Ageing Populations: Japan Today, Where Tomorrow?

Japan is well-known for its ageing population. The figures are stark: In 2014, 26.7% of the population were aged 65+, the number of those aged 65+ overtook those aged 0-14 in 1997 and the median age is already approaching 50 years.

Population of Japan: 1977-2030

Japan-Pop
Source: Euromonitor International Future Demographic Model powered by CAMI

This matters because it is harder to generate economic growth with a backdrop of an ageing population. This is because fewer people are working, leaving the emphasis on productivity gains. In addition ageing squeezes public finances and puts pressure on social safety nets, because of increased demand for spending on pensions and healthcare.

Opportunities to target a lucrative market

A challenge such as this gives rise to impressive innovation and Japanese companies are at the fore-front of products aimed at the elderly, of technology to mitigate against a shrinking working-age population and of government policy. The health sector is an obvious area ripe for innovation. For instance mobility can be a huge challenge. Research from the World Health Organization shows that one third of all adults over the age of 65 fall at least once a year, and that risk increases with age and that falls are the leading cause of injury among older adults. Vision and hearing loss are other challenges ripe for innovation.

Consumer goods companies see the senior segment as a key target market. The Aeon Group, a global retailer headquartered in Japan, has a strategy aimed at targeting senior consumers, who they call the “Grand Generation (G.G.)”. Their initiatives include the launch of a range of women’s underwear “offering unique comfort based on the body shapes of women in their 60s, of which design and function also meet the needs of the active senior class.” They have also increased their focus on single-portion, healthy ready meals again aimed at seniors, and launched “THE GOLDENSHOP,” a cosmetic brand for women aged 40 or over. In addition they have made changes to the shop floor including increasing font size in Point of Sale displays.

Smaller changes are also an option. Nippon Suisan Kaisha (Nissui) and Hagoromo Foods, which make shelf stable food such as preserved fish, fruit and vegetables, have added an easier to peel-off foil as a lid for its metal food cans. Retailers are offering delivery services for seniors and facilitating ordering through non-internet options such as telephone ordering and even door-to-door salespeople with tablets.

Where is the next Japan?

Which countries will face a similar demographic challenge in the years to come? Using our Future Demographic model we can identify those countries with the most similar age structure. Comparing Japan’s demographic trends between 2000 and 2015, we have pinpointed the countries which will most closely follow these trends between 2015 and 2030.

Japan and its 20 Most Closely-matched Demographic Counterparts

Japan-Counterparts

Source: Euromonitor International Future Demographic Model powered by CAMI

It’s perhaps unsurprising that 14 of the top 20 are European countries, including economic heavyweights such as Germany, Italy, Poland, Spain and the Netherlands. These five countries alone account for 48.6% of the EU’s population and 47.9% of its GDP.

On the other hand there are some major developed economies notable by their absence – including the UK and the USA. In 2030 the median age of their populations will remain well below that of Japan today.

Demographic Trends in the USA and UK: 1977-2030

Japan-UK-US

Source: Euromonitor International Future Demographic Model powered by CAMI

Of all the world’s largest advanced economies, France is the least in danger of a sharp “Japan-like” ageing trend. Although the number of people aged 65+ overtook those aged 0-14 in 2015, the child population is set to continue to grow, before peaking in 2024. Conversely in Japan it peaked in 1978 and in 2015 is 42% below this peak.

Demographic Trends in Japan and France: 1977-2030

Japan-France

Source: Euromonitor International Future Demographic Model powered by CAMI

The future is silver

Governments in those countries which look set to match Japan should learn from the Japanese experience. Business operating in countries with ageing populations should plan for a smaller number of working age, but increasing numbers of senior consumers bringing new opportunities as well as challenges. Above all, the scope for innovation is immense. Business can make small changes to existing products or services or target the segment with new lines focused at older consumers. The countries most like Japan in their demographic profile are dominated by advanced economies, but emerging markets are also ageing. Because of their scale, China already has 5 times the number of 65+ of Japan, and even India, with its young age profile, has twice as many over 65s. By 2030, there will be 828 million over 65s in emerging and developing economies. Ageing is a global trend too large to ignore.