The bigger threat to the ‘big corporate’ model, I think, will be if it can’t respond quickly enough to changes in consumer demand.
One of the most ‘popular’ topical posts since we started Frank & Earnest was one written by Frank (Chris Baynes) back in June. It was a comment on the trend toward consolidation of the retirement village sector from a large number of small village operators and a few large corporates to a landscape of more and bigger corporates and less of the smaller operators.
While Chris simply reported the trend and didn’t personally suggest it was a good or a bad thing, those who commented tended to have the same general view that the bigger, corporate model of retirement village is generally more likely to provide a less personal, less caring, less nuanced type of service.
As one commentator, Gail Henderson said, “as the operators grow bigger and bigger, so the distance between them and the residents of their retirement villages expands which contributes to a very unpleasant “them and us” culture.”
We don’t want to hear: “computer says no.” We want to hear, “Yeah, no worries Jane. Let’s see what we can do.”
The cookie cutter approach
We all know this argument – it can be applied in many sectors and situations, including the retail sector, banking, medical practices, restaurants and hotels, even schools. Frequently it is true. Local ‘high street’ cafes and shops being replaced by corporate coffee franchises and chain store outlets is indeed usually, if not always, a recipe for a less personal, more generic, poorer quality consumer experience.
Corporate models rely on efficient, large scale systems and formulas for consistency of product and profit, making them inevitably more generic and inflexible. It’s the ‘cookie cutter’ approach. Humans, as we know, are not generic. Moreover, we appreciate and respond to nuanced human relationships and capabilities.
We don’t want to hear: “computer says no.” We want to hear, “Yeah, no worries Jane. Let’s see what we can do.”
But I’m not sure that the type of ownership ‘necessarily’ has to dictate a certain style of product or service. Depending on the economics of the product, there can be room for quite a lot of discretion and flexibility. It depends on the product and the business model and also the insight and corporate leadership.
For example, one of the large private community care franchise operators has a business model that works precisely on the basis of providing very tailored, localised and highly personal services. While there are the large scale efficiencies at the ‘back end’ of the business, each franchisee has a great deal of personal flexibility to adapt and tailor the service offering to meet the needs of that particular community. Including developing their own business relationships with local contractors and recruiting staff.
Think global, act local
In that situation, the organisation’s brand is a bit like the slogan, ‘Think global, act local’. Success for each franchisee is defined by how well they can operate within the local community of which it is a part by building relationships, gaining respect and fostering goodwill and trust. At least, that’s the theory.
Whether or not that can or does happen in the retirement village setting, I’m not sure. But there is an extent to which it is reliant on the leadership of the organisation and whether a ‘high touch, high care’ approach is seriously considered a key factor in the success of the business.
If there is a competitive marketplace and consumers have reliable information and choice, they will choose the village that they feel will best meet their particular needs, values and price point. The problem for now however, is that the market is not very competitive.
What is perhaps more interesting to speculate on is another comment from Chris’s story, made by Rob Hankins, the recently retired CEO of a major not for profit retirement village and care provider in South Australia, ECH Group.
“I think your prediction of what the situation will be in 10 years time is probably right when it comes to large villages in major metropolitan areas,” he wrote.
“most older people would prefer to move into smaller homes that have been specially built to meet their needs, in their local neighbourhood if these homes were developed in much smaller clusters, say 4-6 dwellings.”
What older people want
But at the same time, he says he believes that this form of retirement living will suit the “relatively small proportion of older people who do want to live in larger retirement villages.”
Hankins believes, “most older people would prefer to move into smaller homes that have been specially built to meet their needs, in their local neighbourhood if these homes were developed in much smaller clusters, say 4-6 dwellings.
“I know I would choose such a development when it comes time to downsize, as opposed to a large retirement village,” he says.
And Rob Hankins has his own 10 year prediction: that “there will be far greater choices of retirement homes available in small groups in nearby neighbourhoods to where older people now live, ones designed so that people like me can live in them to the end of their lives with services brought in to care for me if needs be, without having to move into a high care facility.
“Some creative people will find a way to build these small groups of homes for people like me I am sure,” he concludes.
A great many older people, particularly in the coming years, won’t want to live in the kinds of retirement villages currently on offer.
A market ‘disruption’
While it may be harder, I don’t believe that it is impossible for a large corporate organisation, by some arbitrary size and net worth definition, to deliver a retirement village ‘product’ that offers great, personalised service and a human approach. If it chose to, if that approach was central to its brand and its success and had genuine commitment throughout the entire organisations, from the leadership down, then it should certainly be achievable.
The bigger threat to the ‘big corporate’ model, I think, will be if it can’t respond quickly enough to changes in consumer demand. I agree with Rob Hankins. A great many older people, particularly in the coming years, won’t want to live in the kinds of retirement villages currently on offer. Right now, as current residents know, if you are looking for a good purpose built home to enjoy your later years and be supported, there is limited choice and the number of operators offering that choice, is getting smaller.
But as companies like ‘uber’ have done to the taxi industry and ‘airbnb’ has done to hotels, there is likely to be a ‘disruption’ to the retirement village market.
Just how and what happens, is yet to be seen. But as Rob Hankins predicts, I also believe creative people will find ways to deliver new and different options to meet what the market wants.
If you are interested in some of the experiments already underway, this is an interesting blog:
http://www.cooperativeaging.com/
