This story is part of an occasional series from The Globe's Brian Milner, who visited Japan to assess the results of dramatic efforts to revitalize the world's third-largest economy.
The model for retailing to a rapidly aging population resides on the fourth floor of a busy emporium on the eastern edge of metropolitan Tokyo. Here, spacious carpeted aisles and comfortable seating beckons shopping seniors with everything from shiatsu massages, financial services, a fitness studio and medical clinic to a concierge desk, cafe, handicrafts, music, language and cooking lessons and a stage for concerts and other events.
The 32-year-old Aeon Kasai store reopened in May, 2013, after extensive renovations designed to capture more yen from Japan's only growing consumer segment – people aged 55 and over.
The stakes are high, as competition for the hearts and wallets of seniors intensifies in an otherwise sputtering market.
"We're still in the process of experimenting with this," says Tomohiro Itosaka, general manager of corporate communications with retail heavyweight Aeon Co. Ltd., Japan's largest supermarket and mall operator. The company has been using the Kasai store, as well as a mall opened in 2012 near its headquarters in Chiba, southeast of Tokyo, as a testing ground for a strategy it intends to eventually export to its branches in China and other faster-growing Asian markets.
Aeon has no plans to expand to other developed countries, preferring to focus on foreign emerging markets with rapidly growing middle classes. But the Japanese approach to aging customers could provide important lessons for retailers in Canada, the United States and Europe that will inevitably be facing a similar demographic shift.
"First of all, we would like to create a concrete business model here in Japan. Then, in the near future, China and other Asian countries will experience that [senior shift in the market]," Mr. Itosaka says through an interpreter at Aeon Tower, the company's 26-storey head office. "We are confident that the know-how we accumulate will be very useful in the other markets."
But no market is aging as fast as Japan, where people over 65 account for nearly one-quarter of a shrinking population and a much larger share of consumer spending. By 2060, their numbers will swell to 40 per cent, government projections show.
Households headed by people aged 60 or over accounted for nearly 47 per cent of total consumer spending of ¥280-trillion ($2.98-trillion) last year, up from about 30 per cent in 2000. And their buying power and influence are expanding at a time when increasingly cost-conscious and conservative younger people fret about weak economic conditions, a lack of wage growth and reduced job security.
Spending by households headed by people between the ages of 65 and 69 climbed more than 8 per cent last year, compared with slightly above 2 per cent for the market as a whole.
Aeon's own numbers show that people over 55 spend 10 per cent more on average in its stores than younger shoppers.
This year promises more of the same pattern, as consumer spending has made a slower than expected recovery from the government's hefty sales tax hike of three percentage points in April to 8 per cent. Retailers have been forced to absorb price increases and hunt for cheaper sources of supply to counter declining sales. Many have taken hits to their top and bottom lines.
Aeon's operating profit fell slightly more than 40 per cent on the year to ¥43.3-billion in the six months ended Aug. 31, partly because of the impact of the tax hike. About half of its income came from financial services, including banking, credit cards and insurance.
One obvious solution for Japanese retailers is to go after a bigger slice of the still expanding seniors' spending pie.
To that end, Aeon and its rivals are turning to everything from slower escalators, lower shelves and lighter shopping carts to better-fitting apparel, smaller food portions (including single-cup sake) and magnifying glasses to read small print.
They have also sent thousands of staffers – including more than 350 from the Kasai store – for government-sponsored training on how to handle customers acting confused or exhibiting other signs of possible dementia.
Other marketers ranging from insurers, health clubs and travel agencies to cinema operators and telecom providers are also targeting older consumers.
Aeon happens to offer just about all of the above – and even lower-cost funerals – for what it labels the "Grand Generation" of people aged 55 and over. It has tailored a wide assortment of fee-based services for them, including their own e-money smart card, health checks, extra discounts and other perks.
"It's not one uniform market," Mr. Itosaka says. "We feel the need to cater to each segment."
To shore up its domestic base, the retailer has also launched a major expansion of its online business and its chain of smaller convenience-type stores in urban centres.
Still, Aeon has discovered that if you build something of value for the aged they will come.
In the Aeon Kasai store's sprawling first-floor food hall, a 71-year-old woman is looking at the salmon. She says she usually sticks to small local shops, but is drawn to the single-portion sashimi. Now if she can only be persuaded to venture up to the fourth floor for a Hawaiian hula lesson, a little soap carving or a French conversation class, she might stay long enough to buy a second piece of fish.