Consumers’ newfound propensity to shop for discounts and shun luxury goods marks a sea change that may boost foreign retailers in Japan, according to McKinsey & Co.
“This fundamental shift in the attitudes and behavior of Japanese consumers seems likely to persist, irrespective of any economic recovery,” Brian Salsberg of McKinsey in Tokyo wrote in a report earlier this month. “For Western companies that have long regarded selling in Japan as not only different but also difficult, this may be welcome news.”
Consumers’ growing preference for cheaper goods is prompting department stores to close and deepening deflation. Even so, their increase in price consciousness, willingness to shop online and desire to buy in bulk may be just what foreign retailers from Ikea to Wal-Mart Stores Inc. need to penetrate what once was an elusive market, the report said.
“Because Japanese consumer behavior is shifting closer to that of shoppers in Europe and the U.S., retailers and manufacturers can look to those markets for guidance,” the report said. The global recession only accelerated a process that has been unfolding for some time, according to McKinsey’s Salsberg.
Ikea, the home furnishings retailer, plans to open a store in Fukuoka Prefecture as early as 2012, its sixth location in Japan, Nikkei English News reported March 13. Seiyu Ltd., a Japanese unit of Wal-Mart, sells ¥3,800 suits and ¥990 shirt-and-tie sets.
The change in domestic consumption has been brought on by sluggish growth during the past two decades that caused life-long jobs to give way to lower-paid, less-secure temporary employment, the report said. The portion of nonregular workers more than doubled between 1985 and 2008.
The younger generation that grew up during the economic stagnation has contributed to the shift, showing “radically different attitudes” to spending, with many shunning corporate life and materialism and struggling to get work, McKinsey said.
Fast Retailing Co., owner of Uniqlo discount clothing stores, is enjoying higher sales, just as department store operators such as Isetan Mitsukoshi Holdings Ltd. close branches. Uniqlo is the most popular fashion brand among Japanese women, followed by Burberry, according to a survey the Nikkei Research Institute of Industry and Regional Economy published this month.
More consumers are using the Internet to compare prices. The number of visitors to a price-comparison Web site operated by Kakaku.com Inc. rose 34 percent last month from a year earlier, the company said this month.
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