Stingy Japan

There’s no polite way of saying it. It seems to me lately that Japan is turning into a nation of cheapskates. But, truth be told, Japanese have always adopted a defensive stance when it comes to spending money. This is one of the reasons why it is so important to establish a relationship of trust with Japanese buyers, before they will part with their or their company’s “hard-earned”. Building trust and status have always been the prerequisites for brands to entice people in this country to open their wallets. And when those prerequisites are met, until recently, they have spent big. For example, Japan’s luxury business for many years weathered the long-term national economic decline. Consumers simply made economies in other areas of their budget so that they could splurge on whatever totemic item that was flavour of the month.

Those salad days appear to be fading fast. Taking some wind out of the sails of the “mass” luxury sector, cheap specialty apparel retailers like H&M have provided new consumption experiences and enabled new modes of personal expression. For a long time it was thought that Japan’s famously finicky consumers worshipped only at the altar of what seemed like to outsiders, an insanely over-engineered level of quality. What successful marketeers in Japan now understand is that the equation is not quite so simple in a consumer market undergoing a secular economic decline. Quality remains important, but today’s poorer shoppers are more aware of the possibility of striking a balance between price and quality as they attempt to prolong the joys of consumerism on a limited budget.

It is not just in fashion that this trend is evident. Surveys of grocery buyers in 2008 and 2011 by the Japan Cooperative General Research Institute showed in those years, the percentage of buyers citing low price as a key criterion for buying meat had risen from 24% to 52%, while at the same time those citing quality had risen from 24% to 41%. Overall, the most important criterion was the balance between price and quality cited by 70% of buyers in 2011, where it had only been 50% and third ranked in 2008. I believe those data encapsulate what is happening in every single category in Japan as buyers continue to seek world-class quality, but at increasingly lower price points. Japan’s notoriously hard to please consumers, just got even harder to please!

An example of a business delivering high quality at low price points is an eyeglass retail chain called Zoff. Zoff has a series of stores in high-profile locations including Tokyo’s Harajuku. Their frames offer the latest looks with great quality, but cost as little as 5,000 yen. At those kinds of prices, the average fashion conscious consumer can buy several pairs, get a different look for a range of occasions and still have enough money to eat out several times to show them off.

One foreign entrant getting in on the act is the Danish discount chain, Tiger Copenhagen. Tiger offers an eclectic range of high-design items, mostly costing around 100 yen. Within three days of opening their first store in Osaka, there were reports of the entire store having sold out. Osaka people are well known for their canniness with money but, of course, what really makes a concept like Tiger work so well is that the Japanese consumer truly appreciates great design. Tiger and H&M show that if you can offer great design at accessible price-points you can create the ultimate modern shopping experience — cheap, fun and repeatable.

The cheapskate trend has even asserted itself in the world of fine dining. At L’As restaurant in Tokyo’s ritzy Aoyama, you can treat yourself to a multiple course dinner that would be the equal of any high quality restaurant in London, Paris or New York for a surprisingly reasonable 5,000 yen. The only catch is that every diner has just the one set-course to choose from every month — a clever way of keeping costs under control and maximizing execution. On the lower end there are numerous examples of amazing deals such as the Izakaya Kakumei chain that offers unlimited free shochu, Kura Zushi offering decent quality sushi at 100 yen per plate and the far from shabby looking Nanezou which offers all you can eat Shabu Shabu for 1,980 yen.

It will be interesting to see how far the trend can carry, because there are limits to what companies can deliver at such low prices. However, as a harbinger of trends elsewhere in the world it would be worth looking at what is going on here. Japan is truly setting the standard in terms of marketing to a consumer with a declining budget, but continuing to deliver products and services that make the buyer feel pampered, not poor.

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