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‘Abenomics’ whets appetite of rich as sales of luxury items surge

JIJI

Sales of luxury goods at domestic department stores are rapidly growing, as the economy shows signs of life apparently due to Prime Minister Shinzo Abe’s economic policies, dubbed “Abenomics.”

“Buying appetite among the rich has been on the rise,” said an official at Sogo & Seibu Co., the department store unit of retail giant Seven & I Holdings Co.

With February sales gathering steam, department store operators are expecting a continued pickup in consumer sentiment.

Since late last year, the Tokyo stock market has been on an uptick and the yen is weakening against other major currencies thanks to growing hopes for Abe’s policies, which feature bold monetary easing and timely fiscal spending.

At Sogo & Seibu’s flagship outlet in the Ikebukuro district of Tokyo’s Toshima Ward, sales of watches, including luxury brand items, rose some 30 percent from a year before in January. In the first 20 days of February, sales were up 90 percent, compared with a year ago.

According to the store, sales were robust for watches priced between ¥300,000 and ¥500,000 in January. This month, Franck Muller and Rolex watches with price tags of between ¥500,000 and ¥800,000 have been selling briskly among customers in their 40s and 50s.

Sales of foreign brand clothes and goods at Takashimaya Co.’s 18 stores in the first 21 days of February surged 30 percent year on year, against growth of about 1 percent for the whole of January, company officials said.

The strong sales stemmed from the effects of the prime minister’s policies and a surge in demand ahead of Louis Vuitton’s price hike on Feb. 15, the officials said.

Takashimaya President Koji Suzuki has said: “The business environment for department stores looks severe over the medium term as the consumption tax is set to be raised” to 8 percent in April 2014 from 5 percent at present.

However, he expressed hopes for an increase in bonuses reflecting a quick recovery of the economy.

“If Japanese workers’ income starts to increase this summer or later, that would be a tailwind for department stores for the time being,” Suzuki said.