Japan: A Demographic Revolution

By Alex Murray

It is no secret that Japan is a rapidly aging society. The fact that consumer packaged goods giant Unicharm’s sales of adult diapers in Japan exceeded those for babies for the first time last year (a trend that is expected to continue this fiscal year) is a very real indication of the challenges the country faces. However, rather than mourning the passing of an era, Japanese brands are seizing the opportunity to deliver meaningful innovation.

In this vein, convenience store operators are looking to reposition their entire category. As their traditional male customer ages, the focus now is to attract new, older consumers. From small portion fresh food to home delivery services, companies are investing in different strategies to capitalize on the demographic shift underway. Stores already offer a wide range of services that extend far beyond the products sold, acting as post offices, banks, places to pay bills and refuges late at night or in the case of disaster. Open 24 hours a day and with a consistent, reassuring presence across Japan, they are aiming to become “community hotspots.” The fact that the segment is one of the few that has grown steadily suggests the repositioning is paying off and they are successfully expanding their appeal.

Uniqlo, ranked again as Japan’s top retail brand, is a veteran of redefining expectations. Heattech, one of the brand’s flagship product lines, celebrated its 10th anniversary in 2012. In that time, the company’s revenues have roughly tripled. Developed A Demographic Evolution with Toray and steadily improved over a decade, the introduction of cutting-edge Japanese technology into the fashion world was creative thinking at its best. Delivering new value to consumers, it changed perceptions of what “fast fashion” meant. However, the market is unforgiving and the company needs to constantly deliver innovation to maintain its momentum.

The other change that has long been on the horizon is the rise of the private brand. All of this year’s top Japanese brands owe some or all of their success to this phenomenon. Growth for Lawson and Family Mart is, in part, driven by their house brand food offerings. Meanwhile Uniqlo, Muji and Nitori depend entirely on selling under their own brand names. Emulating their achievements is one of the key challenges for other retailers seeking their place in a digitally empowered, deflationary economy.