Gifts to grandchildren

American Demographics, August, 1996

Not all grandparents buy gifts for their grandchildren. Of those aged 50 and older who have grandchildren, 27 percent had spent nothing on them in the last four weeks. Those households of grandparents who do buy gifts figure that they spend a median of $650.64 annually on their grandchildren. Based on the findings of The 50+ Studies, households with grandparents over 50 who buy gifts for their grandchildren spend an estimated $15 billion on those gifts. The study identifies and defines four mature market segments: Upbeat Enjoyers, Insecure, Threatened Actives, and Financial Positives.

In terms of overall gift-giving to grandchildren, the female Financial Positives give more than any subsegment. In contrast to the median of $650 spent annually by grandparents over 50 on all gifts, female Financial Positives have spent over 1,200, while male Financial Positives estimate that they spend a median of $690.72.

Clothing Preferred Over Toys

In contrasting gifts of toys to those of clothing, within a four-week period, more grandparents give clothing (73 percent) as compared to toys (65 percent). Of those who purchase toys, annual expenditures are a median of $308.28 as contrasted to a median of $567 for those grandparents over 50 who purchase clothing.

Grandparents who buy toys and clothing for their grandchildren spend almost twice as much on clothing as toys. For example, Insecure grandparents who buy such items for their grandchildren spend $246.48 on toys, but $380.16 on clothing. At the other extreme, Financial Positives who buy such items spend a median of $392.52 annually on toys, but $693.36 on clothing. The Upbeat Enjoyers who buy toys and clothing as gifts for grandchildren spend annual medians of $294.48 and $639.36 respectively. Expenditures by the Threatened Actives for such items are $334.80 and $573.24.

One indication of the weakness of using only demographics in targeting a particular market is shown by the fact that female Threatened Actives spend far more on toys for their grandchildren than any other gender-based subsegment and far more than those over 50. While the mature population spends a median of $308.28 annually on toys for grandchildren, female Threatened Actives spend $544.08. This amount is far more than that spent by the male Financial Positives ($262.20) and the female Upbeat Enjoyers ($301.08).

Another example occurs in examining the Self segments by gender and their clothing expenditures on grandchildren. Male Financial Positives who buy clothing for grandchildren do not spend as much as do females. Female Financial Positives spend a median of $1,071.12 annually on clothing for grandchildren as compared to males in this segment who spend $524.52, less than the national norm.

Targeting Self Segments Can Pay Off

Grandparents over 50 who buy in these categories spend about twice as much on clothing as on toys. These purchases are not lost on companies such as Oshkosh B'Gosh, a manufacturer of attractive, well-made clothing for infants and children. As a result of its own research, the company decided to target mothers, grandmothers, and female gift-givers over 45. Since female Financial Positives who buy clothing as gifts for their children spend twice as much as the national norm, Oshkosh B'Gosh would do well to target this Self subsegment.

For toy manufacturers, female Threatened Actives are clearly the subsegment to reach. Although their median incomes are low, they spend disproportionately in this category.

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