If people over 60 are your biggest spenders, then how do retailers respond? For starters, they slow down the escalators.
In Japan, with people over 60 doing 44 percent of the spending, and with those over 65, 23.3% of the entire population, merchants are becoming more elder-friendly. One major Tokyo-based supermarket has slowed its escalators to two-thirds their normal speed and made their shopping carts lighter. Seeing elders buy more diapers than young mothers, retailers also expect increasing demand for small size food packages and lunch delivery trucks. And several large chains have begun to offer discounts to people over 65 on the days that pension checks arrive.
Our bottom line: In countries like Japan with aging populations, the public and private sectors will have to adjust. As fiscal policy–spending, taxing, borrowing–increasingly targets the challenge of supporting more retirees, so too will businesses respond to a shifting demographic.
Sources and Resources: All of my facts about Japanese retailers are from this Bloomberg article while the population pyramids that follow are from the Economist’s “Graphic Detail” daily charts, a great source for fascinating information. In addition, here, in a series of 2010 Special Report articles, the Economist discusses the challenges Japan faces as its demography shifts. Finally, I thought it might be helpful to see the OECD (Organization for Economic Cooperation and development) “Elderly Population” graph to compare worldwide aging. You can see India at one end and Japan at the other.
Posted by: adminEcon
Tags: 65 and older, adult diaper sales, Aeon Co., aging populations, convenience stores, Daiei, fiscal policy, Japan, pensions, population pyramid, Seven-Eleven, slower escalators, small size food packages, Unicharm Corp.
With a euro zone update on Greece unfolding (they might lease some islands but we’ll get to that in a moment), here is some Greek math that Michael Lewis presents in Boomerang.
Referring to the deficit, during October 2009, the Greek government thought it was 3.7% of GDP. A closer look from a new finance minister soon resulted in a revision to 14%. How could they have been so wrong (assuming the new figure is valid)? They actually had no independent group gathering statistics. Instead, the political party in charge managed the math.
The 2009 Greek deficit (spending minus revenue for one year) was close to 14% of GDP. The Greek debt (the total amount they owed) might have been 114% of GDP. Why could the Greeks borrow so much?
Comparing Greece’s GDP to its deficit is sort of like comparing your income to your mortgage and then having a wealthy uncle who would guarantee what you borrowed. After the Greeks joined the euro zone, their borrowing costs plunged because lenders assumed the Germans would be there to support the loans. Even though the German economy was much healthier than Greece’s, their governments could borrow at similar rates–and those rates were low. As a result, Greece could go on a borrowing spree and use the money to run unprofitable government businesses like the national railway, to pay generous pensions to retired government employees and to ignore nationwide tax evasion.
Now, Greece knows it has to cut the public payroll. A recent Bloomberg article tells us that they are using incentives to encourage retirement and also placing people on 75% pay if they receive a poor evaluation or disciplinary action. However, as one IMF official told Michael Lewis, “I’m all for reducing the number of public-sector employees. But how do you do that if you don’t know how many there are to start with?” (from Boomerang, p. 79).
And finally–why do the Germans and French care about Greek math? Here we have reality. German and French banks hold Greek debt.
For an excellent video from the St. Louis Fed on “The Greek Tragedy,” I recommend this YouTube video and all others from the series. And this Washington Post book review tells more about Michael Lewis’s financial disaster tourism in Boomerang.
Posted by: adminEcon
Tags: Angela Merkel, default, early retirement, eurozone, France, French banks, German banks, Germany, Greece, Michael Lewis, pensions, PIIGs, President Hollande, selling islands, sovereign debt, tax evasion