Japan's silver surfers, shoppers (& porn stars)

The oldest population on the planet has a whole district designed just for them – the Tokyo suburb of Sugamo. David McNeill reports

It takes roughly 17 minutes to traverse Tokyo's generation gap. In the city's youth mecca of Harajuku, goths, lolitas, rockers and young fashionistas help fill out a shopping landscape crowded with boutiques and brand-name franchises. Nine stops later on the Yamanote loop railway line in Sugamo, the river of human traffic turns greyer and slower as it files past shops selling thermal underwear, hearing aids and orthopaedic socks. Shopfronts have been modified to accommodate wheelchairs, and hand-written signs replace neon. Think Harajuku for pensioners.

"I come here twice a week with my friends," says 90-year-old Hisako Yanagida, who chats in between belting out traditional ballads in a musty karaoke bar called Mukashi No Uta ("Songs from the Old Days"). "Meeting and shopping with people my own age helps stop me from going senile."

Japan is undergoing a unique social experiment, suggests a 2008 government White Paper, and is transforming into a "type of aged society never experienced before". With one-fifth of its roughly 128 million people aged 65 or over, the nation has the largest percentage of senior citizens on the planet. By the middle of the century, when average life expectancy is expected to stretch to 86 for Japanese men and to 90 for women, more than one third of the population will be pensioners.

That inverted population pyramid, now being swelled by retiring baby boomers, is already straining Japan's arthritic welfare system, but amid the nation's worst economic crisis since the Second World War, opportunities are knocking for some. According to the government, the average pensioner couple has savings of more than 24 million yen (£162,000) and average monthly spending per household peaks in the 60-69 age group. Many businesses want a slice of the so-called silver market.

Sugamo is the retail cutting edge of this phenomenon. Its main shopping street, Jizo Dori, is one kilometre long but boasts 10 chemists' shops, half a dozen or more outlets selling walking aids, at least two funeral arrangers and a karaoke bar where the song list stops in the 1970s.

Red underwear, a traditional gift for the over-60s because it is reputed to warm the nether regions and ward off sickness, hangs outside many shops, like the street's unofficial flag. Unlike many of its more garish neighbours around the capital, Sugamo has few fast-food restaurants or flashing neon signs to strain those tired old retinas.

"People come here from the miles away, even from the countryside," explains Mariko Saito, the owner of Mukashi No Uta. Inside the bar, scenes from old samurai dramas flicker on the karaoke screen as Yanagida entertains a handful of customers whose collective age is older than the US. The bar is a well-known haunt for pensioners. "It is hopping at the weekends," says Saito. "Sometimes old folk who are completely blind come in with family members to read the lyrics for them."

Sugamo's spiritual heart is the 400-year-old Kogan-ji Buddhist temple, home of the Togenuki statue, which has earned a reputation over the years for performing miracle cures on the sick and ailing. "Of course most people don't believe that coming here will make them better, but it can't do any harm either," laughs Michiko Morioka, 79, who suns herself in the temple's grounds, crowded with elderly people discussing back pain and creaking joints. "We come to talk and shop."

As the temple grew in popularity among the old, local businesses sprang up or modified to cater to them, says Hiroshi Shimichi, who owns a furniture store on the main street. "They were coming in and asking for walking aids so I began to stock them about a year ago," he adds. "So far at least, sales haven't been harmed by the recession." The crowds are bigger on the 4th, 14th and 24th of each month – considered lucky dates among the elderly.

Sugamo is one harbinger of what

some observers believe could be a major consumer shift, as businesses begin to cater for a demographic they have largely neglected. "A lot of companies were unsure or even afraid of how to deal with older people," says Florian Kohlbacher, author of The Silver Market Phenomenon: Business Opportunities In An Era Of Demographic Change. "They think it will have a negative impact on their image, but this is changing."

He believes the market, while "still very underdeveloped", is promising. "Japanese companies were among the first to react to the challenge of the demographic change and are constantly coming up with product as well as service innovations."

Examples abound. A Kyoto-based underwear maker, Wacoal has studied more than 40,000 human bodies in a bid to discover how the body changes over time and develop the perfect fit for the elderly. The car-maker Nissan is trying to develop a vehicle for the elderly that will respond more sharply to dulled driving instincts. And the telecoms giant NTT has developed phones with easy to read keys and functions. The over-55s are among the fastest-rising group of new customers in Japan for fitness clubs, dating agencies and holiday outings. Even Tokyo Disneyland, once geared exclusively toward the young, is trying to lure some of that grey yen.

The changes are all the more remarkable because before the 1990s, Japan's elderly demographic was average – until its huge strides in diet and in healthcare began to kick in. Longer life expectancy has been coupled with the plummeting birth rate, forcing a rethink for many companies, even those catering to market niches once considered unthinkable for the elderly – such as adult entertainment and sex. Several firms have launched product lines dubbed "elderly porn" – an increasingly popular genre with its own star in 75-year-old Shigeo Tokuda. A veteran of 350 films, Tokuda entered the industry late in life after decades working as a salaryman in the tourism industry.

He told a Japanese magazine last year that his success, and his ambition to keep working until his 80s, was a sign of the times. "As Japan ages," he said, "people like me will become more important because we show that we can still have rich lives."

In Tokyo, Osaka and other cities, some firms now operate call-out prostitution services for pensioners and the immobile. Known euphemistically as "delivery heath", they charge up to £370 for a 180-minute session, and offer optional services such as pick-ups for wheelchair-bound customers from home to hotel.

But the ageing phenomenon has its dark side. For those who cannot afford the cost of buying into the silver consumer market, prospects are bleak: life on meagre and shrinking welfare benefits. And over the past few years the authorities have grimly taken note that people do not stop committing crimes when they turn 60. Robbery, assault and murder by pensioners are on the increase amid what the media has dubbed a "grey crimewave". The percentage of over-65s in prison has trebled in the past decade and exceeds 12 per cent of the total prison population – four times the figure in Britain.

Japan has the highest rate of incarceration for pensioners in the industrialised world and a custom-tooled prison – Onomichi in Hiroshima, equipped with handrails, pushcarts and walking aids. The inmates include a pensioner who beat up his care worker after he threatened to resign, and an elderly married couple who held up a convenience store. The eldest is 89.

As the slump deepens, the problem of elderly crime is likely to deepen. But business and government hope that the future looks more like Sugamo than Onomichi, and a virtual universe away from its crowded streets. With cash in their pockets, the generation who built postwar Japan into an economic superpower can chat, shop and even – if local rumour is to be believed – date at the neighbourhood love hotels. And of course there is always singing.

"Sometimes I get lonely and think I've been forgotten about," laments Yanagida, whose husband died 37 years ago. "Here I feel like I'm part of the world again," she says, before returning for her fourth stint at the karaoke machine.