last week the Federal Reserve released a startling report on the extremely limited amount of savings large numbers of Americans have or are amassing for their retirement years. The results suggest the trend toward frugality that sprung from the Great Recession won’t end anytime soon.
The Fed found that 31 percent of Americans surveyed have zero money saved for retirement. You read that right: ZERO money.
Now for many of those folks the picture could improve in years to come. It’s hardly a shock that among 18 to 29 years olds, slightly more than 40 percent pay little to no attention to retirement. After all, who among us at that age really planned for what may happen 40 years later.
It’s more alarming that nearly 20 percent of those aged 55 to 64 find themselves with nothing saved for retirement, even though age-wise they are on the cusp of that decision.
The Fed explained that a big part of the problem is that in recent decades Americans have been given more control over their own retirement planning as company sponsored pensions have largely disappeared. In addition, many of these non-savers are challenged by low resources and little awareness or access to the planning they needed to do.
The results of these findings portend all kinds of challenges for the food industry. Most obviously, these resource strapped shoppers will need to continue to pursue extreme value shopping in every way possible. That sounds like great news for merchants targeting this segment, which means all others will have to consider how to successfully win over this market.
After all, 30 percent of the American population is a segment far too large for any company to ignore.
In addition, many of those interviewed in the Fed survey acknowledged that they will need to work far past the traditional retirement age of 65, with 25 percent saying they plan to work as long as possible. For companies that might mean a new supply of experienced labor for all parts of business, yet it also means confronting the unique challenges that can come from an aging workforce.
However, as is always the case, the challenges come with opportunities. Many companies may decide to enter the extreme value market with new formats, in much the way ShopRite has launched its PriceRite division. And those that already have established themselves as value operators could expand into new markets: below, Kevin reports on the apparent decision by WinCo to move into Oklahoma City. (When you think about it, if the folks at Market Basket could just get their act together, this would be a perfect time for that brand to expand its footprint.)
While older workers may bring specific challenges, the life experiences of these employees could serve as an asset to employers in years to come. Programs like job sharing and mentoring could receive significant benefits and could help in the training of younger associates. One hopes that retirement planning and the pitfalls of not starting soon enough might be one of the key topics to discuss.
Clearly there are countless other issues to consider, but the bottom line is that smart businesses always race to find ways of serving large and emerging demographic groups. Based on the Fed’s findings, the elder poor might soon become an enormous group and sharp companies will learn how to serve it.
After all, planning ahead - or the lack thereof - is what caused this in the first place.
Michael Sansolo can be reached via email at firstname.lastname@example.org . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
- KC's View: