By  on October 12, 2012

The healing touch can comfort not only people but also ailing markets like geriatric Japan.

At least that’s one of a number of ideas at Shiseido’s award-winning research and development operation, which has been doing basic research into how the physical act of applying makeup and massaging the face through the use of skin care can ease the effects of dementia. In a recent interview in Tokyo, Youichi Shimatani, who heads up research and development at Shiseido, explained how the company used technology it codeveloped to gauge the amount of fingertip pressure required to have a beneficial effect. The information is used in developing products and services. The process affects the frontal lobe of the brain, which controls emotions. Speaking through an interpreter, Shimatani said tests showed that the brain becomes activated by touching the face during makeup application and administering facial massage in using skin care. In patients suffering from dementia, pressure from the finger tips increased pleasantness, tests indicated.

In studying the aging of skin, the company also discovered stem cells located near blood cells in the dermis, a key finding in the study of the generation of fibroblasts and hence the production of collagen. This pinpoint focus is echoed in the targeted marketing of Shiseido’s domestic sales department. Beauty teams are sent to nursing homes to generate enthusiasm among the elderly for using products. General manager Daisuke Teranishi, speaking through an interpreter, notes, “Women in their 60s are much more interested in their beauty products than they used to be.”

Shiseido has long promoted the concept of “successful aging,” no doubt because the graying of the population is a well-trodden issue in Japan. The message from Shiseido and others is that pockets of opportunity, which may have been overlooked in the past, can offer new veins of growth. No wonder there’s interest in the older customer in Japan. Of a population of 127.8 million people last year, 23.3 percent of them were age 65 and older, the largest percentage in the world. Moreover, the percentage of children aged 14 and under accounted for only 13.1 percent of the population, a record low, according to government statistics. The future is bleaker. By 2050, the 65-and-up set will comprise 38.8 percent and
the youngsters 14 and under will claim only 9.7 percent of the total. The total population will have dwindled to 97 million people by then.

But Japan remains the second-largest single beauty market in the world, behind the U.S. and ahead of Brazil. The Japanese government calculated the size of the domestic beauty market for 2011 at 2.3 trillion yen in total wholesale value, or $29.5 billion at current exchange. It’s large, but it’s also challenging. Teranishi concedes that the overall domestic market has sustained “flat growth” during the last decade.

Shiseido is not alone in continuing to look for untapped possibilities domestically while also developing business outside Japan. Ricardo Quintero, senior vice president and global general manager of market development for Clinique, points to the stoic resilience shown by the population in bouncing back from last year’s massive earthquake, tsunami and nuclear meltdown. He connects the dots: the market’s continuing prominence, the high level of education and the 350,000 scientists who are graduated every year. This particular store of human capital explains a recent phenomenon of technology-driven companies, like Fuji Film, coming into the skin-care arena with hopes of leveraging their technical prowess. Waving aside the familiar complaints of market maturity, Quintero proclaims, “I went there and I saw opportunity, because I saw a culture that had to endure and face some very massive things.”

What isn’t obvious from the depressing demographics is the enthusiastic heart that throbs under the superficial figures; what appears stagnant is dynamic at its core. This becomes clear on a recent Wednesday afternoon when walking through Shibuya 109, a hive of frenzied teen shopping that doubles as a vertical mall crammed with fashion and accessories boutiques and stalls. School is out and the place is swarming with the famed youth of Shibuya, sporting bleached-out hair, clad in the skimpiest of minis and tricked out and blinged out in all manner of girly frills, sassy and sweet. No one in sight seems to be over 20.

“Creativity is such an important ingredient for growth and these people are very creative,” marvels Quintero. “I see the connection between makeup application, fashion and accessories,” he says, during an interview in New York. Independent perfumeries and department stores have been particularly challenged and as a result big retail players have been experimenting with new formats. One of the most prominent is Isetan Mirror, a hybrid format fusing the elegance of a department store and the shopping freedom of an assisted-sell format. “They are learning and they are going to evolve it,” says Quintero. “The question is, will the brands and the distribution have the courage to capture that consumer in the way she wants to be captured and the way she wants to be engaged?”

The one dynamic channel is the Internet. The flood of information has doubled over the Web in the last eight years, according to Teranishi. As a result, Shiseido has launched two Web sites, Beauty & Co., an informational site, and Watashi +, an e-commerce initiative.

Another budding category is m-commerce. Half of Clinique’s business is done over mobile phones, and the company is looking to lure that youth-oriented traffic back into department stores. Clinique maintains a digest of its top 10 products on iPads installed in its department-store installations. Consumers are able to download the information over their phones and take the data with them, with the hope that they will drop by a department store to check out the actual product. Quintero points to the universal truism that a large percentage of consumers shopping in other parts of a department store don’t buy beauty in that particular retail location. “We have an opportunity to reinvigorate the growth and draw new consumers,” he says. “Those people shopping shoes now are going to shop beauty. There is a paradigm challenge in front of us.”

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