Japan’s overall population decline is currently only visible in the outer regions, particularly in small and medium cities, but it will have a major impact on consumer brands and retailers. Two recent government white papers highlight the problem, introducing a new designation for cities expected to experience medium-term decline. Longer term the same trend will hit the major urban areas too, with Tokyo, Osaka and Nagoya all predicted to see the most rapid growth in older migrants looking for more convenient and better services.
Japan continues to struggle with issues arising from population decline in many parts of the country. With so many small and medium sized cities experiencing rapid ageing and population decline, with all the concomitant weakening in social and medical infrastructure, not to mention loss of taxable income, the government is planning to implement a stream of measures to help offset this problem.
The latest of these is a set of initiatives targeting what will now be called ‘compact cities’ – essentially cities by name, but shrinking towns by nature. These designations will be applied long-term, with the subtext being that most aren’t expected to grow again and need to be managed until so small that support is no longer feasible. Compact cities will be eligible for additional funding to invest in medical, welfare and even commercial services that have deteriorated as people move away and those remaining just get older.
One example given in the white paper is a new transport structure being implemented in Toyama city. Yet Toyama is, for now, neither one of the smallest nor least prosperous cities. In JC’s Top 100 Consumer Zones report, it ranked 34th in the country for its potential up to 2025. Indeed, the population will grow due to inward migration over the next 10 years, savings rates are almost 60% higher than the national average and, as with similar medium sized regional capitals, there is plenty of space and motivation for new commercial development given sufficient investment. But Toyama’s population is ageing rapidly, with population expansion mostly due to migration of older, rural residents into the city, and the potential for long-term decline will indeed grow after 2025.
To prepare for an older population, Toyama has developed a hub-and-spoke transport system, with essential facilities strategically located in a way that allows less mobile consumers, notably those unable to drive, to reach these centres easily. The government commends the scheme as an example other cities should emulate.
At the same time, Toyama’s problems are clearly minor compared to some places, particularly some of the smaller cities where the average age is already well over 65. Less than a week after releasing the first white paper, a second was published focusing on the eight prefectures around Tokyo that make up the greater Kanto Region. Although this area accounts for more than a third of the entire population and continues to receive immigrants from much of the rest of the country, the new paper confirms that here too total population is expected to peak in 2015, and new migration into the centre will again include a large and growing proportion of over 65s.
Total population in Kanto will hit 43.6 million this year. By 2040, the number of 65s and over is expected to grow 21.5% compared to 2010. Similarly, the number of over 65s will increase by 4.8% in Osaka and 7.8% in Nagoya in the same period.
The government finishes its reports on a high note. While 65 remains the commonly used cut-off for the entry into ‘old age’, Japanese are staying healthy and active for much longer. The same paper notes that some 60% of those 65 and older still express a desire to work and to continue to do so for as long as they can. For Japan’s sake they’d better.
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