The Japanese Market: Consumer Behavior

1
The Japanese Market Consumer Behavior

• Roy Larke, PhD.
• Editor JapanConsuming.com
• Professor, University of Marketing Distribution
  Sciences, Kobe, Japan

2
Understanding Japan

• Who are Japanese Consumers?
• Is Japan still worth it?
• How have retailers reacted?
• What can we expect in the future?

3
Population Issues

• Very, very crowded
• 1,000 people per km2 on average
• Tokyo vitally important
• Kansai, Nagoya secondary, but growing
• Generation Markets
• aging population (25 over 65 by 2025)
• baby-boom markets (22 of total population)
• Sex differentials marked
• 1.3 million more men than women between 0 and 34

4
Tokyo The Centre of Japan
5
Who are the consumers?

• Pre-college
• 20m low income, but active consumers
• College
• 4m small group, but high disposable income
• Office Ladies (young working women)
• 10m avid consumers, high income, no career
• Salarymen
• 45m limited consumption, almost never shop
• Housewives
• 45m shop to live, control household budgets

6
Is Japan still worth it?

• What the newspapers are saying
• Japanese economy is in crisis
• Deflation
• Retail sales are falling fast
• Consumer confidence is low

7
Hidden beyond the headlines

• Japan is the second largest economy in the world
• Japan has very high income per head
• Still low penetration by non-Japanese firms and
  brands
  
• Rich consumers with money to spend

8
Just the facts

• 1 in 6 Japanese (20 million people) own a Louis
  Vuitton accessory
  
• 1822 year olds 170,000 (1,550) a month for
  non-essentials
  
• The average savings per working household is 10
  million (90,000), 15 million overall

9
Income Expenditure Flat in 1990s
10
Monthly Savings increase 21
Monthly savings per working household 1990
11
Consumer worry Labor market Reform

• End of lifetime employment
• Personal abilities important
• Fast track employees (MBAs)
• More job hopping
• Skilled employees gaining personal value and
  seeking careers in many companies
  
• Fewer jobs for graduates
• Acceptance of jobs abroad and with foreign
  companies

12
Consumer worryHigh Prices

• Most expensive country in the world
• Prices 35 times (food highest)
• Demand for discounting
• Hindered by high distribution costs low
  margins
  
• Move away from price quality
• Specialist retailers overseas companies

13
Retailers unable to cope

• Retail problems are largely their own making
• Lack of strategic direction
• Overly inflated prices, high costs
• Polite, but standardised, boring service
• Too much empire building by big retailers
• High debts, cant take advantage of lower land
  prices
  
• Slow to react to consumption changes

14
Japanese retailers the lost decade
15
Consumers are worried

• End of life-time employment
• Worry about jobs, income
• Save more and more
• Worsening of position of women in the workforce
• Movement of students and workers overseas when
  possible
  
• But

16
Consumers are also bored

• Consumer confidence hasnt hurt some retailers at
  all!
  
• Japanese firms (2000-01)
• Fast Retailing (Uniqlo) Sales up 106.1
• Five Foxes (Comme Ca) Sales up 17.1
• Overseas firms
• Louis Vuitton, Prada, Hermes etc..
• Sephora, Gap, Starbucks, Carrefour

17
What do consumers want?

• Consumers want what they are told they cant
  have
  
• Lower prices
• Well supported brands
• Genuine, friendly, outgoing service
• Imaginationfrom products and stores
• Value for money

18
The Future

• Further internationalisation
• Internet
• But through mobile phones not land lines
• Increased demand for imports
• Reduced prices through competition
• Distribution concentration, fewer big firms
• Distribution channel cost control
• Consumer orientated marketing

19
Huge opportunities for overseas firms

• Land prices low, demand high
• Great pool of workers looking for new, exciting
  jobs
  
• Big demand for imagination and originality
• Ikea by 2005, Tesco sooner, Wal-Mart sooner
  still
  
• The time has come to be in Japan and stay
  long-term

20
If youre not in Japan

• Youre not in the game