Retail giant Aeon evolves to engage Japan’s aging customer base

by Hidetoshi Takada

Kyodo

As the nation’s population ages, retailers have been forced to evolve to serve the needs of Japan’s changing consumer base.

Retail giant Aeon Co. has renovated 13 outlets across the country to cater to seniors, offering earlier opening hours and services that encourage asatomo (morning friends) get-togethers.

At a mall in the Kasai area in eastern Tokyo, a bookstore, gym, bakery and cafe all open at 7 a.m., and a sports goods retailer even offers early bird discounts.

The area’s demographics explain why the early starts make good business sense. In the 2-kilometer radius around Kasai’s central shopping district, around 35,000 people — or 44 percent of the area’s 80,000 residents — are aged between 65 and 74. As of October 2016, the corresponding nationwide rate was 27.3 percent.

Kohei Nakahara, a store manager, canvassed elderly people who frequent nearby parks to better understand their needs. “We brought what they want to do into our store, and it resulted in them staying longer. We want to make the store a place like a community hall for neighbors,” he said.

Yasuko Tanaka, 78, and Hanako Muraoka, 71, are asatomo and good examples of the kinds of customers to which retailers are trying to cater. Early each day the pair take part in a 30-minute group physical exercise session that brings together around 100 fellow senior citizens from their Tokyo neighborhood. The store visits have become a major part of Tanaka’s schedule, and the results of her 8 a.m. exercise regimen have her smiling. “I wash clothes the night before and get up early for breakfast at 6 a.m. I am so happy, I lost 2 kilograms thanks to the exercise,” she beamed.

Having heard about the activities through word of mouth, Muraoka joined soon after Tanaka. Now they both enjoy talking over coffee and sharing snacks and sweets with fellow asatomo after their morning workout.

The two women are representative of the massive migration that took place in the post-war period, which saw tens of millions flow into Tokyo, Osaka, Nagoya and the surrounding regions drawn by strong demand for labor during the country’s economic boom. Tanaka moved to Kasai when she got married in 1964, and Muraoka moved to the community — then an emerging residential town — in 1973. Both have been customers since Aeon Kasai opened in 1982. It was the first outlet in the Kanto region for the retail conglomerate.

Among the 13 shopping malls renovated with seniors in mind by Aeon Retail Co., the group’s core retail arm, most are located in the country’s three largest metropolitan areas, said Tetsuo Sawai, the project’s manager. The combined population of the three areas surpassed that of 36 of Japan’s 47 prefectures in 2005, according to a government research team, and the once-young families that relocated have grown old.

Aeon Retail positioned one store each in Tokyo, Nagoya and Osaka as model outlets for seniors. Aeon Kasai, the first newly-renovated store to open since 2013, has tried to attract seniors by offering various services from health checkups to a shop that sells fashionable canes. Among over 500 malls operated by the retail group across the nation, the Kasai store is the only one to offer smartphone rental services.

On the first floor, small portions of expensive meat cuts are displayed on the shelves. “Seniors cannot eat a lot of meat but they are looking for better quality,” Sawai said.

In the store’s latest renovation, in December 2016, a morning exercise space was opened that includes a 180-meter walking track on the fourth floor. Participants warm up on the track and enjoy chatting with their friends prior to the exercise sessions. The number of customers at the store has grown 10 percent over the previous year, bolstered mainly by seniors, according to Nakahara.

Amid more than a decade-long decline in supermarket sales in Japan, Aeon has geared up since 2011 to boost sales and profits through a four-pronged long-term growth strategy — cities, seniors, Asia and online marketing. In a medium-term management plan announced in mid-December, the retail group emphasized that it would endeavor to create community spaces at its outlets.

Aeon Retail has set a target of operating 100 outlets tailored for senior consumers by 2025, when all post-war baby boomers will be 75 or older. A recent survey by the Mitsubishi Research Institute of 15,000 citizens in their 50s to 80s showed that people in their 70s are more satisfied with their daily lives compared with those in their 50s and 60s. “The number of healthy seniors will increase, particularly those in their early 70s,” said Shinya Sano, chief research manager of the institute’s Platinum Society Center. “For those in their 70s and 80s, as future uncertainties fade after they free themselves of the burden of nursing their parents, they will have more free time and feel comfortable financially.”

With life expectancy projected to increase, the number of people in their 70s or older will continue to grow — from 24.32 million in 2016 to 31.59 million in 2050, according to data compiled by the Cabinet Office.

And with the country’s demographics in mind, Aeon Kasai’s strategy is no doubt a sensible one. Its senior customers in Kasai are a good example of the payoff. “The store manager is a very nice person. He buys souvenirs every time he goes on business trips and shares them with us. We feel very happy with that,” Muraoka said. “I don’t know how we’d cope without this store.”