Two of Asia’s largest consumer markets — China and Japan — face the challenge of rapidly aging populations.
In Japan, a country whose population is aging faster than that of almost any other developed nation, retailers and brands have more experience marketing toward more mature consumers. Several companies, including Shiseido and Fujifilm, have come out with beauty lines that target this growing segment of the market, and the customer base of some key retailers has continued to age. A spokesman for Isetan Mitsukoshi Holdings, Japan’s largest department-store operator, said the company is faced with the challenge of expanding that base to include customers on the lower end of the age range as well.
“Particularly in the case of Mitsukoshi, many of our customers are already middle-aged and above, so we aren’t really actively focusing on growing that group. It’s the opposite, actually — we need to target younger people in order to continue to grow, so we’re concentrating more on that,” the spokesman said. “On the other hand, many seniors in their 60s and 70s have a strong sense for fashion and enjoy a high-quality lifestyle, plus they have a mind-set for consumption. So, of course, we also cater to them. It’s a two-faceted approach.” RELATED STORY: The German 50+ Customer >>
In China, as well, there appears to be a consensus among analysts that brands, particularly global luxury players, are not missing out on a huge opportunity among older consumers. Generations aged over 50, or even in their late 40s, still tend to save money due to historical and societal factors. Most in this demographic lived through some of the most tumultuous times in Chinese history, such as the Great Leap Forward and the Cultural Revolution, when millions starved to death, were killed or otherwise had to get by with very little.
“They have memories of much more difficult periods in Chinese history, like those who lived through the Great Depression in the United States,” said James Roy, a senior analyst with the Shanghai-based China Market Research Group. “They are not really free-spenders — not nearly as free-spending as people in their 20s or 30s.”
China has a population of at least 200 million who are age 50 and over, according to government statistics. By 2050, more than a quarter of the country’s population will be over 65.
Additionally, the Chinese government provides no social safety net, which means a huge health calamity could break the bank for families. “They tend to save for a rainy day,” Roy said, adding that when these generations do spend, it tends to be on health products, antiaging cosmetics, on their children or for lifestyle experiences, such as a trip to Europe.
“The core group of consumers who have the means and who are willing to spend are in younger age brackets in China,” Roy said. “I don’t think this is a big missed opportunity right now.”
He added, though, that a generation now reaching their late 30s and early 40s could soon be a new opportunity for brands. This group made a lot of money over the past decade or so in China’s housing boom, is willing to spend and will soon have evolving tastes that do not match marketing to Chinese twentysomethings. “That group will transition into those older age groups, so that is something to look out for over the next five to 10 years,” he said.
According to Franklin Yao, managing partner at the consultancy Smith Street Solutions, Chinese consumers age 50 and older have money, particularly those living in second- and third-tier cities, but tend to spend it on domestic brands they trust.
“They are being provided for, they are just being provided for in the traditional way,” Yao said. “If you look at local jewelry brands or department stores in smaller cities, they aren’t marketing to younger generations but are all providing for the Boomer generation. And if you look at the education level of older generations, they are not well-educated. They are generally happy with what they are getting.”
“These people are well served,” Yao said. “They are not going to suddenly change their ways and buy Alexander McQueen because it is trendy. Western brands are not really even competitive.”
Consumers in their 50s and 60s in China who can afford to spend still aspire “for something younger,” Waldemar Jap, a partner and managing director of Boston Consulting Group’s Hong Kong office, said. “There are some specific brands targeting an older female, but these are value-for-money products. We are not aware of any premium brands targeting this segment.”
Nevertheless, there is evidence that older Chinese are feeling overlooked by retailers and marketers, according to a January 2013 report from market-research firm Mintel. Only 8 percent of older Chinese surveyed in the study said they feel advertising is aimed at them. The same percentage said they feel that stores and companies do not cater to retired people. The study points out that spending habits coincide with lifestyle preferences — cooking, exercising, traveling and entertainment. “After covering necessities, retirees show a strong propensity toward spending on experiences rather than on possessions,” the study said.
Online shopping is also increasingly popular among this demographic. People 50 and older make up 10 percent of China’s Internet users and 1.75 million of them say they have shopped online, according to the government-run China Internet Network Information Center. Women’s apparel is the most popular category among older online shoppers with nearly nine million pieces of women’s clothing sold to shoppers over age 50 in 2012, according to the China-based iResearch. RELATED STORY: Special Report: Boomers — the Neglected Market >>
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