The Missing £Billions: The economic cost of failing to adapt our high street to respond to demographic change

Dec 21, 2016 | REPORTS

This report looks at barriers to consumption in later life, and how best to address them to increase spending amongst the over 50s.

In most developed countries, including the UK, consumption accounts for over two-thirds of GDP. In these countries, a rising proportion of the population is approaching or past State Pension age; in the UK, there are approximately 12.4 million people over State Pension age, and the number is set to rise to nearly 14 million by 2030.  The behaviour of older consumers is thus a topic of great relevance for the economic policy debate.

Several studies, among which the 2015 ILC-UK report “Understanding Retirement Journeys: Expectations vs reality”, have documented how consumption steadily falls with age, and how this decline appears to be persistent over time, and typical of most western countries. In addition, while financial constraints are likely to be one of the main reasons for a drop in spending, they appear to be less of an issue for older people, and therefore something else may be at work.

With this report, we investigate the impact of what we call ‘health barriers’ on consumption expenditure in retirement, as well as on participation in social and cultural activities. By health barriers we mean general poor health issues, such as having a long-standing illness, mobility issues, such as having a difficulty walking for ¼ of a mile unaided; and other health conditions or disabilities such as arthritis, poor eyesight, difficulty hearing and incontinence.

Findings include:

  • Older people with a walking difficulty spend on average 14.5% less than those without such a disability.
  • People aged 50+ with poor eyesight spend 9-10% less on leisure and eating out.

While health conditions are likely to have an impact on older consumers, they are not the only factors likely to determine consumption in old age. The report thus explores the impact on spending on what we call ‘connectivity barriers’. By connectivity barriers we mean lack of proximity to shops and amenities, especially for people living in rural areas; lack of access to a private means of transport, such as a car or a van; and lack of access to the internet.

Findings include:

  • Living in a rural area is associated with 12.1% less spending on clothes and 7.8% less on leisure activities, regardless of age, income, health barriers, and having access to a car.
  • People living in rural areas spend on average 7.2% more on eating out than those who live in urban areas.
  • 56% of people aged 75+ living in rural areas have no access to the internet, yet a lack of internet access is associated with 28% lower spending.

Finally, the report explores the potential for addressing some of these barriers by changing the built environment.


Authors: Cesira Urzi Brancati and David Sinclair