Older consumers set to spend in Japan

14 August 2009

TOKYO: Older consumers in Japan could represent a valuable target audience for many brands, as they have a considerably higher disposable income than most young people in the country.

It is estimated that the 8 million "baby boomers" in the Asian nation will collectively receive retirement payments totalling ¥80,000 billion ($841bn; €590bn; £508bn) during the ten-year period to 2017.

The country's Ministry of Internal Affairs also reported last year that Japanese seniors over the age of 70 typically had savings of ¥24.15 million, three times that of those in their thirties.

Yasuhide Yajima, a senior economist at NLI Research Institute, said there are "no accurate figures, but it is said that the older generations own 70% to 80% of Japan's financial assets."

Setsuro Sakamoto, a consultant for Hakohodo, the advertising company, also pointed to the fact that the "grey market" contained many early adopters of goods such as flat-screen TVs and digital cameras.

This was partly because they had more money to spend than their more youthful counterparts, but was also due to more deep-rooted factors, he added.

"Today's retirees grew up during Japan's post-war growth spurt, so they're used to aspiring to the latest products," Sakamoto suggested.

Similarly, Toru Saito, of Dentsu, the ad agency, said members of the generation that began to retire two years ago are likely to translate their savings and retirement payments into ¥7,776bn of new consumer spending.

However, he also warned that the downturn had caused a rising degree of anxiety, meaning that "in spite of aggressive promotion by many companies, success has been limited to a few industries."

One company that has effectively done so is Kanebo, the cosmetics manufacturer, which derives ¥10bn in annual revenues for it Evita brand for women over 50 years of age. 

Indeed, it has now developed a premium-priced extension to this range that will be sold in department stores, and products targeted at female consumers in their sixties.

Leon, a lifestyle magazine aimed at men in their fifties and above, has also maintained its sales figures in the downturn, at around 50,000 copies a month, and is aiming to increase this figure.

Hiroyuki Murata, of Murata Associates, a consultancy specialising in issues related to "middle aged and older customers", saod that this demographic has a unique set of needs.

"As people get older, their tastes and needs become more similar. Japan is a living laboratory" which could provide valuable lessons for a variety of other markets, he argued.

Previous research from SILVER has found that the retired population in Asia Pacific as a whole will have a spending power of some $2 trillion by 2015.

Kim Walker, the consultancy's ceo, said Japan's "super-age status" means "we can learn a lot from their experiences with developing products and services, and marketing to older consumers".

Data sourced from Financial Times; additional content by WARC staff