The Land of the Rising Consumer Awareness
It’s official: The Japanese consumer is no longer a sap.
Long known for their rather charming if zany belief that anything more expensive must be better, the Japanese have discovered the concept of value, declares the Economic Planning Agency. “High-Price Myth Losing Believers,” trumpets a recent newspaper headline.
Apparently even the Japanese have their limits. A decade after the end of Japan’s free-spending bubble years, consumers have finally learned how to stretch their yen and carefully weigh price against quality.
To be sure, Japanese consumers didn’t wake up suddenly last week and realize that paying high fixed prices was declasse. But the Planning Agency report suggests that the trend has reached collective mass after two years of nationwide price declines, a protracted economic downturn and major structural changes in the retailing industry.
So-called price destruction, once restricted to a few limited areas, has now spread to major sectors of the retail economy, including clothing, pharmaceuticals, cosmetics and even restaurants. The result, consumer and marketing experts say, is a far more selective Japanese spender.
During the bubble years, says Kazue Daikoku, a 51-year-old Tokyo office worker, she used to buy $1,000 dresses on a whim and then never wear them. People did little comparison shopping and paid list price without question, she recalls, often focusing far more on social status than personal taste or an item’s inherent value.
“What was I thinking?” she says with a laugh. “In the last year or two in particular, I’ve become much more selective. I’ll usually look at prices and check the quality in several stores now before buying.”
Not to suggest that Japan has suddenly become a bargain hunter’s dream. Far from it. With its $13 six-packs of beer and $50 melons, Tokyo remains the world’s most expensive city in many rankings. Even something as basic as paying monthly bills in Japan can run $3 to $5 per wire transfer, in a country that still shuns checks and credit cards.
What is increasingly evident, however, is the steady chipping away at protected parts of the economy as discounting and deregulation spread--trends that are expected to continue.
The government report, based on an analysis of national spending patterns and deflationary pressures, finds the search for value is prompting consumers to buy either low-cost merchandise or high-end items, which can also offer great value if they last a lifetime. Caught in the headlights are traditional mid-market players unable to persuade finicky shoppers that they offer either.
In reality, Japanese shoppers were never the rubes they were made out to be. They just didn’t have much choice.
Until recently, many big companies had the distribution muscle to control what consumers touched and at what price. Bureaucrats served as handmaidens by damping down competition, ignoring price-fixing and blocking the borders against nettlesome imports. As a result, price often was the sole measure of value as far as Japanese consumers were concerned.
Today, everything from computers and clothing to crackers and costume jewelry pours into Japan through a thousand side doors. Old, established retailers are going broke. Scrappy new players are changing the rules. And inefficient intermediaries are fighting for their lives as years of economic hardship leave consumers with the upper hand against retailers and manufacturers.
What has emerged is a far more complex and dynamic retail market selling everything from high-priced, shoddy goods to high-quality bargains. French and Italian designers now sell direct, and 99-yen stores proliferate along with successful cut-rate chains.
Now that they have some use for these skills, Japanese have become increasingly adept at weigh ing hundreds of variables besides price before shelling out their money.
“There are a lot more opportunities to find discounts that were never around before,” says Yoshiko Yoshimoto, a 54-year-old housewife, carrying a shopping bag from a Takashimaya department store. “There’s just a lot more choice.”
Marketing analysts say the old “expensive is better” psychology reflected the group-think of an earlier generation of Japanese. After the yen soared in value in late 1985, this group found itself very rich very quickly and gravitated en masse to costly status symbols.
Though the Japanese have suffered a great deal in the past decade, they’ve passed the nouveau riche stage, enjoy basic economic security given the country’s enormous savings and are increasingly individualistic. This is particularly true of the “six-pocket” generation now in their 20s, so called because they’re often supported financially by two parents and four well-off grandparents.
Nor have the Japanese--some of the most discriminating shoppers in the world--given up their obsession with quality or their love affair with name brands. But this is more tempered now, experts say, and determined less by manufacturer fiat or social pressure than by millions of individual choices. The more eclectic approach can result in outfits that might include jeans, a secondhand T-shirt and a $1,200 Prada bag. This environment has sent shock waves through many corporate marketing departments.
“This has all been great for Japanese consumers,” says Hideyuki Suzuki, the Planning Agency’s director of price research and author of the pricing report. “But many companies are now struggling to find a formula that works.”
Among the hardest hit have been Japanese department stores and supermarkets, saddled with expensive infrastructure and caught in a world of changing tastes and declining sales. Some of Japan’s biggest names--Takashimaya, Daimaru, Isetan, Matsuzakaya and Daiei--all saw their sales drop by 3% to 10% last year, the industry’s third straight year of decline. Sogo, one of Japan’s largest retail chains, collapsed last month with $17 billion in debt, sending tremors through the economy.
Discounters, on the other hand, including cut-rate apparel and lifestyle retailers Uniqlo, Muji and Shimamura, along with electronics sellers Yamada Denki and Yodobashi Camera, have seen their sales and profits surge.
Many traditional players just don’t get it, says Atsushi Miura, marketing expert at the Research Institute of Consumption. “During the bubble, when expensive was better, even an imbecile could sell,” he says. “Now many people have forgotten how to market.”
Retailers’ efforts, and frustrations, are increasingly centered on Japan’s so-called dankai junior, or neo-boomer, generation. This group, aged 24 to 29, represents what demographers say is Japan’s last great marketing wave. They number 11.8 million, or 9.2% of Japan’s population, have money, are well-traveled, well-educated, relatively insulated from the recession and adept at weighing value.
“They have lots of disposable income and time,” says Masahiro Yamada, author of the book “Era of the Parasite Single,” a term he coined to describe a generation of unmarried adults who often continue living with their parents beyond age 30. “They have had money since they were young, so they have acquired critical eyes.”
Says Tamotsu Sengoku, director of the Japan Youth Research Institute: “When you put their income together with their parents’, they are very rich. This makes a very attractive target.”
For marketers, the stakes in reaching the neo-boomers are far higher than just the immediate dash for cash. If companies don’t get it right with this group, many could find their very survival in jeopardy. Future generations are likely to be ever more imaginative, finicky and value-conscious.
“These trends are only going to accelerate,” says Yasuko Nakamura, president of Boom Planning, a market research firm.
Some traditional retailers are fighting back. In a closely watched experiment, Isetan has set up an area called BPQC--short for Bon Prix Bonne Qualite Bon Chic (Good price, good quality, good style)--in the basement of its flagship Tokyo department store. Designed to re-create the feel of a street in Harajuku, Tokyo’s youth mecca, BPQC includes several boutiques, a cafe, a CD shop and even a teeth-whitening salon.
Miho Onozaki, a 25-year-old office worker, wanders through BPQC’s Lush boutique, checking out the handmade soaps sold in chunks at $28 a pound. Also available are bowls of “organic mud mask”--cosmetic facial cleansing cream--offered along with fresh kiwis and cherry tomatoes at $84 a pound, dispensed in small ice cream cups.
Onozaki, who lives with her parents and spends several hundred dollars a month on cosmetics and clothes, is exactly the kind of customer Isetan is hoping to attract.
In the end, she opts not to buy anything today. But she says she likes what she sees. “Maybe next time,” she says.
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In Japan, a Bit of This and That
Japan’s “neo-boomer” generation--in their 20s, well-educated, eclectic and familiar with lower prices overseas--are dropping the traditional “expensive is better” view. This often results in odd combinations of bargain clothing and costly brand-name accessories.
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These photos were taken for The Times in Tokyo’s Roppongi district by Koichi Kitayama.
