Ringing in theAge of Reiwa
A presentation to Global Chamber, PaloAlto
Prepared by Dominic Carter
October 20191Agenda

1. Reiwa: demography and destiny
2. Four key ‘megatrends' in Japan
3. Where does the US fit into this?
© Kyodonews

2

The age of Reiwa will see
a traditional society
becoming ‘modern’, driven bydemographic pressures thathave not been seen in any
society before© Instagram by gkrk_0219

3Japan is meeting the era of Reiwa with unprecedented growth at the elder age brackets
and atrophy in numbers among the youngkainaDyBab

4

1989: Heisei Year 1*Source: www.populationpyramid.net

kaina
DGen Y/Z

2019: Reiwa Year 1

Scarcity of younger people
is changing everything (andcreating huge opportunities)

5

The worker in Japan is in an unprecedentedly strong bargaining position
Job Opportunities-to-Applicant Ratio (Annual)
2019

1.8
1.6

1991

1.4
2008

1.2
1.0
0.8
0.6
0.4
0.2
0.0
1990

1995

1991: Bubble Bursts

2000

2005

2008: Lehman ShockSource: Cabinet Office – Portal Site of Official Statistics of Japan: e-stat.go.jp

62010

2015

Today: A seller’s market

https://www.e-stat.go.jp/statsearch/files?page=1&layout=datalist&toukei=00450222&tstat=000001020327&cycle=1&tclass1=000001032430

2019

Dealing with a society with dramatically less people of working age

1

3The Changing
World of Work

Japan is facing a major labor shortage,
with no clear solution – women, robots and“imported” labor are all being engaged.

Japan is the most aged country in the world. An
unprecedented problem, with no firm roadmap.
Generations may or may not have commoninterests.

Attitudes to the traditional workaholic ideal, andbeing tied to an office are also changing.

2WomenPowerA record number of working age women now
hold jobs in Japan, yet traditional work
structures – such as the two-track work system –and attitudes are creating resistance.

7

GenerationalDynamics

The four macro trends
shaping modern Japan

4Internationalization

Immigration is at record high, while the country isalready experiencing a record tourism boom.
Rugby World Cup 2019 and the 2020 Olympic Gamesare key turning points.

Japan’s working habits
Japan knows that change around work must take place
100%
90%

21%

80%

59%

26%

63%

17%

57%

70%
60%

38%

40%

37%

50%

Strongly agree

40%
30%
20%

Somewhat agree
33%

Neither
Somewhat disagree

10%4%

0%
2019
837%

30%
5%

3%

4%

4%

Males

Carter Japanese sentiment survey –“Q2.7 In order for Japan to remain healthy, its working habits and structure need to change”

Females2%

Strongly disagree

Pressure on companies to provide more flexibility on working hours

Japanese Government Premium Friday Initiative:“A leisurely and luxurious weekday of afternoon ‘bla’ shopping”

9Dealing with a society with dramatically less people of working age

13The Changing
World of Work

Japan is facing a major labor shortage,
with no clear solution – women, robots and“imported” labor are all being engaged.

Japan is the most aged country in the world. An
unprecedented problem, with no firm roadmap.
Generations may or may not have commoninterests.

Attitudes to the traditional workaholic ideal, andbeing tied to an office are also changing.

2WomenPower

A record number of working age women now
hold jobs in Japan, yet traditional work
structures – such as the two-track work system –and attitudes are creating resistance.

10GenerationalDynamicsThe four macro trends
shaping modern Japan

4Internationalization

Immigration is at record high, while the country isalready experiencing a record tourism boom.
Rugby World Cup 2019 and the 2020 Olympic Gamesare key turning points.

The pressure on population sees business turning to women to fill the gaps

*Source: Bloomberg

11

Managers in OECD countries

Japan’s share of female managers is second lowest among OECD countries
Share of Employed who are Managers, by sex (2017)16%

MaleFemale

14%
12%
10%
8%
6%
4%
2%

AustBe rialgiumCzecChRe h ilepuDe blicnma
Es rkton
Fin ialan
Fr da
Ge n cerman
Gr ye
Hu ecenga
Ice r ylan
Ire dlandIsrael
ItalyJa
pan
Korea
Lat
Lit via
huaniaM
N e exth icoerlan
No dsrwa
Po yl
Slo P andova r tk R ug
ep aluSlo blicvenia
Sp
Sw ainS w editz enerlan
Unite Tu dd rk
K e
Un ing yit do
O E ed mCD Sta
Av teserage%

Source: 2017 - Organisation for Economic Co-operation and Development (OECD)

1212

https://stats.oecd.org/index.aspx?queryid=54752

The Reiwa era is likely to see an
upturning in the balance of power,especially economic power, between
men and women.
Women will have their own money andwill have more freedom in how tospend it.
The long term implications are yet to beseen, but the social, consumer andretail trends are already apparent.

13

The Death of Kawaii?
It used to be assumed that Japanese women coveted ‘kawaii’ (infantilized cuteness).
This may be changing…
Women in Daihatsu drove the change in design from what men thought women wanted to what they reallywant and reestablished Mira in the top 10 best selling cars in Japan.

14FROM THISTO THIS

Mira Cocoa

Mira Tocot

Premiumisation: a response to women having more to spend on their own terms?
Premiumisation of mundane or everyday products has been a response to tougheconomic times – a way to enjoy an elevated experience at an affordable price-point.
However, as women earn more and gain more control of their money –premiumisation – the sensible splashing out on oneself will continue.
Tokyo’s range of high-end chocolatiers that have grown up in recent years are atestament to this trend.
Even Kit Kat has been elevated to the high-end department store channel.

15

Dealing with a society with dramatically less people of working age

1

3

The Changing
World of Work

Japan is facing a major labor shortage,
with no clear solution – women, robots and“imported” labor are all being engaged.

Japan is the most aged country in the world. An
unprecedented problem, with no firm roadmap.
Generations may or may not have commoninterests.

Attitudes to the traditional workaholic ideal, andbeing tied to an office are also changing.

2WomenPowerA record number of working age women now
hold jobs in Japan, yet traditional workstructures – such as the two-track work system –and attitudes are creating resistance.

16

Generational
Dynamics

The four macro trends
shaping modern Japan

4Internationalization

Immigration is at record high, while the country isalready experiencing a record tourism boom.
Rugby World Cup 2019 and the 2020 Olympic Gamesare key turning points.

Concern about Japan’s ageing society
Japan’s looming issues are already causing concern
100%90%

26%

80%

67%

70%
60%
50%

41%

40%

Strongly agree30%

Somewhat agree

20%
10%
0%

26%

Somewhat disagree
4%3%

2019

17

Neither

Carter Japanese sentiment survey –“Q2.8 I worry about the care demands of our aging society, and how Japan will deal with it”

Strongly disagree

Retailers facilitate lifestyle for seniors

Aeon is renovating its shopping centres to better
cater for seniors:

Source: Japan Times

18§

Opening earlier§

Health check-ups§

Exercise space and sessions§Social hub§Curated products targeted for seniors

Tech-savvy seniors support e-commerce

Internet and smartphone penetration continues toincrease among seniors.
They are becoming more active in online shopping.
Clear opportunities exist to alleviate the physicalstrain of shopping as well as providing services
those that need to care for seniors.

19

Opportunities for generational exchange?

Clear opportunities exist in some retail sectors suchas toys, to facilitate cross-generational experience.
Retailers such as Toys R Us are looking at formats formore hands-on play that will attract kids and theirgrandparents.
Unlocking Japan’s seniors’ wallets in the service ofthe young generation is a worthy challenge!

20

Dealing with a society with dramatically less people of working age

13The Changing
World of Work

Japan is facing a major labor shortage,
with no clear solution – women, robots and“imported” labor are all being engaged.

Japan is the most aged country in the world. An
unprecedented problem, with no firm roadmap.
Generations may or may not have commoninterests.

Attitudes to the traditional workaholic ideal, andbeing tied to an office are also changing.

2WomenPowerA record number of working age women nowhold jobs in Japan, yet traditional work
structures – such as the two-track work system –and attitudes are creating resistance.

21

GenerationalDynamics

The four macro trends
shaping modern Japan

4Internationalization

Immigration is at record high, while the country isalready experiencing a record tourism boom.
Rugby World Cup 2019 and the 2020 Olympic Gamesare key turning points.

Foreigners working in convenience stores in JapanAn NLI Research Institute report has found that about
7% of the 35,000 people working at 7-11 convenience
stores throughout Japan are of foreign origin (about2,450 people).
This reflects the changing face of Japan’s labour force
as it responds to demographic pressures.

22

Integrated Resorts

At least three huge ‘integrated resort’ projects are on
the drawing board for Japan
These multi-billion dollar developments will integrate
gaming, retail, leisure, meetings and conferences

23

Japanese retail concepts engage with the world

Nintendo Tokyo, which will open in Tokyo’s Shibuya
district in later this year, follows in the footsteps ofNintendo’s popular specialty store in New York.
It is unique for a Japanese brand to open firstoverseas and then open in Tokyo.
Nintendo hopes to benefit from the influx ofinternational visitors around Rugby World Cup andthe 2020 Olympics.

Nintendo New York24

In the context of Japan’s internationalization,
how well placed are US businesses?
25

Digital companies dominate among Japan’s favorite US brands‘Favorite’ American brands in Japan – Top 10 (Carter Survey, April 2018)

14%

710%

3%

7%

2%

% respondents who mentioned the brand | Base: Japan | April 201826

Consumer perceptions of US brands

Opinions towards US brands have seen firm improvement in recent years
3%
100%
90%

6%
20%

80%
70%

23%

26%

9%
32%

12%
11%

60%

28%

37%

11%

50%
40%

Strongly favorable
56%

48%

30%

45%

Depends on the brand

20%

Neither/Don't know

10%Somewhat unfavorable

0%

6%
2017

27

Somewhat favorable

3%

6%
2018

3%

6%

1%

Strongly unfavorable

2019

Carter Japanese sentiment survey – “Q7. Please indicate how favorable your opinion is of US brands and their associated goods, products andservices. You may also indicate that you don't know or don't have an opinion”

The most popular destinations of 2019
The US is one of few Western countries gaining popularity as a destination“What are your preferred destinations for international travel?” [NET]
35%
2018

2019

30%
25%
20%
15%
10%
5%0%
United States

28

TaiwanItaly

Australia

CanadaCarterJMRN: Japan Consumer Economic Sentiment Survey 2018 & 2019

Hong Kong

FranceSouth Korea

Great Britain

Spain

Fast food and restaurants are area with relatively strong latent demand for US brands“How open-minded would you be to buying more of the following US products?” – Top-2 box

29

Product
Category

Total
16-69
n=1,000

16-19
n=69

20s
n=14630sn=17940sn=21550+n=391

Processed food

1120

1515

117Fresh food101681298

Beverages (non-alcohol)

81314

1193

Beverages (alcohol)

1020

121097

Fast food

16292420

1410Restaurants

1730

2322

1312

Home delivery food

1019

1416

12

4

Average Top-2 “Buying More” (25 products)

1018

1313

9

6

Base: Japanese aged 16-69 | n=1000 | March 2017

A recipe for successfor US business in the Age of Reiwa
30

Four Key Areas Where Japan’s Megatrends
Synergistically Manifest

CONVENIENCE

31

EXPERIENCEWELLNESSCULTURE AND
DESIGNCONVENIENCE IS KING

Convenience is something that has often been designed
around the needs of the salaryman.
Now it is growing in its scope to facilitate enhanced roles
for women in their work and career.
Seniors want bothersome chores taken away from themas they pursue a more meaningful life.

32

EXPERIENCE

Shopping is so much more than buying goods. This canbe all done online nowadays.
What to do with all the extra time that saves?
Retail concepts that incorporate the opportunity tospend time in an enjoyable way are growing –increasing engagement with brands as well the valueof goods sold.
And the needs for experience go well beyond retail
into leisure and entertainment

33

WELLNESS

Wellness is a nascent trend in Japan prompted byconcerns that arise from a faster paced and sometimes
more disconnected life.
Japan’s health-obsessed seniors also provide a longterm boost.

34

CULTURE AND DESIGN

In today’s jaded world, Culture and Design intersect toestablish interest and status and create content forbrands that will truly connect.
Outdated assumptions about what is going to connect
to ‘typical’ Japanese are being thrown out the window.

35

Socio-demographic change means opportunities for US business
Especially where US businesses represent best practice…

THE FOUR MACRO TRENDS

The World of Work36

Women Power

Tourism: inbound andoutbound§Ageing tech§Experiential§

Integrated resorts§

Wellness
Beauty and skincare

English training§

Financial sector

Management/HRconsulting (diversity)§§

Recruitment tech§Premium categories§

Shared workspaces

§

Food

§

Management consulting§

Lifestyle§§

Generational Dynamics

Internationalization§

Onbehalfofof
theReiwa
generation
On behalftheReiwa
generation
Thank youThankyou3746