*As of 2009, the population of elderly citizens in Japan (65 years and over) was 29.01 million, constituting 22.7 percent of the total population of Japan. In 2009, the younger age population in Japan (0-14 years old) amounted to 17.01 million, accounting for 13.3 percent of the total population, the lowest level on record since the Population Estimates began.
I am not an academic and am not going to get involved in the all of the implications of an aging population in Japan – not all but one – who will replace the aging luxury consumer in Japan?
It's a fact that the elderly in Japan control half the country's wealth, and it is also a fact as they are aging they are not buying luxury goods.
When speaking with several CEOs of luxury brands in Japan, one of their biggest concerns voiced is losing these wealthy, elderly consumers and having the challenge to replace them in an economy where the work force is made up of over 30% temporary workers and where only about 54% of new college graduates are able to secure jobs upon graduation.
Watching the market we can observe some of the ways luxury brands in Japan are starting to adapt to the aging population.
Diffusion lines and second lines; once relegated to luxury’s aspirational consumer and made popular after the luxury bubble burst at the end of 2007, diffusion lines and second lines are strategically changing with the population demographics and realities of a younger generation not as wealthy as their parents. Red Valentino by Valentino is one brand that hits the mark, as well as Bottega Veneta, not only ever-so-slightly changing their merchandising and pricing but also replacing most of their older workers in Japan (in their mid-to-late 40s and over) with younger workers to reflect the younger generation. Through social media brands like Hermes, Gucci, Burberry, and more are taking different approaches toward building a rapport with Japan’s young consumers with the hope the brand awareness they build now will translate to sales later.
These are just some of the strategies I have so far been observing in Japan’s luxury sector. I am sure we will soon witness the incredibly creative and effective to the inane and ineffective.
What strategy is your luxury brand implementing for the preparation of Japan’s aging population?
* Ministry of Internal Affairs and Communications, Bureau of Statistics