Rebels With Disposable Income Aging Baby Boomers Line Up to Buy High-End Versions of Youthful Indulgences By Greg Schneider Washington Post Staff Writer Sunday, April 27, 2003; Page F01
Stop, hey, what's that sound?
It's Dad's cartilage creaking as he gets off his Harley.
In case you haven't noticed, the young motorcycle tough of American mythology has matured a bit. Less Easy Rider and more easy-fit Dockers, the median customer for Harley-Davidson Motor Co. is now a 46-year-old man.
He finally has the disposable income to feed his inner Steppenwolf, and he's not stopping at just motorcycles. As the Summer of Love evolves into the Autumn of Viagra, baby-boomer males are buying all the cool toys they couldn't afford when they were kids.
Their own dads might have splurged on a fancy camera or a fishing boat, but the boomers want electric guitars, model trains and other talismans of their eternal youth.
It's good for commerce, and it has created some entirely new markets. But for a company like Harley or Maryland-based MTH Electric Trains, the phenomenon also raises questions about how to sustain business into the future. After all, the boomers only think they're going to live forever.
"That could be a problem, as far as those guys going away," said Andy Edelman, vice president for marketing at MTH. "A lot of our business is baby-boom men basically rekindling their memories."
Harley dealerships don't feel like Harley dealerships anymore. They feel a little like Pottery Barns with leather. At East Coast Harley in Dumfries, near the Quantico Marine Corps base, surgically clean bikes sit in a line near racks of Harley boots (starting around $100), Harley Motorclothes (shirts, jackets, gloves, etc.) and Harley cat toys.
It's a lifestyle as much as a product, and giant banners remind customers of the company's 100-year heritage: One black-and-white photo shows a young man and his prim female companion cycling through the countryside in the 1920s or 1930s. Next to that, a 1970s color shot shows a long-haired biker in aviator shades and denim, blond babe behind him in a denim vest, riding past a big American flag. There's something both jarring and reassuring about the contrasting pictures; surely the first couple would be shocked by the second, but, hey, we're all Americans. We all ride Harleys.
Bill Richardson, a 47-year-old regional sales manager for a pharmaceutical company, just bought his seventh Harley at East Coast, and this one is the big enchilada: a Road King, $25,000 worth of chrome and rumbly power.
"It kind of looks like a late-'60s police motorcycle," Richardson said. "I've just always liked that style."
Richardson used to buy any kind of junk motorcycle he could afford, but while his kids were growing up he quit riding. A few years ago, he said, he realized that "my financial situation had improved to where I could finally get what I wanted, which was a brand-new Harley," so he did.
Now Richardson worries that he represents a dead end for the Harley mystique. "When I first started into buying Harleys, it was an eclectic group -- you had people with money, but you still had some of the original biker guys left over," he said. "As it progressed, the bikes got more expensive, and you kind of lost some of the biker guys who couldn't afford $20,000 for a bike. I think Harley needs to pay more attention to developing a younger customer base, or else they're going to die off with us older guys."
To some degree, all cycle makers are grappling with the issue of aging bikers. The median customer industry-wide was 38 in a 1998 rider survey, up from 32 in 1990. The federal government says the trend is contributing to rising death rates among motorcyclists. Last year, bikers under age 40 were less likely to die in a crash than the year before, while deaths among bikers over 50 were up 24 percent, according to the National Highway Traffic Safety Administration.
Still, the influx of older riders has been a huge boon for sales. A decade ago, fewer than 300,000 Americans bought motorcycles. Last year, 937,000 did, according to the Motorcycle Industry Council.
Harley's 46-year-old median customer is the industry's oldest, but the company is trying to fight back. In 1998 the company bought Buell Motorcycle Co., which makes sports-model cycles aimed at a younger crowd. Buell gives Harley a nameplate to compete with more youthful Japanese and European brands such as Kawasaki, Honda and Ducati.
Training Wheels Last year, Harley debuted its own line of "V-Rod" bikes aimed at the sport customer. And it has created something called the Rider's Edge program, a training course designed to attract women and potential customers under age 35.
For about $250, Rider's Edge students learn not only how to handle a motorcycle but also how to outfit themselves in proper Harley gear. Company officials say a little more than a third of the 15,000 people who have completed Rider's Edge have gone on to buy motorcycles.
"We've found it to be an effective way to get younger people and women into the dealerships," said company spokesman Joe Hice. "We've actually grown the number of women riders. Before it was about 2 percent, and today it's over 9 percent."
Those efforts are crucial for the company's long-term health, said Burke Koonce, who tracks the company for Merrill Lynch Global Securities. "If you go to rallies, you can kind of tell your stereotypical Harley guy has gray hair now," he said. "The real key to the Harley story here is, down the road, how they'll be able to bring more riders into the fold."
While Harley has been selling more bikes each year since at least 1997, its market share has slipped. With 22 percent of U.S. sales in 2001, Harley was second in popularity to Honda, which had 28 percent, according to the Motorcycle Industry Council. Honda and other imports have kept the pressure on Harley by appealing to younger riders and also by introducing big, loud touring bikes of their own to woo baby boomers.
The trick for Harley-Davidson is to satisfy both boomers and fresher generations without losing the company's single most valuable asset: its rebel image. There aren't many businesses whose customers tattoo the logo onto their body parts.
Gene Miller is a 51-year-old airline pilot from Manassas who admits that part of the attraction of sinking $40,000 into a Harley Fat Boy is knowing that his late father was horrified by bikers.
"You can be a professional in your daily life and on your weekends you can turn into this renegade outlaw-type thing," he said. "When I go to work I've got to look professional, act professional. It's kind of nice to look like a dirtbag sometimes. You don't shave, you wear ragged pants -- I hate to quote my father, but the hooligan look."
When it comes to his own college-age children, Miller has a different perspective. He won't let them ride.
Reviving Rebellion A perpetual state of youthful rebellion is among the baby boomers' distinguishing traits, said Ann Fishman, a New Orleans-based marketing consultant and adjunct professor at New York University.
"This is a generation that is not going to have a lifespan, they're going to have a youth span," Fishman said.
The boomers also would rather spend than save, she said, and they have a sense of entitlement brought on by the extreme doting of their post-World War II parents (that's right, blame the parents). When they want something, they want it now -- which pretty much explains pop culture for the last several decades. Any generation that would invent Woodstock and then reinvent it 30 years later with corporate sponsors knows how to exploit its own desires.
The market for fancy model trains is a nearly perfect embodiment of the boomer ethos, Fishman said. "Expensive train sets combine a couple of characteristics: The boomers love to spend, they feel entitled to the best, and they're nostalgic for their youth."
At MTH Electric Trains in Columbia, that spells big success. The company's customer base is similar to that of Harley-Davidson, said Edelman, the MTH marketing chief: the average MTH buyer is a 55-year-old male with college education and income greater than $50,000.
MTH makes O-gauge trains, in which a quarter-inch equals a real-world foot. That's larger than the HO-gauge size that many baby boomers grew up with and that still dominates the retail world. Finely detailed O-gauge engines can sell for as much as $1,300 apiece.
Started in 1980 as a subcontractor to industry giant Lionel Trains, MTH ventured out on its own in the early 1990s. It has grown from $1 million in sales in 1992 to $60 million in 2001, and it now splits the O-gauge marketplace evenly with Lionel.
That high-end market barely existed until the boomers came along, Edelman said. MTH owes its rise to them.
"They grew up expecting more out of products and life, and experienced nothing but improvements in everything around them as they grew older," he said. If you can feed those expectations with a greatly improved version of a cherished childhood toy, that's what you call a promising business model.
Like Harley, MTH -- and, to a degree, the more diversified Lionel -- is working to drum up a younger base of customers for the future. Both train companies are investing heavily in technology, hoping that programmable controls and sophisticated special effects will woo the GameCube generation.
Other makers of expensive playthings are taking a different approach. The personal-watercraft industry, for instance, has all but abandoned the young-adult customer in favor of middle-aged men and their wives and kids.
Those one-man, stand-up Jet Skis that used to terrorize beachgoers, with ab-ripped guys in shell necklaces vaulting over waves on their water hogs, now represent about 1 percent of the market. New models have wider seats and room for three or even four people, with storage space for coolers and spray shields to keep legs dry. They're practically minivans.
"The people buying them are 40 years old, married, with two kids," said Kirsten Rowe, executive director of the Personal Watercraft Industry Association. Those customers are willing to pay an average of nearly $9,000 for their toy, but they don't want to overexert themselves.
The old stand-up models "were tiring," Rowe said. "I personally have never ridden a stand-up, but someone who works in my office has. Physically, you have to be pretty strong and pretty in shape to actually operate one."
That's a key insight, Fishman said. "It's got to be an easier-to-operate piece of equipment without looking like it's made for an aging person," she said. "The boomers want a youthful lifestyle forever."
The Holy Grail, then, would be a product that isn't physically demanding, symbolizes perpetual youth and can be made to seem "special" through outrageously expensive detailing. At the same time, this product should be tied to a lifestyle that attracts the boomers' children, who will buy cheaper versions of it and carry the market far into the future. Think of something that appeals to both Joe Walsh and the kid on the corner in baggy pants -- something legal, that is.
Think of the guitar.
Plucked From the Attic Carl Werkmeister had shoulder-length hair and played in a rock band. Then he got married, got a regular job and cut his hair. He put away his guitar and didn't play for more than a decade. About 10 years ago, in his early forties, Werkmeister hauled his old acoustic down from the attic to teach his son how to play.
And it hit him like a Robert Plant solo: He wanted a new guitar. A really, really hot guitar. "It was like, hey, you know, I've got the money. I don't have to justify this to anybody. I always wanted one so I'm going to have one. So I went out and bought it."
Then he bought another, and another -- about a dozen, in all -- culminating recently with the purchase of a rare Paul Reed Smith Dragon model, its fret board a mosaic of thousands of tiny stones and mother-of-pearl in the shape of a sprawling dragon. Suggested retail price: $20,000.
"Guitars are better than other women," Werkmeister keeps reminding his wife.
Now 53, he works as telecommunications administrator for a Baltimore credit union, and he admits that "you'd never take me for somebody that plays in a band." But he has a basement any teen headbanger would envy -- filled with amplifiers, guitars and drum set -- and whenever possible he and his over-40 buddies get together and jam.
The buddy-jam has replaced golf as the way some businessmen interact, including executives who use it to assert their alpha powers. Thus the Rock and Roll Hall of Fame in Cleveland hosts an annual Battle of the Corporate Bands, which last year featured executive rockers from companies such as Harley-Davidson, PeopleSoft and HealthSouth. Embattled HealthSouth founder Richard M. Scrushy, 50, played guitar and sang lead on an original song called "Too Good Lookin'."
His generation created the popular market for guitars, said Brian Majeski, editor of the industry publication The Music Trades. Until the early 1960s, Majeski said, guitars were "arcana," popular in regional clusters -- such as with folk or country-and-western musicians -- but otherwise not widely played.
The baby boomers changed all that. They all wanted to be the Beatles or the Rolling Stones, and to do that, they needed the props -- a Gibson Les Paul like George Harrison, a Fender Telecaster like Keith Richards.
As guitars became mass-produced in the 1970s and 1980s, though, their quality suffered. In the late 1980s, independent designer Paul Reed Smith made an important discovery: If you built extremely high-quality electric guitars -- using exotic woods and old-fashioned attention to detail -- you could sell them for top dollar. Smith's company is "sort of a pathfinder in this market, they really pioneered it," Majeski said.
Baby boomers had just hit their top earning potential, and the result was a beautiful marriage of commerce and, well, extra commerce -- adding a robust new market on top of the already blooming guitar phenomenon.
"When we started, nobody paid over $1,000 for an electric guitar," said Smith, whose staff hand-builds guitars near Annapolis. Now his designs feed a thriving collectors' market. High-end acoustic guitars from Martin also are in demand among boomers. Fender, which helped start the original guitar craze but which drifted down-market during the 1980s, is back with painstakingly re-created Telecasters and Stratocasters. You can even order one factory-aged, scuffed and worn to look like it's been around since your days as a Jimi Hendrix sideman.
The privately held Fender has enjoyed "double-digit growth" for the past few years, spokesman Morgan Ringwald said. While it serves the full market from entry-level flailers on up, Fender has also ridden the boomer wave, offering $17,000-plus custom models that appeal to either professional musicians or wealthy dabblers "who may only know three chords but still want to feel like a rock-and-roller at 56 years old," Ringwald said.
Last year, 73,000 of the 1.9 million guitars sold in the United States were priced over $1,000, Majeski said. That's a small percentage, "but it's an important dollar component of the market," he said. Those high-end guitar sales amounted to roughly $102 million last year -- virtually all spent by baby boomers.
"My father's generation probably would have bought a sailboat or something along that line," said Brian Scherzer, 50, a clinical psychologist in a suburb of Denver who owns two PRS guitars and maintains an Internet forum for PRS enthusiasts. "I think our generation was so caught up in music, ranging from Elvis and the Beatles to the other early rock bands, and I think we're still very firmly entrenched in loving music -- loving what had been and trying to re-create it."
Though the re-creating can only go so far. Scherzer said he wouldn't want to revisit the hard living and instability of his days as a professional musician in the '60s and '70s. And Werkmeister said he intends to steer clear of that other icon of his generation, old and young, the Harley-Davidson.
"I had Harleys back in the '70s," he said, "but things got too dangerous on the street for me. Going fast on a motorcycle is extremely dangerous, and I guess maybe I did learn something over the years. I had a couple of close calls and decided I wanted more protection around me than a motorcycle offered."
Inevitable pause.
"But I have thought about it. It never completely goes away, because it is just an unbelievable feeling to be riding a motorcycle with the wind in your hair. It's just really, really a great feeling."