Getting ready for the silver avalanche in Asia
THE silver avalanche is coming to Asia. To give some perspective, it took the UK, US and France 45 years, 69 years and 115 years respectively to move from an ageing to an aged society, and it will take Singapore and China only 25 years. The momentum of the silver avalanche may not be the same for all Asian countries, and nations such as China, Singapore, Thailand and South Korea will be most affected by the silver avalanche. For example, in Singapore, by 2030, 46 per cent of the population will be over 50 years old, and this segment will be growing at 9.5 per cent year-on-year, one of the highest in Asia.
It is commonplace to consider ageing a risk, but it also serves as a huge opportunity for the business community. The silver avalanche is an economy in itself with some US$26 trillion in terms of the accumulated wealth by the silver population in 2018. By 2030, people over 50 years of age will constitute 32 per cent of the entire Asia-Pacific population, but are expected to contribute 52 per cent of the region's total consumer expenditure.
While the opportunity is here to stay, the nature of this opportunity is far from being homogenous. For example, just across two dimensions - wealth and digital adoption - the silver economy remains highly divided. Unsurprisingly, the wealthy seniors who have yet to embrace the digital age command 60 per cent share of the silver economy. Interestingly however, the wealthy seniors who have embraced digital command the second-largest share of the silver economy. In fact, smartphone penetration for the population who are above 50 years old is growing 2.4 times faster than that of the population aged 18-34 years old.
Furthermore, the elderly, as consumers, behave very differently across markets - another point of non-homogeneity in the Asian silver economy. For instance, by 2030, a fifth of the spending of the silver population in Japan will be in food & beverage (F&B). Comparatively, in Singapore, F&B spend share is only 8 per cent but leisure and hospitality will command a fifth of the spending of the silver population in the country.
The sheer lack of homogeneity in the silver market complicates how businesses can develop their silver market strategies. Companies, especially those that operate in multiple geographies in one or more sectors, will need to carefully think through the cascade of choices in terms of the goals and aspirations, where-to-play, how-to-win, the capabilities and management systems to serve their silver market. That said, there could be a few broad plays that can be considered by assessing the spend share and growth of the spend from the silver market.
CONCERTED EFFORT
In countries such as Singapore and Thailand where the silver market's spend share and annual growth are both high, businesses - irrespective of their market standing - should start transforming their core business on priority. For businesses in countries like Japan where the corresponding spend share is high but annual growth is low as the silver market has matured, the transformation should have happened by now. India and Indonesia are countries where the silver market's spend share is low but growth is high. Businesses in these countries can continue to serve the non-silver market but can also afford to experiment on the edges to serve the silver segment.
The silver avalanche is fast upon us. While the governments put together their public policies to respond to this trend, businesses also need to respond, and this response has to be different for different markets. Regardless of how businesses choose to play, one thing is clear - it cannot be tackled in isolation but requires a concerted effort by multiple parties towards serving the needs of the silver market. Therein lies the call for action - harness one's ecosystem partners to not just do things differently, but also to do different things to respond to the silver avalanche.
