Springtime Comes to Consumerland

Those of us who have lived in Japan for some time will often marvel at how quickly and definitely the seasons change. One day it’s winter and the next it’s spring — such is the speed with which the seemingly entrenched weather pattern can change. So also it seems with the economic mood. As late as six months ago I was making presentations to our clients on the basis that we were faced with a consumer in full retrenchment.

The trend to reduce unnecessary consumption had been in full swing since the Lehman shock but was exacerbated with the earthquake, tsunami and nuclear meltdown in March 2011. A consumer that was looking inwards and stuck in a super-defensive mind-set with regard to spending their ‘hard earned’ was causing some serious challenges to marketers. But to the credit of the creativity of Japanese business these were challenges that were being met head on. In many ways, the last few years in Japan have been an extremely innovative time as marketers have been forced to respond to a consumer stuck in neutral.

In recent weeks, one could be forgiven for thinking that the consumer has (in a good way) lost her senses, got back into gear, and put her pedal to the metal. Witness the recovery in consumer spending in the first few months of this year. It is not just spending on the basics that appears to be recovering but spending on discretionary luxury items like watches and jewellery. Nikkei quotes Tiffany as reporting that their sales from February through April increased more than 20% compared to the same period last year. In April New car sales at 365,164 beat sales of the same month last year by 101.5%. Japan’s property market is also showing signs of improvement, attracting new investment in recent months.

These kinds of reports are not harbingers of austerity. Indeed it seems that the consumer in Japan is finally getting out of her funk and doing what we all need her to do — spend! Could it really be happening? After years and years of soul-searching about where it would all end, are we really seeing the light at the end of the tunnel? Certainly, after the hard years, the consumer landscape is permanently changed. This is especially true in the area of what is considered to be luxurious and premium. Luxury will always be luxury — expensive, desirable and aspirational. However in recent years, a touch of elevation has been applied to a range of ordinary consumer categories. The idea of the “everyday” luxury, created and savoured as a response to tough times is becoming entrenched as a staple of life in Japan.

A name has even been coined to cover this idea — the “Petite Zeitaku”. Petite Zeitaku (luxury) is a way that consumers can get a cheap but meaningful boost by buying upgraded versions of their everyday staples. Examples of this abound in the market right now and are increasing by the day.

Take for example, 7/11’s “gold” and “premium” range which has surprised even themselves in its popularity. Their Gold Leaf Bread has been a rip-roaring success, selling more than 650,000 loaves in the fortnight after its launch, despite being priced 100 yen higher than the average. In the beer category, Asahi is preparing to launch “Dry Premium” which will be priced 20% higher than their mainstay brand, Super Dry. Despite the higher price, forward orders are looking frothy.

At a more expensive price point, but in line with the trend to elevate the ordinary is the high-end bike boom. Indicators of this trend include a range of new specialist magazine titles, a chic new Urban Cycling Collection from fashion brand PEdAL ED, and bike cafes like Swedish brand Bianchi’s Cafe and Cycles. This particular phenomenon reflects an intersection of appreciation for craftsmanship, concern for the environment, and a certain modesty when considering in years past the same people may have been buying cars. Indeed carmakers such as Mercedes Benz, Porsche and BMW are introducing or (re-introducing) their bicycle lines in Japan.

It is becoming clear from the consumers that we regularly speak to, even as recently as a few weeks ago, that change is underfoot in the consumer “zeitgeist”. There is an increased willingness to consider the idea that economic conditions are improving. People are definitely loosening their stance and starting to think about buying the things that they have been putting on the back-burner for some years. We feel that this is setting the stage for a strong recovery. With all the genuine efforts to create a premium sense of value, even in the everyday necessities of life, it is somewhat exciting to see what may be in store in the next six months to a year. If Japanese business can put some real-life business results against its frantic attempts to innovate, then we may well see a renaissance in profitability in this market. And, for once in a long time, the rest of the world may be looking to Japan’s marketers to show the way.

CarterJMRN is a strategic market research agency that has been helping clients with consumers and businesses in Japan and beyond since 1989.

We believe that, although the terrain you face in building a successful marketing strategy and activation path sometimes seems obscure, the path to success is knowable and that the consumer is the guide who will show you the way.

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