In a report produced in partnership with the Silver Marketing Association, specialist later life and property writer Tony Watts OBE interviews marketers from four leading retirement providers to find out the challenges to increasing sales… and the solutions being applied.
All around the developed world, as populations continue to age, sales of specialist retirement properties are booming. But not here. Take retirement villages for example, one end of the sector spectrum: it’s estimated that less than 1% of British over-65s live in retirement villages, compared – for example – to over 6% in the USA and 5% in Australia.
It’s even not as though we’re playing catch up. In any one year, between just five and seven thousand new properties for sale come out of the ground in the UK, compared with projections of between 30,000 and 50,000 units required to meet the needs of our rapidly ageing population.
What’s more, many older people actively want to “rightsize” to a property they would find more manageable and more economic to run. Three million would like to make that choice, according to the report “Homes for Later Living”.
So, what’s going wrong?
Is it a question of planning? In part, certainly – not helped by the fact that planners regularly favour applications aimed at first time buyers over those for last time ones. Moreover, local authorities regularly express concerns about the extra burden on social care that an influx of older people would bring – disregarding the fact that most of these older people already live locally, and that moving into retirement accommodation would release a family home for someone else to occupy.
Is it more of an image issue? After all, not everyone wants to live exclusively with other older people. Or are many older people simply unpersuaded by the benefits regularly extolled by the providers? And, if so, what are the people who market retirement properties doing to get the right messages across?
The biggest player in the market is McCarthy Stone, responsible on average for around 2,000 of the new units being built each year across 40 to 50 developments. According to their Director of Communications and Marketing Paul Teverson, “Our competition doesn’t come from other operators. It’s market inertia.
“When we look at non-take up research, 90% of the customers who don’t buy from us just don’t move. It’s definitely not a Pepsi vs Coke decision. We need to work hard to ensure we’ve enticed them sufficiently, or they haven’t reached the point yet where they feel they have to move.”
That’s a view shared by all of the others interviewed. Says Emma Webster, ESG and Corporate Affairs Director of the Lifestory Group, “Our greatest competition is the pull of someone’s family home. And you absolutely understand that because it’s where they have their memories.”
So what more could operators do to pull in more sales and rentals?
“We know there is enormous need for specialist housing for older people,” argues Mario Ambrosi of Anchor, England’s, largest not-for-profit housing provider for older people. “But we’re not necessarily communicating a joined-up vision of the range of services out there for older people, and the benefits… not just to older people themselves but to society more broadly.”
The dilemma, it seems, comes with how you articulate that vision of what’s available.
“Even its generic name can present an issue,” says Mario. “Different providers use different terminology. Some are aiming at different ends of the market. And, sometimes for our own reasons, we use different language. Which makes sense for an individual organisation… but not necessarily as a sector.
“What’s more, there are so many subtexts to whatever phrases you use. The word ‘retirement’ itself is not always used as a positive.”
So is the sector looking for a new language? “Arco (Associated Retirement Community Operators) has introduced the descriptor ‘Integrated Retirement Communities’, says Mario, “but of course that refers to a specific model, and doesn’t apply to all forms of Retirement Housing. More broadly, I guess it’s so wrapped up in prejudices and perceptions about older people, making this a bigger issue than just one for the specialist housing providers.
“The question is: what are people going to type into Google? Most of the time it’s ‘retirement housing’. So we have to use the language that people are using. I’d say that it’s less about changing the language and more about changing people’s perception of what it is.”
Adds Paul Teverson, “Our properties start at age 60 and above, but very rarely do you have people of that age moving in. It’s a strange number. And it’s a different product for that person. At that age you’re a downsizer but you still probably want two parking spaces. More bedrooms and more space. You don’t want care and support, or a restaurant… all the things that add to your service charge. At 80 you probably do. This isn’t a younger older person’s product. This is an older older person’s product. And people in the sector understand that.”
Targeting the market
Then there’s the question of how you deliver targeted messages to a market that is problematic to delineate, as anyone marketing in this sector will concur.
James Cobb, Chief Customer Officer of Inspired Villages, contends that, “We are countering a society that puts older people over 65 into an amorphous mass. And they’re really not. In that ‘market’ you have singles, couples, people with aspirational ideas, people with care needs, people with different attitudes… and every single person is an individual anyway.”
As Emma Webster points out: “What is an older person? Ask anyone and it’s invariably someone ten years older than them.”
The challenge, then, is to persuade a hugely varied range of people that what’s on offer is for them. Make it look too young/active/vibrant and you’ll put off those looking to move into a quiet place where their growing care needs can be met. Portray your offer as a place where care and support are always on tap, and the “younger old” will dismiss it as God’s Waiting Room.
“Moreover,” argues James Cobb, “if you go out with a generic Christmas tree of everything we do and everything we have, there will always be something that puts someone off. A 68-year-old will see a reference to care and say, ‘I’m not ready for that’. A 92-year-old will see a bunch of people doing Zumba, or a pool they will never use, and say, ‘That’s not for me.’
“But if you ask anyone of any age: do you want more years of healthy living, they’ll all say ‘yes’. Do people want a sense of belonging, yes they do. So, when you are doing national, generic advertising, you have to focus on universal truths.”
Says Emma Webster: “The fact that we have just a small percentage of older people living in specialised retirement housing compared with elsewhere in the world demonstrates that there is an untapped market there. But there is a big part we can all play in explaining the benefits and opportunities.
“One of the things the sector has, perhaps, been historically guilty of being overly complex. And really, it’s important to get the messages across simply and be transparent about costs and what they mean. What’s included and what isn’t.”
According to Paul Teverson, “It’s up to us t0 provide the right balance in our wording. If we go too far down the road with the care and support provision, you can put people off. If you go too far in the direction that this is a wonderful downsizer’s proposition, it won’t deliver the right messages to people who do need a level of support.
“So we need to put across the message that it’s an aspirational place to live, but when you need it we’ve got care and support available too. It’s a fine line to get the messaging right. Sometimes we go back and forth between those two. When it lands on your doorstep one year it’s not right, but the same messages next year will hit home.”
Avoiding using too many words is one way to avoid putting prospects off because it allows people to paint their own picture. “That’s where using the visual element works,” adds Emma. It’s about showing people the environment and the spaces, which will mean very different things for different people in how they would use that space.
“We focus on enabling people to think about what their lived experiences would be, and providing them with what they need to make an informed choice.”
Experiences that speak to you
The message of informing customers and letting them make their own minds up comes across from all of the operators. But endorsements can – and do – play a big part too.
“I think it’s about showing the experiences that people actually have when they’re living in this kind of housing and being part of those communities,” says Mario Ambrosi. “If you show people having a great time, they are speaking for you.
“Our tag line is about enabling people to love living – creating that freedom to live life how you want to. We talk internally about enabling residents to be themselves. We have a range of wellbeing services as well, so taking away the hassles that comes with some aspects of owning a traditional home, and having the time, freedom and independence to live life how you want to.
“The research we’ve done shows that when people understand what’s being talked about they are really positive about it. There is a need for it, and a demand for it… but a lack of awareness, understanding of what it is.
“Someone who has lived independently in a self-contained property can see moving into specialist retirement community as losing some of the control they have over their life, but this is turning that on its head. It’s actively buying into a community of like-minded people. Yes, it takes a degree of adjustment, but it means you’re not having to worry about the garden any more, or the leaking roof.”
As for establishing that there is a local market for their product before they put spades in the ground, there’s no question that the successful operators in this sector are doing their homework. And quite rightly. A development could easily involve speculating anything between £10 and £40 million.
Explains Paul Teverson: “We have a relatively sophisticated algorithm for how we select sites: we drill down into local demographics, age and affluence, not forgetting what local properties already fetching: we’re typically selling at the £250/300,000 mark, so people buying are generally selling at £400,000 and releasing equity at the same time.
“Then you look at local levels of frailty, along with existing supply in the area. It’s only then that we look to find the right site, for which we have a ten-point tick list: level access, public transport, amenities and so on.”
Local consultation ahead of even buying a site can also help ensure a ready market for the eventual product. “Key to that is getting into a community early and working with a Local Authority on ideas,” says Emma Webster. “In many cases, even before you have purchased the land or entered into an option agreement. That gives you a chance to discover what is important to their local area.
“In our experience, early engagement leads to a better scheme. Plus, you have a chance to find out from them what hasn’t perhaps worked so well with other developers.”
The next stage is choosing the right channels.
McCarthy Stone are fairly typical in how they get the word out that there is a new development locally. “We utilise a lot of the typical marketing approaches of a housebuilder,” Paul Teverson says. “We have our own website. We go on the property portals. Over half of the people who buy from us will be living within a five-mile radius, so we do door drops, plus put ads in local magazines and radio. Like all these things, you can’t always be certain which channels work each time, but probably the most impactful are the site hoardings.”
And while digital certainly has its place, don’t believe the rumours of the demise of traditional media any time soon. “Agencies will tell you that everyone is using Facebook now,” says James Cobb, “but it’s just not true. Although the influencers probably do, a lot of our customers don’t. And while a considerable percentage of a typical marketing budget has been moved from conventional across to digital, it’s still only around 50/50.”
The fact that the average age of someone moving into a retirement property is just below the 80 mark vindicates that, although all of the operators recognise that they are also trying to influence potential buyers’ families, which is where digital can play a role.
Closing the sale
On one point all of the operators agree: key to selling or renting a retirement property is getting someone to visit.
“When people come into one of our villages,” says James Cobb, “one in four buys something – because you are sitting in front of a person and doing a lot of listening in order to understand them. Then you explain the benefits of this kind of living to them, knowing who they are and what they are looking for.
“At Inspired we analyse an awful lot of data, so all of our decisions are data led. We dig really deeply into understanding people and what’s happening. We do a lot of story boarding because, at the end of the day, this is a journey. And to empathise with people you’ve got to paint pictures and take them on that journey.
“We use value proposition canvases which are very much about understanding what an individual wants to gain in life and what their pains are. Then we describe how we will help them gain what they want and relieve their pains.”
With market inertia rather than other providers representing the “competition” for all of the providers, is there scope for collaboration in order to shift attitudes more broadly and raise awareness? “Yes, in principle,” says Emma Webster. “It’s important that the sector works collectively rather than necessarily championing one part of it at the expense of the rest. The challenge is that there are different elements within the sector, just as there are different choices available… tenures, price points and so on.”
However, to James Cobb, whose Inspired Villages represents the “Integrated Retirement Community” end of the supply side, there is also a need to differentiate the offers of IRCs and retirement communities, which generally offer fewer facilities and services. It’s hard to see how that particular bridge can be crossed.
But in the meantime, hope is on the horizon for the entire sector as the Government’s Older People’s Housing Taskforce pursues its research into what is needed to help retirement housing, in all its forms, fulfil its potential. Early signs are that issues like making the planning process less uncertain are coming to the fore, and so too are addressing concerns around consumer protection.
And while some parts of the industry have been pressing for incentives such as stamp duty relief, James Cobb sees giveaways like that as tinkering around the edges. What is needed, he says, is some sort of incentive from the Government that would really make it a financially prudent thing to do over and above the reasons why it’s financially prudent already. “I imagine a world where the whole IFA community is recommending to older customers that they move into one of these communities for the last seven or 10 years of their life.”
The mere fact that the Government recognises how valuable a role the sector could play in tackling issues like isolation, health and social care, as well as the national housing crisis, would give it a much-needed fillip.
What would future success look like?
And with that hint of a promise of support in the pipeline, operators are hopeful that the sector will see a positive few years. Paul Teverson believes that a doubling of the numbers of new units in the next five years would represent success, cogniscant than anything more than that would be hard to deliver.
James Cobb is simply looking for a reset in the way society views the product. “To me, success would be its normalisation and a genuine understanding of what it offers. The more normal it becomes, the more that people will know someone who lives in one and can see what their life is like. Overseas, around 40% of sales come from referrals. For us it’s currently about 10%. That’s what comes with scale.”
To Emma Webster, “Yes, it’s getting closer to 30/50k figures that people talk about. But it’s more about building those communities in the right places: delivering the right services and infrastructure. When I speak to our residents they talk about wishing they’d made the move earlier. Because what we offer is not about living longer, but about living well.”
And success for Mario Ambrosi comes with a new series of Frasier. “I was watching the very first episode recently,” he reflects, “where his dad is coming to live with him. Frasier doesn’t want to put his dad in a retirement home… That’s the language they use in the show: Frasier thinks it would be an awful experience and he’d be letting him down by doing that. Success in five years’ time would be turning that conversation on its head.
“Perhaps the next series could be set with Frasier living in a retirement community and showing what a positive experience he and all of the others are having…”
A point in time, in fact, where marketers would have a lot of their work done for them by popular culture.