Marketing To The Elder Set

Imagine this scene in the ginza shopping district of Tokyo just 10 years from now: in a street once dominated by electronics dealers and toy stores, a new business is opening its doors. Signs in bold lettering are advertising "authentic" whalebone walking canes, along with high-tech wheelchairs. Three doors down, Sony's new snap-on cholesterol sensors are all the rage. But few stores are doing well. Instead, the once lively neighborhood is getting taken over by undertakers, physicians and hotels featuring tiny cubicles and nursing robots.

Welcome to Silver World: a landscape of rapidly aging populations. This year the average Japanese turned 42 years old. The over-70s have reached 14 million. The demographics are clear, and irreversible. Two thirds of all senior citizens who've ever lived are alive today. The number of people born between 1990 and 1995 was only about half as large as the number born between 1970 and 1975. That means more old people, and fewer younger workers to support them. Some fear a series of "aging recessions," beginning when the first big wave of boomers hit retirement and start divesting--around the end of the decade. Others see a collapse of social services as the elderly overload health-care systems. A few gloom-mongers even talk of "generational warfare." A recent U.N. report calls it "the greatest societal challenge of the 21st century."

But there's another way to look at the coming Silver World. It could be one of history's greatest opportunities for innovation. And nowhere are the chances greater than in the world's most rapidly aging societies, in Europe and Asia. Already, industries that traditionally cater to youth are reinventing themselves for the newly old: toy companies in Japan, amusement parks in Europe. From housing to autos, robotics to electronics and cosmetics, the global market is being driven by aging baby boomers. In the cosmetics industry, product ranges advertised for "mature skin" such as Shiseido's Benefiance or Lancome's Absolue account for about half of those companies' skin-care sales. Is it so inconceivable that, come 2012, we'll look back and marvel at the economic production inspired by the aging of the planet?

Not only is the 50-plus crowd the fastest-growing market in the developed world--on average, they're also the richest seniors ever, thanks to improved pensions. Luxury cars and expensive SUVs are doing well because the average car buyer is older than he was 10 years ago, and most of the older are richer. Companies that don't get with it are getting creamed. Levi Strauss, for example, complains that the youth market is shrinking faster than the company's jeans: shifting demographics was the main reason it shut down three European factories in 1999.

As both the oldest and the fastest-aging industrial society, Japan may be a good sign of what's to come. (In 2012, three in 10 in Japan will be over 60, a state of gray the United States won't reach until around 2070.) Companies like Honda and toy maker Bandai are developing robots that serve drinks and carry bags. When Bandai came out two years ago with Primopuel--a high-tech doll that nods, talks and sings--its most eager customers turned out not to be lonely young women but single seniors who wanted a companion. In December, a hotel for seniors will open in northern Japan.

You couldn't tell from MTV, but the taboo against aligning corporate image with older people is breaking down. In Italy (the world's second most rapidly aging society), upscale designers like Prada, Gucci and Armani began about five years ago to offer special lines for the "mature" customer, with looser fits, higher waist- and necklines, and colors that accent pallid skin. In France, L'Oreal recently abandoned its preference for younger models and hired Catherine Deneuve, 57, to sell skin-care products. Harley-Davidson, the ultimate symbol of American rebel youth, is now a luxury ride for older bikers; its average customer is 52.

Inevitably, an aging society has mounting burdens, particularly the cost of health care. But those who fear aging recessions appear to ignore that more people are more vital even at an advanced age. "The tendency in Europe today is for seniors to have a second puberty," says Andreas Steinle, managing director of Trendburo, a Hamburg-based trend-scouting firm. "They want to do everything they missed out on the first time around." The trend, he says, is driving everything from sales of speedy convertibles to a rising divorce rate among seniors. In Italy, Piaggio and Aprilia report brisk sales of three-wheeled scooters to seniors who have no intention of stopping their zipping through Italian traffic. A recent survey showed 73 percent of Italians older than 60 were still having plenty of sex, two thirds of it chemically assisted. Punsters quip that Italy's oldies are living "la dolce Viagra."

Seniors are transforming the leisure industry to suit their own needs. Amusement parks, once the preserve of the young, are trying to appeal to the aged, with gentler rides. Last March the Norwegian cruise ship ResidenSea set sail from Oslo, a floating apartment building for retirees. Its 190 living quarters sold for up to $7 million each; occupants sail around the world until they move on in one sense or another.

It would be wrong to assume that advanced age implies a backward economy. Sure, seniors are rarely first adopters. But that's because today's seniors grew up in a pre-PC era. Seniors are the fastest-growing group of Net users: in Italy, surfers over 60 outnumber those under 20. Alcatel, Ericsson and Nokia market oversize cell-phone models for clumsy, arthritic fingers.

The looming shortage of young people will hasten the advance of automation: from self-service supermarket checkout (introduced at some Migros stores in Switzerland last year) to driverless trains and buses, voice-activated appliances and paging systems. At a DaimlerChrysler research unit in Berlin, scientists say many newer Mercedeses are designed with older drivers in mind. Sensors that keep an automatic minimum distance to the car ahead of you are a plus for drivers with slower reflexes and declining vision.

For those who can't handle cars, there'll be myriad carts, buggies and wheelchairs. In Japan, the exploding population of the elderly is already being trained for electric-wheelchair traffic rules. Towns and landscapes will change dramatically. The retrofitting industry will boom as people replace their dangerous bathtubs with no-trip, walk-in showers. Big-family homes may disappear, replaced by new modes of communal living. Millions of buildings will be abandoned as Europe's population shrinks by 124 million, or 17 percent, between now and 2050. With fewer mouths to feed, there'll be more golf courses in the countryside than working farms.

Baby boomers have no intention of aging quietly the way their parents did. "They'll be the first generation to live youth culture throughout their lifetime," says Phil Goodman of Generation Transitional Marketing, a San Diego-based consultancy. One in four over-50 Brits still goes to rock concerts--last week the Eagles (of 1970s fame) were at the top of Billboard's list of the highest-grossing live concerts.

OK, so you can't really reclaim your youth. And there's no dodging some hard truths: neither the United States, nor Europe and Japan, has figured out how to save pension systems from the threat of bankruptcy. And that's not the only problem. More than a few economists are warning of the "long bear," a sustained decline in the price of major assets like houses and stocks. As a growing number of retirees sell out to a falling number of younger buyers, prices seemingly have to drop. "We're talking about a severe transformation with lots of strains and stresses," warns U.N. Population Division director Joseph Chamie, who notes that aging is one of the most predictable of all trends. "We're more certain about the demographics 40 years from now than about the weather next week." With that in mind, it might be wise to start saving for that shiny robot.