Evidence that the economic recovery is creating a “new wealthy class” while leaving others to struggle is showing up in department stores and other luxury retailers that are outperforming their convenience store cousins.
A showcase on the sixth floor of Takashimaya Co.’s Nihonbashi department store in Tokyo, for example, is stocked with Swiss watches by Franck Muller.
“Several watches priced at more than 10 million yen have been sold,” said sales manager Ichiro Nakamuta.
At Mitsukoshi Ltd., the attraction seems to be watches and art objects costing more than 10 million yen each. A public relations person at Mitsukoshi confirmed nouveau riche sightings, noting that pictures costing more than 100 million yen have been bought “not by corporations but by individuals.”
It’s the same at Daimaru Inc., according to Chairman Tsutomu Okuda.
“High-quality wrist watches for men and art objects,” Okuda said. “Such high-priced goods are selling.”
Another department store executive said high sticker prices might be making a comeback.
“Prohibitively priced jewels and ornaments have been sold,” said Shunichi Samura, managing director at Matsuzakaya Co. “The big reason is the high prices.”
The market for premium goods started taking off last fall, when the stock market started recovering. But the difference between this recovery and consumption recoveries of the past is that the new wealthy class is fairly anonymous, one industry analyst said.
Today’s big spenders are thought to be chiefly IT entrepreneurs or individual investors — people not already on the special customer lists department stores have compiled over the years.
Department stores refer to the new entrants as “unknown customers,” the analyst said.
For department stores, which have been closing stores and downsizing since the collapse of the bubble economy in the early 1990s, it is impossible to launch a sales offensive unless they know who these customers are.
They do not want to lose a “mountain of treasure” and are trying to prevent the boom from ending in a short time, the analyst said.
To keep track of the new customers, department stores are asking people who buy pricey items to apply for their credit cards.
Mitsubishi said it offers customers who spend more than 1 million yen a year at its stores a gold card with a “higher” discount rate.
While nearly everyone seems to be offering some kind of discount card nowadays, convenience stores seem to be in a slump. The prolonged drop in sales has been blamed on both their ubiquitous presence and Japan’s changing demographics.
“Convenience stores have reached the saturation point,” said Takeshi Niinami, president of Lawson Inc. “If the trend of a declining birthrate and aging of society continues, we will face an even worse predicament.”
Although convenience store operators have been opening new outlets at a relentless pace, year-on-year sales at existing stores had dropped for 19 months in a row as of the end of February, due chiefly to a gradual decline in young customers — the cheap retailers’ main clientele.
“In this economic recovery phase, there will be nothing like the bubble period, when everybody was enthusiastic about consumption,” said Yuko Ishiwata, a consumer trend researcher at Dentsu Inc.