Lately articles like this one could be seen in several publications. Japan's luxury decline causes shocks all around the globe due to the apparently unshakeable luxury spending of the 90s and early 2000s. If you consider the whole Japanese luxury spending phenomenon a luxury bubble, then the development seen now can be considered anything but a surprise. But I personally disagree with the grave tone of most of the articles that talk about a lasting trend and a reorientation of the Japanese towards frugality and thrift. The economy here will recover. It will take years maybe, but to throw everything over board and expect Japanese shoppers to align themselves with European or American shopping patterns is missing the point. Japanese consumers are insecure, overwhelmed by certain developments and unsure about their future. what is happening in the consumer market now is consolidation process, a juggling of values and a generation gap (of values) that leads to confusion. Social role models are missing and a country that is not used to dealing with subcultures in the open media has difficulties making sense of its own developments. Still, I have the feeling that the actual trend will not be a new equilibrium.Prove me wrong.
2 comments:
I think that all signs point towards a future where the spending on luxury by Japanese consumers will not only recover but absolutely obliterate old sales record. The winners of this game of chicken will of course be the brands that have managed to stay on top of trends and the national psyche during the lean years that will follow.
I base this observation on several factors, one being the very slow population decline of this country and the resulting shift in consumer spending that this entails, i.e. fewer people will need to save money for future house ownership and fewer children means that young and middle aged couples will have a disposable income many-fold of what their parents had when they don't need to take their offspring through Japan's costly education system.
There is off course a wild card in the game as well, and that is the (sense) of growing social injustices. While some people end up with more and more disposable income (i.e. middle aged unmarried Tokyo males) other groups will be basically impoverished within the next decade (i.e. single parents in local prefectures).
In a market where 96% of women are aiming to catch the 3% of men who make the required 10 million yen yearly (needed to raise a family of 4 in central Tokyo) you can be sure there will be room for luxury hungry consumers well into the future.
The last point is very important. The recent run and more extreme competition for the countries top elite. David Marx, former editor at Mekas, Diamond Agency in Tokyo, has pointed out a direct connection between rising luxury sales from 2000-2005 despite the continued eonomic downturn. The fact that consumers consciously or unconsciously use fashion and apparel to place themselves psychologically within the membership of a certain social class leads to the foregone conclusion that most people would like to be associated with the upper classes. So basically, a change in income distribution and more importantly, in class consciousness, could be a major driver towards increased consumption of expensive western luxury brands, i.e. status markers.
The the rising income distribution in Japan is a difficult subject.
A change in the demographic structure of an aging society with a declining birthrate can lead to a consciousness of perceived inequality (If we take a closer look at the development of the Gini coefficient, we can see that about 90% of the change in the last 10 years can be attributed to factors other than an actual change in income, namely the impact of changes in household membership and the aging population of Japan. For contemporary discussions on this topic see Tachibanaki 2005; Sugimoto 2003; Nihonsôgôkenkyûsho 2006; Hayashi 2005, and also Hashimoto 2006. The image that 90% of the Japanese used to view themselves as belonging to the middle class is analyzed critically by Sugimoto 2003: 35-46, go to my reference section on the right, point 5 in my working paper, or to the label references). Although the economy might have regained momentum in 2005 and salaries were about to rise for a short time period, this was not true for most of the part-time workers, leading to a strong polarization of living standards (Nikkei Konwakai 2005).
Please see my entry on "The changing meaning of luxury in Japan" from August, 6th, 2008.
The importnat words are "perceived" and "consciousness". The thing is not that Japan was never classless to start with. It was classless in the minds of people. The confucian ideal that positions of power can be achieved by fair competition (meaning in Japan academic credentials, standardized tests in the form of entrance examination) and a clear hierarchical structure also within companies, leads to an acceptance of income disparities as they are integrated into a system of ways top achieve them, that is perceived as being "fair". The chances to get there, should one just try hard enough, are perceived to be equal. Please also see Aoki (1994): The Japanese Firm for an account on the different information structure (horizontal vs. vertical in the West) and the concequences of this for the incentive structures and promotion systems within the company. Readers should understand that different information distribution within companies leads to a different job definition (less clear, diffusion of information among many members, shared responsibility) which again leads to a different dynamic within the job market, etc... the subject is complex and can't be simplified.
I encourage people to go for the facts and not for the cliches concerning phenomena in the Japanese market. There are very good logical explanations for most of the observed results that make Japan so "special".
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