Mining The Silver Market
Companies seek riches selling to Japan's growing ranks of seniors
TOKYO - In Japan, Panasonic has designed a toilet that not only measures weight and body fat, but also tests body waste. Noritz Corp. sells a bathtub that monitors a bather's heart rate. A minivan by Toyota Motor Corp. has a rotating seat that makes getting in and out a snap.
These are just some of the goods and services being developed amid a surge in Japan's senior population. The trend is evident in industries such as electronics, travel, food and cosmetics. There is even the Ichome Shotengai, an indoor shopping mall in Tokyo with a retro theme, which attracts people like Eijiro Yoshino, 83. "It's very nostalgic," the retired dressmaker says. "The atmosphere reminds me of where I grew up in Tokyo."
Targeting older shoppers may not sound like the most exciting way to make a sale. However, for many companies, seniors are the growth story in an otherwise lackluster economy.
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It's easy to see why. Japan is aging faster than any other developed nation. And the elderly are relatively well off - people 65 and older own about half of Japan's $11 trillion in household savings. With workers' wages falling and consumption slack, businesses reason that targeting seniors is a smart bet.
"It's really demographics that are the key factor," says Ryo Hino, economist at JP Morgan in Tokyo. "The market for these types of goods and services has to grow."
Two reports released in June confirm that seniors are already on their way to occupying a bigger segment of the population.
One shows that the number of people ages 75 and older increased 5 percent in the space of a year and has topped 10 million for the first time. The second reveals that Japan's birthrate continues to dive to new lows, with women now bearing 1.32 children on average, short of the official projection of 1.33.
Given statistics like these, it is no wonder businesses are aggressively wooing the older set. However, getting grandma and grandpa to buy isn't necessarily simple. Like nearly everyone else in Japan, seniors are worried about the future - and with good reason. With the longest average lifespan in the world, lots of Japanese can expect their golden years to stretch out.
That raises the problem of financing the years after retirement. It's something older people are growing more concerned about as the government looks for ways to spread the cost of supporting an aging nation. Earlier this year, the cabinet approved a plan for people 75 and above to shoulder a portion of their medical expenses. Other possible measures include eliminating tax breaks for wealthy seniors, radically increasing the consumption tax and cutting pension benefits.
"The outlook is definitely on the downside," says Hino, adding that the combination of higher medical fees, rising taxes and lower pensions will diminish seniors' spending power.
Some elderly are already feeling the pinch. "Many people probably think that old people are all rich, but that's not the case," says Yoshino. "There are plenty of poor old folks like me."
By 2010, an estimated 22.5 percent of Japanese will be at least 65 years old, and the figure is tipped to rise to 35.7 percent by mid-century. Clearly the silver market is one businesses here can't ignore. It remains to be seen just how lucrative that market will become.
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