For most businesses, Asia represents the future of growth. It is the world’s largest and fastest-growing consumer market. Both China and India lead the way offering gargantuan potential for just about any brand. Add to this the accelerating numbers of people who have become – or will shortly become – part of the middle class1. By next year, Asia will be home to half of the world’s middle class, resulting in millions more consumers who are empowered to make purchasing decisions about what to buy – and where to buy it – for the very first time. As part of this growth trajectory, many brands look to the power of young consumers and millennials, and their changing tastes, as a bellwether for future trends.
However, to focus on younger consumers as the key to future growth would mean missing out on a critical demographic shift in Asia. Asia is aging fast, making the so-called “grey market” a vital focus for growth. Globally, this age group is the most important consumer growth market over the next 15 years. Developed economies are already experiencing the huge spending power of the elderly. Asia will be no different – with the exception that the demographic changes in Asia will mean that it happens even faster in Asia.
The case for this view starts with some important demographic facts: the number of older people in Asia is growing faster than any other age group – at an unprecedented rate of around 5% a year. By 2040, 16% of the region’s population will be over 65, more than double the 7.8% share in 20152. By 2050, one-in-four people in Asia will be over 60 years-old, with this population tripling between 2010 and 2050 to reach close to 1.3 billion people3. China and India alone will account for 39% of the world’s seniors4.
The pace of ageing is also faster in the developing Asian countries and at a significantly earlier development stage than occurred in developed countries. It took France 115 years, Sweden 85 and Australia 73 to move from an ageing to an aged society, but China is anticipated to get there in 25 years, Singapore and Thailand in 22 and Vietnam in 195, giving these Asian countries both limited time and opportunity to adjust to the needs of an aged society.
There are still many countries in the region which have a relatively larger proportion of young population. But, in absolute terms, even these countries have a significant number of older people. South and South-West Asia had only 8.7% over 60 years-old in 2016 but, this still equates to 168 million people, representing a substantial opportunity6.
Why does this matter? In the past, consumption growth was driven largely by population growth – the so-called “demographic dividend”. But this is no longer the case in some Asian countries such as South Korea, Japan, and China, where the working-age population (15 to 64 years) is shrinking7. Globally, by 2030, population growth will generate only 25% of global consumption growth. The remaining 75% will come from increasing per capita consumption or — to put it squarely — it will depend on how much each and every individual spends. Chinese seniors alone are expected to spend over one trillion dollars on consumer goods in 20208, reaching 33% of China’s GDP by 20509.
This rapid pace of ageing, with longer lifespans than previous generations, is a positive outcome of social, economic and technological development in Asia over the past few decades. This key demographic shift will have profound and far-reaching implications for countries and businesses in the future. Identifying where growth will come from within the senior market, knowing who’s the most likely to spend, where they are, and what they prefer to purchase, is going to be critical for brands.
Some of the keys for businesses and brands to be successful in marketing to this senior demographic include the following:
Avoid Age Stereotypes: Age stereotypes are one of many unconscious biases. And, unfortunately, ageism is the most socially “normalised” of any prejudices, so negative attitudes and portrayals of seniors abound.
Businesses and brands in Asia shouldn’t fall into this trap. There is no ‘typical’ older person. Seniors are a diverse group, with varying needs and preferences. And more seniors are remaining mobile and active. So, companies need to find the new nuances, interests, and trends that more accurately portray this key demographic segment.
Recognize the Real Shift of Lifestyles: In Asia, traditionally the younger generations have been expected to care for their elders, and filial piety is regarded as a social norm. While elements of this are still true, attitudes are changing. So are the practicalities of modern life, such as greater female workforce participation and the massive rural-to-urban migration in Asia, which often means the sheer availability or geographic distance between families makes traditional cross-generational housing and family care increasingly untenable. In China specifically, its one child policy has created the “4:2:1” problem; four grandparents and two parents for every one working Chinese will exacerbate the problem of the sheer number of family members potentially in need of care, translating into a caregiver shortage. Add in longer life spans, and it will become increasingly common for older people themselves requiring care to still be carers for their own parents. Expectations on who actually funds retirement is also changing from the extended family to individual responsibility. Research in Taiwan, South Korea, Singapore and Hong Kong found that between 40-60% of adults expect to be self-funding in retirement.
Who should bear responsibility for providing income to retirees?12
As a result, more services and forms of assisted living are growing rapidly in the region, as more seniors are on their own. This trend is likely to continue and to accelerate.
Enable New Senior Lifestyles and Services: We can expect to see new forms of innovation for supporting and enabling senior lifestyles. How these opportunities manifest themselves may change on a market-by-market basis, and not everything is going to be a success. What is a given though is that the market for senior-related products and services is only going to grow. The diversity of the senior demographic will mean a range of new products and services, many of which will deliver new experiences to those with time and money on their hands. Older Chinese consumers, for example, are expected to travel abroad in unprecedented numbers with some estimates at 10 million a year by 2030. Those who invest now will tap unmet needs and reap the rewards.
Identify Opportunities Within the Senior Demographic: The challenge for brands will be identifying the right market opportunities and micro segments within the senior demographic. For the wealthy, this might mean a focus on luxuries and improving quality of life. For the less well-off seniors, it might mean a focus on minimising costs while helping them maintain and improve living standards.
The question today that most brands need to answer is how to best position their products and services to meet the needs of the rapidly-growing senior audiences. Otherwise, you may be guilty of ignoring the fastest growing demographic in Asia.
1. middle class defined as those living in households with daily per capita incomes of between $10 and $100 at 2005 purchasing power parity (PPP)
2. World Economic Forum – Who are the future consumers of South-East Asia?
3. UNFPA – Asia and The Pacific Ageing
5. UN ESCAP – Ageing in Asia and The Pacific
8. McKinsey Global Institute – Urban World: The Global Consumers to Watch
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