With the world’s highest life expectancy and one of the lowest birth rates, Japan is facing serious challenges due to its rapidly ageing population. Japanese in major cities age even faster than the country overall. Absence of well-integrated communities in city neighbourhoods, concentration of elderly citizens in certain areas, and rising costs of healthcare are only some of the issues that are currently experienced by Tokyo, Osaka, Nagoya and other cities in Japan. Social and consumer services need to adapt to the new reality in Japanese cities.
Ageing Population Needs More Care In Cities
Japanese baby boomers moved from rural areas to cities in the economically thriving 1970s. Currently they are about to reach their retirement age, and the population aged 65 or older is estimated to surge by 15% in 2013-2018 in Tokyo and by 13% in Nagoya and Osaka. In comparison, the overall increase in the rest of the country is expected to reach only 9%. Combined, the three major Japanese metropolitan areas will be home to over 17 million citizens older than 65 in 2018. 29-31% of the population will be over 65 in Tokyo, Nagoya and Osaka in 2030.
Such pronounced demographic changes pose new challenges to metropolises. Elderly care in the cities is in higher need and has a higher cost for society than in the countryside. For example, in contrast to tight social bands of families and communities in rural areas, the majority of urban elderly people live alone. According to the Tokyo Medical Examiner's Office, the number of unattended deaths is rising and 2,869 elderly died alone in their homes in Tokyo in 2013, doubling figures in the past decade.
Cities are also facing issues of empty and unattended housing. In 2008, one third of the 7.5 million empty Japanese housing lots were abandoned by owners (the other two thirds were awaiting tenants or serving as second homes). In 2010, the first municipality introduced ordnance outlaying specific requirements for vacant property management, and by April 2013 211 municipalities followed. Some of them, such as Adachi ward in Tokyo, even aim to tear down vacant houses, or, in some cases, turn them into community centres.
Public authorities in Japanese metropolises recognise the demographic challenge they face and are investing in improving cities’ infrastructure, to adapt to the needs of senior citizens. Elderly-friendly infrastructure projects include massive installation of elevators in train stations, “priority” seats for the elderly on public buses, more benches on every floor in shopping malls and handrails in restaurants and public toilets. There is more attention to every aspect of everyday life of the elderly, for instance making names on road signs larger to help the elderly recognise the signs. Private initiatives are also evident, with cab companies offering door-to-door service driven by qualified carers, who can also help the elderly with errands. Supermarkets, concert halls and other venues offer shuttle buses for senior customers.
Strategic Planning For An Ageing Population
Over the next two decades, Japanese cities will remain the world’s key consumer markets (as measured by total annual disposable income), while its elderly population will account for an increasingly larger share of total income. Specifically, Tokyo will remain the world’s second-largest consumer market in 2030, while Osaka will be among the top 10. At the same time, the population aged 65+ will account for 31% of Japan's total household gross income in 2030, up from 25% in 2013. Given these developments and the substantial size of Japanese cities’ consumer markets, businesses need to adapt their strategies to remain competitive.
A number of useful examples are already present in Japan. For example, retailers realise that elderly customers no longer do weekly shopping outside the urban centres. To follow the customer, convenience stores such as Lawsons and 7-11 are opening small outlets in residential areas with demand for those expected to surge in the near future. With an increase in single person households, especially among the elderly, shopping patterns are also changing in terms of products and their packaging sizes. The packaging industry is swift to introduce new solutions, such as one portion or resealable packs, as well as extended shelf life products. All of these product changes in Japan signal that effects of demographic changes are already recognised by market participants, and late product adoption might mean significant loss of market share.
Analyst Insight by Kasparas Adomaitis - Cities Analyst, Euromonitor International
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