Strong demographic trends are often credited with economic progress. Population growth generates increasing population density and urbanization, which are strongly correlated with rising income. A greater proportion of citizenry in the workforce means not only more producers, but more consumers as well. As the majority of economic activity centers on this cohort, most businesses succeed or fail based on their appeal to working-aged individuals. Apple would not be one of the biggest companies in the world if our grandparents' consumption dwarfed our own.
As people age, both their interest in working long shifts and consumerism tend to fade. Older consumers have their own set of needs that can differ significantly from those of younger cohorts. As this slice of population increases in size, businesses looking to take advantage of these trends will have to accept that the ideal of the traditional consumer is changing. For some countries, this development is well under way.
In Japan, businesses marketing to older citizens are becoming increasingly common. Over 22 percent of Japan’s population is at least 65 years old, compared to 13 percent in the United States. Older consumers have unique needs, concerns, and opinions, and in Japan this group also holds nearly a third of all household wealth. Companies from electronics stores to rock gyms know that catering to this group will be an increasingly important aspect of their business.
Certain sectors already facing increasing demand, such as health care, will have to evolve to meet the needs of rapidly maturing populations. Japan’s strict immigration policy will make it hard to depend on inexpensive foreign caregivers, as much of the Western world does. In a country famous for its robots, it should come as no surprise that many companies, such as Toyota, are looking for ways to bring more automation to the health care system. Although robots that could take the place of human care are still in very preliminary stages, already new technologies for accessibility, health monitoring, and even companionship are proving desirable.
As the Japan example also illustrates, when it comes to aging demographics leading to economic decline, the story is not that clear-cut: Japan’s economy is projected to grow faster in 2012 than that of the relatively younger U.S. or Europe. Companies in Japan, better than those in many countries, are able to benefit from older workers in the form of consulting and mentoring derived from experience and wisdom. It seems likely that those societies best able to keep their elderly healthy and engaged stand the best chance of maintaining high economic well-being.
Another reason not to bemoan a graying society is that such societies tend to be less prone to violence, war, and political instability, which is attractive to any business. Large youth bulges throughout history tend to correlate with social unrest and conflict, and countries with such conditions today—such as Somalia, Yemen, and Afghanistan—reflect this tendency. Most companies prefer to avoid such uncertainty and find operating in older countries more dependable.
The demographic transition to an older society will differ in speed and severity from country to country. Japan may provide a helpful case study for much of the Western world as their societies continue to age. In counties such as the U.S., which faces a more gradual graying than many other countries, businesses may be able to adjust more aptly than their counterparts in societies that age more quickly. Practices that work well could be emulated, whereas those that come to a dead end could be avoided entirely.
The so-called "silver market" will become increasingly important in the U.S. and around the world, and companies that capture this change will be positioned well for continued success. It will be in the interest of not only business, but also society as a whole to embrace factors, such as immigration and technological innovation, that will play a critical role in determining who will stay competitive in a changing landscape.
UN Photo/Kibae Park: Seniors in conversation at Jongmyo Park, in downtown Seoul, Republic of Korea.
At the end of October 2011, the world population will pass the 7 billion mark. This year’s annual report by UNFPA, the UN population fund, highlights the remarkable trends behind the numbers: roughly one in two people now lives in an urban area, the global average life span is 68 years, and close to a billion people are 60 and over. The report sees the possibilities in 7 billion – for fostering sustainable cities, productive labour forces, and generations young and old that contribute to the well-being of economies and societies.
This article was originally published in the Diplomatic Courier's January/February issue.
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How Corporations Will Have to Adjust to Demographic Changes
February 3, 2012
Strong demographic trends are often credited with economic progress. Population growth generates increasing population density and urbanization, which are strongly correlated with rising income. A greater proportion of citizenry in the workforce means not only more producers, but more consumers as well. As the majority of economic activity centers on this cohort, most businesses succeed or fail based on their appeal to working-aged individuals. Apple would not be one of the biggest companies in the world if our grandparents' consumption dwarfed our own.
As people age, both their interest in working long shifts and consumerism tend to fade. Older consumers have their own set of needs that can differ significantly from those of younger cohorts. As this slice of population increases in size, businesses looking to take advantage of these trends will have to accept that the ideal of the traditional consumer is changing. For some countries, this development is well under way.
In Japan, businesses marketing to older citizens are becoming increasingly common. Over 22 percent of Japan’s population is at least 65 years old, compared to 13 percent in the United States. Older consumers have unique needs, concerns, and opinions, and in Japan this group also holds nearly a third of all household wealth. Companies from electronics stores to rock gyms know that catering to this group will be an increasingly important aspect of their business.
Certain sectors already facing increasing demand, such as health care, will have to evolve to meet the needs of rapidly maturing populations. Japan’s strict immigration policy will make it hard to depend on inexpensive foreign caregivers, as much of the Western world does. In a country famous for its robots, it should come as no surprise that many companies, such as Toyota, are looking for ways to bring more automation to the health care system. Although robots that could take the place of human care are still in very preliminary stages, already new technologies for accessibility, health monitoring, and even companionship are proving desirable.
As the Japan example also illustrates, when it comes to aging demographics leading to economic decline, the story is not that clear-cut: Japan’s economy is projected to grow faster in 2012 than that of the relatively younger U.S. or Europe. Companies in Japan, better than those in many countries, are able to benefit from older workers in the form of consulting and mentoring derived from experience and wisdom. It seems likely that those societies best able to keep their elderly healthy and engaged stand the best chance of maintaining high economic well-being.
Another reason not to bemoan a graying society is that such societies tend to be less prone to violence, war, and political instability, which is attractive to any business. Large youth bulges throughout history tend to correlate with social unrest and conflict, and countries with such conditions today—such as Somalia, Yemen, and Afghanistan—reflect this tendency. Most companies prefer to avoid such uncertainty and find operating in older countries more dependable.
The demographic transition to an older society will differ in speed and severity from country to country. Japan may provide a helpful case study for much of the Western world as their societies continue to age. In counties such as the U.S., which faces a more gradual graying than many other countries, businesses may be able to adjust more aptly than their counterparts in societies that age more quickly. Practices that work well could be emulated, whereas those that come to a dead end could be avoided entirely.
The so-called "silver market" will become increasingly important in the U.S. and around the world, and companies that capture this change will be positioned well for continued success. It will be in the interest of not only business, but also society as a whole to embrace factors, such as immigration and technological innovation, that will play a critical role in determining who will stay competitive in a changing landscape.
UN Photo/Kibae Park: Seniors in conversation at Jongmyo Park, in downtown Seoul, Republic of Korea.
At the end of October 2011, the world population will pass the 7 billion mark. This year’s annual report by UNFPA, the UN population fund, highlights the remarkable trends behind the numbers: roughly one in two people now lives in an urban area, the global average life span is 68 years, and close to a billion people are 60 and over. The report sees the possibilities in 7 billion – for fostering sustainable cities, productive labour forces, and generations young and old that contribute to the well-being of economies and societies.
This article was originally published in the Diplomatic Courier's January/February issue.
