Italy’s graying economy demonstrates how demographic planning is a strategic business priority

Q: Italy is likely to experience a projected population decline from 59 million in 2024 to 45.8 million by 2080.⁹ How do you see this demographic shift reshaping Italy’s economy and workforce in the coming decades?

 A: Declining birth rates and increasing life expectancy are driving a major shift in workforce composition, with significant implications for both companies and the country’s broader economy. In fact, by 2050, individuals age 65 and older could make up 34.6% of Italy’s population, compared 24.3% today.¹⁰ The ratio of working-age individuals to non-working-age individuals is expected to drop from about 3-to-2 to 1-to-1 in 2050.

Italy is already facing a shortage of skilled workers, and companies are competing fiercely for top talent. As the demographic changes deepen, businesses should rethink how they attract, manage, and retain workers, which will likely require more innovative and holistic approaches. Artificial intelligence and new automation technologies, if properly adopted and integrated, can enable companies to significantly enhance labor productivity, at least partially compensating for the scarcity of skilled labor and human capital.

The broader economy isn’t immune either. Italy’s GDP could shrink by 9% by 2050, mostly due to lower productivity from a smaller workforce, among other reasons. Industries could feel this impact in different ways. Some traditional sectors might see a drop in demand and sales, while new market opportunities like the silver economy are expected to grow.

Demographics can also impact company profiles (what we call “firmographics”). Italy’s many resilient subject matter experts have proven that they can survive multiple disruptions. But business leaders should watch for three trends: where business activity is moving geographically, how organizations are connecting, and generational shifts in the workforce. Ecosystems and alliances can enable companies to focus on their core strengths, survive long-term, and thrive in the new business landscape.

Q: You mention that many Italian companies are aware of the demographic challenge but lack structured plans to help address it. What are the main barriers preventing businesses from integrating this challenge into their strategic agendas?

A: Italian companies are beginning to experience the effects of demographic changes, but these challenges are not always being addressed with the strategic focus they may require. One reason could be the gradual nature of the shifts, which make organizations less likely to act with urgency as they did during a disruption like the COVID-19 pandemic. As a result, these changes may be seen as a general concern rather than a pressing business priority, with social implications overshadowing the impact on operations and competitiveness. Today’s business leaders seem more likely to focus on short-term goals, such as profitability and margins, or sustainability and digital transformation.

But balancing short-term profitability with long-term demographic challenges can mean thinking ahead. Deloitte Italy’s research shows that many companies lack structured, holistic strategies to tackle the risks and impacts of demographic shifts.

Planning for the potential consequences of demographic change now is important to stay competitive and create long-term value for stakeholders. It requires a real shift that begins with a “step change” in an organization’s mindset and strategic vision. Leaders should look beyond day-to-day challenges and be willing to change established business models and management practices. What worked in the past may not work in the future. Acting now with focused strategies and investments, and fundamental changes that maintain and grow the company’s DNA could pay off over time. But for latecomers, the costs of inaction could increase exponentially as the gap between them and leading companies widens.

Of course, there is no one-size-fits-all formula for success: each company should have its own transformation plan to capture new opportunities, manage risks, and boost long-term performance. Boards should lead by making demographic change a part of their governance and discussions.

Q: In light of the demographic shifts taking place, what are some strategies that can help organizations remain competitive? What should organizations be rethinking in response to aging workforces and consumers?

A: Demographic change is one of the most complex business challenges because of its multidimensional nature, with impacts on technology, workforce, and strategy.

As the workforce continues to age, leaders may need to reconsider traditional career models. Investing in reskilling, creating hybrid career paths, and ensuring that corporate know-how is transferred from one generation to the next can help organizations stay relevant.

Another key strategic dimension is the organization’s value proposition. As demographics and behaviors shift, so can customer expectations. Adapting the organization’s offerings—whether that means more digital access, products tailored for older consumers, or solutions that reflect changing social and environmental values—can help organizations stay ahead of the demand curve.

And finally, corporate purpose is an often overlooked strategic differentiator. Workers and consumers alike increasingly expect organizations to embody ethical values and social responsibility. Companies that align their commercial objectives with a broader social mission could earn deeper trust and better long-term competitiveness.

Q: The rise of the silver economy is presented as a significant opportunity in this research. Could you elaborate on how frontrunner sectors like insurance, real estate, and fashion are already adapting to an aging population today?

A: To stay competitive and maintain market positioning in the midst of demographic shifts, businesses should adapt their customer experience, engagement strategies, and product portfolios to meet the evolving needs of two key groups: digital natives and senior citizens. By 2050, individuals over 65 could represent more than one third of Italy's population, pushing business-to-consumer companies to rethink their value propositions and their omnichannel customer experience strategies with significant implications in terms of research and development, product development and go-to-market strategies.

In the fashion industry, for example, seniors’ increasing purchasing power, coupled with their preference for quality, durability, and practicality, is driving investments in R&D. Companies are reviewing product offerings to satisfy the needs, preferences, and aspirations of an older population. Likewise, in the food service sector, seniors are shifting their consumption habits toward healthier foods, portion-controlled options, eco-friendly packaging, and accessible designs. Additionally, demand for delivery services continues to grow, reflecting changing lifestyles.

From a financial perspective, banks are reevaluating their operations to better serve senior customers. They’re changing their asset management strategies and revising how they approve loans. They’re also creating more personalized service models that offer seniors a single entry point for their financial needs. Similarly, insurance companies are creating flexible and customizable products designed to help address social and health-related risks. They’re focusing on providing support throughout an individual’s life, incorporating services like prevention, care, and assistance as part of their core offerings.

Real estate companies are rethinking how buildings are designed and how cities are planned to better serve changing demographics. Spaces that are more inclusive, sustainable, and accessible are growing in popularity, and senior citizens are seeking housing with smart living solutions designed specifically to meet their needs.

In short, in a slowly but progressively ageing society, the businesses that can ultimately succeed are those that not only recognise these demographic shifts but have the courage and vision to boldly innovate and go beyond “business-as-usual”. By doing so, they can create more inclusive, adaptive and meaningful experiences: turning the challenges of tomorrow into the opportunities of today.