Aging Consumers Reshaping Japanese Market

Tapping the Potential of Japan’s Senior Consumers

Economy Society

Japan’s aging population offers new opportunities for Japanese industry—provided it can tap into the diverse needs and shifting consumption patterns of the elderly. Murata Hiroyuki offers a tantalizing glimpse of future trends in Japan’s senior market.

The number of elderly citizens in Japan has hit 33.8 million, a full 26.7% of the total population, according to government figures released on September 15. As the children of the postwar baby boom (1947–49) enter their golden years, this segment of Japanese society will continue to grow. While some have portrayed this trend as a demographic crisis, others look on the burgeoning senior market as a unique business opportunity.

Opportunities abound, to be sure, but viewing Japan’s elderly population as a single monolithic market would be a serious mistake. In the following, I offer several concrete examples of consumer trends to illustrate the growing diversity of the senior market and provide a glimpse of its future potential.

Who’s Buying Those Prepared Meals?

One of the big consumption trends of recent years is the rapid growth of the market for prepared foods. Increasingly, people are buying meals or dishes prepared commercially and taking them home or having them delivered. According to a survey by Recruit Lifestyle, men in their 30s and 40s account for a substantial portion of this increase, but another growing market segment consists of consumers in their 60s, men and women alike.

A key factor behind the increase in prepared-food consumption among Japanese in their 60s is the fact that the baby boomers are transitioning to a new life stage. One aspect of this trend is the growing number of retirees and the impact of their retirement on their wives. In a 2011 survey of women in their 50s and 60s by the Living Kurashi How Institute, respondents whose husbands had retired were asked how often their spouses stayed at home. A full 38% answered “about seven days a week,” while 25% replied “more often than not.” In short, more than 60% of the women surveyed reported that their husbands spent most of their time around the house.

The same questionnaire asked the women whether they felt they had more or less time to themselves than five years previously. The percentage indicating that they had less time was 18.6% among women whose husbands were still working but climbed to 31.6% among those whose husbands had retired. The main reason women of this age bracket feel they have less spare time is that they are expected to serve three meals a day to their retired husbands. While it is true that more Japanese men are cooking than ever before, most males of this generation are still fairly helpless in the kitchen; teaching one’s husband to prepare his own meals would be a huge undertaking in itself. Much of the growing demand for store-bought meals reflects the desire of women with retired husbands to minimize the added burden of food preparation.

On the other hand, the “underfoot husband” phenomenon is just one aspect of a complex picture. The uniformity that characterized the boomers’ incomes and lifestyles during the years of rapid economic growth has given way to diversity rooted in such differences as employment or lack of it and disparities in health, fitness, and family situation. Indeed, the senior market is best thought of not as one mass market but as a collection of micro markets. Let’s look at some examples of this diversity.

Are Seniors “Morning Consumers”?

There is a widespread perception of the elderly as early risers who are most likely to consume in the morning hours. Certainly it is common to see older people walking their dogs or taking a walk around the block in the early morning or lining up outside a department store before it opens. Cognizant of this phenomenon, some businesses have begun tailoring their hours and offerings to early-rising seniors. One example is the Komeda coffee shop chain, which offers a 7:00–11:00 AM breakfast special of coffee, toast, and a boiled egg.

But a pattern of evening consumption has been emerging as well. Exemplifying this trend is 65-year old Yamamoto Jirō of Saitama Prefecture, who stops at the local supermarket to buy prepared foods for his dinner on his way home from work each evening. “Eating out every night would be too expensive,” he explains.

Meanwhile, an izakaya (restaurant/bar) near Gotanda Station in Tokyo’s Shinagawa district is doing a booming business offering an “all-you-can-eat senior course” for groups of customers aged 65 and up. At ¥2,680—including 180 minutes of free drinks—the pricing is attractive, and the course has made the bar a popular destination for older office workers and hobby groups alike.

Growth in consumption from evenings on can be attributed in large part to the rising number of working seniors. According to the government’s Labor Force Survey, the number of employed persons aged 60 and up has risen steadily over the past decade. In 2013, the total was 12.1 million, accounting for almost 20% of all employed persons 15 and up. One driver of this trend is the amended Act for Stabilization of Employment of Older Persons (in effect since April 2013), which requires companies to offer all regular employees options for continuing employment at least until age 65. That said, the number of employed persons 65 and up has been rising as well over the past 11 years, hitting 6.81 million in 2014.

As for retirees, the overall trend in recent years—underfoot husbands notwithstanding—has been toward a more socially and culturally active lifestyle. Going forward, this trend should drive further growth in evening consumption among Japan’s seniors.

Fitness Fuels Consumption

The role of women in these growing markets cannot be overstated. Women comprise half of the baby-boom population, and since women live longer than men, their share is sure to increase as that cohort ages. To a large extent, women are the main drivers of consumption among older citizens.

As a member of the faculty at the Smart Ageing International Research Center of Tōhoku University, I frequently run into women in their fifties, sixties, and seventies. They are on campus to take classes at Curves, the women’s fitness facility located on the center’s sixth floor. I see them energetically climbing the stairs—as opposed to riding the elevator—and their hearty greetings echo through the hall. (That cheerful vitality provides a sharp contrast with the ambience in the waiting room of the university hospital next door.)

Each session at Curves consists of 30 minutes of strength training, aerobic exercise, and stretches. After three months of classes, most women feel significantly better than when they started. More surprising, perhaps, are some of the other changes that can be observed in these women.

To begin with, many of them start buying clothes—not just fitness gear but clothing in general. The obvious explanation is that they have lost weight and are happy about the way clothing fits them. They also begin buying shoes, handbags, makeup, jewelry, and so forth. Not only that but they start going on more outings and taking more trips with their friends.

Why would strength training and aerobic exercise bring about this sort of change?

According to researchers at Tōhoku University, exercise of this sort stimulates the prefrontal cortex, which plays a key role in motivation. Decreased functioning in this part of the brain is a feature of both depression and dementia, which are especially common among older individuals. Researchers have found that when the prefrontal cortex is stimulated through strength training and aerobics, people become more positive and feel more motivated to get out and do things, leading to increased consumption. Put simply, when you feel better, you spend more.

Curves, an American import, has expanded rapidly in Japan over the past decade. It now boasts 1,625 branches nationwide with 710,000 members averaging 61 years of age. Senior-oriented businesses like these are helping Japan’s older citizens live healthier, happier, and more fully engaged lives.

The Liberation Stage

In October 2013, railway company JR  Kyūshū launched a deluxe rail tour called Seven Stars in Kyūshū. The package offers travelers the opportunity to tour the region’s famous spots aboard an extravagant cruise train equipped with luxury dining and sleeper cars. The plan is not cheap by any means; as of late 2014, the cost of a four-day three-night cruise ranged from ¥430,000 to ¥1.25 million (roughly $3,500–$10,000) per person. Even so, every cruise so far has sold out, thanks mainly to interest from people in their sixties.

Contrary to what one might expect given the fares, the passenger list is not dominated by the very wealthy. An acquaintance of mine who took the cruise—a 65-year-old woman from Chiba Prefecture—formerly worked on the staff of a nursing home. Why would people of modest means spend this much on a vacation?

American psychologist Gene Cohen, a former director of the National Institutes on Aging, has called the period of life from the sixties to the early seventies the “liberation phase.” According to Cohen, this is a time when people frequently feel the urge to do something they’ve never done before.  A corporate manager takes early retirement and becomes a scuba diver in Okinawa. A woman who spent years as a part-time cashier becomes a dance teacher.

Why is this period of life a time of liberation? One reason is that the brain develops certain latent capacities around that time, and people discover the energy to take on new challenges and roles. Another is that individuals often embark on a new life stage at this point, having graduated from their roles as caregivers to their children and aged parents. These circumstances, combined with the realization that they only have so much time left to do what they want to do, often inspires people to action.

My acquaintance who took the Seven Stars rail cruise said she treasured the experience because she had always dreamed of riding a luxury train but never had the opportunity before. Even people of moderate means are willing to splurge on such a trip if they love trains and realize they may never have the opportunity again. This tendency is by no means unique to Japan but can be observed among older people around the world.

Tech-savvy Seniors

More and more Japanese seniors are learning to navigate the Internet and do their shopping and other chores online. According to the government’s Communications Usage Trend Survey, between 2001 and 2012 the percentage of Internet users rose from 19.2% to 71.8% among Japanese seniors in the 60–64 age group, from 12.3% to 62.7% in the 65–69 bracket, and from 5.8% to 48.7% among those aged 70–79.

The ability to access information of all kinds online is altering the behavior of seniors in important ways. For one thing, they are becoming savvier consumers.  A nursing home executive told me that in the past, when the facility held information sessions, about 50 of the 600 seniors in attendance would sign contracts then and there, despite the hefty upfront fee of ¥40 million. Now the facility requires an initial payment of only ¥10 million, yet virtually no one signs up on the spot. Impulse purchases are less common among seniors now that they have begun using the Internet to access information, compare costs, and get the best possible deal.

My own research suggests that by 2025, about half of Japanese citizens aged 83 and up will require nursing care, and about 45% of them will be Internet users. Given another decade, even the most elderly members of our population may come to take Internet use for granted. This is bound to have a dramatic impact on the way they shop. Instead of ordering products from TV shopping channels or newspaper advertisements, seniors will be doing their mail-order shopping online.

The physical strain of shopping is often cited as an obstacle to consumption among seniors, and the spread of e-commerce offers a convenient answer to this problem. How the distribution sector adapts to the rise of “smart seniors” will be a key to unlocking the vast potential of the senior market in Japan’s rapidly aging society.

(Originally published in Japanese on November 9, 2015. Banner photo: A strength training class held on the grounds of Kōganji temple in Tokyo’s Sugamo district on Respect for the Aged Day, September 21, 2015. © Jiji.)

consumption aging baby boomers Seniors senior market