As the first « Baby Boomers » in Japan begin turning age sixty in the coming year, the most recent « Annual Report on the Aging Society, » issued by the Japanese Cabinet Office, predicts that this generation has the financial power and population spike to make a big impact as consumers. Further, the report forecasts that newly-minted seniors, born between 1947 and 1949, are merely the first wave of a population shift in Japan — and spending frenzy — that will last for decades.
Looking ahead, the mature Japanese consumer offers significant opportunity for international brands and companies seeking new markets. Adding to the opportunity, the country of Japan has recently undergone dramatic changes in many long-standing systems and practices, such as industry regulation and labor mobility in order to promote foreign direct investment. As a result of these changes, Japan has transformed itself into an active, welcoming investment environment for US and European companies, and it’s cumulative FDI (foreign direct investment) stock has steadily increased during the past three years.
The New Japanese Senior: Wealthy and Ready to Spend
The average Japanese retiree will receive $180,000 (114 yen/dollar) in severance pay upon retirement, according to Nikkei Financial Daily. This unprecedented payout will create $658 billion in total spending power for retirees during the years 2006 and 2010 — an amount equal to approximately one-third of the total US revenue during 2005. Further, by the year 2015, empty-nest senior « affluents » will be responsible for one-quarter of all spending in Japan. By all measures, they constitute a « consumer block, » with the financial resources to purchase goods and services across a wide variety of sectors.
In demographic terms, seniors (age 65 and older) comprised 19.5 percent of the total Japanese population in 2004. This number is projected to increase annually until 2050, when seniors will comprise 35.7 percent of the total Japanese population. This generation of Baby Boom seniors has spent a lifetime working, and currently controls more than 85 percent of all savings in Japan.
Source: METI
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