Remember we told you’ll about China emerging as the second largest luxury market in the world. And we even informed you about the possibility of China overtaking Japan, which is on the first position. This recession has done something that earlier declines couldn’t: turned the Japanese, who were once slaves to luxury into Wal-Mart shoppers. Surprised?? Read on to know how the Japanese have changed their outlook.
In seven years operating in Japan, through a subsidiary called Seiyu, Wal-Mart Stores has never turned a profit. But sales have risen every month since November, and this year, the retailer expects to make a profit. That is an understatement. Across the board, discount retailers are reporting increases in revenue — while just about everyone else is experiencing declines, in some cases, by double digits. As a result, the luxury boutiques, once almighty here, are wobbling. Sales at LVMH Moët Hennessy Louis Vuitton, makers of what has long been Japan’s favorite handbag, plunged 20 percent in the first six months of 2009. In December, as the global economic crisis unfolded, Louis Vuitton canceled plans for what would have been a fancy new Tokyo store.
Now, the Japanese luxury market, worth $15 billion to $20 billion, has been among the hardest hit by the global economic crisis, according to a report by the consulting firm McKinsey & Company. Retail analysts, economists and consumers all say that the change could be a permanent one. A new generation of Japanese fashionistas does not even aspire to luxury brands; they are happy to mix and match treasures found in a flurry of secondhand clothing stores that have sprung up across Japan.“I’m not drawn to Louis Vuitton at all,” said Izumi Hiranuma, 19. “People used to feel they needed a Louis Vuitton to fit in,” she said. “But younger girls don’t think like that anymore.” In the new environment, cheap is chic, whatever the product.
In supermarket aisles, sales of lowly common vegetables — like bean sprouts, onions and local mushrooms — are up. (Bean sprouts, which sell for as little as 25 cents a bag, are a particularly good substitute for cabbage, which can go for about $4 a head.) And instead of melons, Japanese shoppers are buying cheap bananas, pushing imports up to records. “I’ve cut down on fruit since last year, because of the cost,” said Maki Kudo, 36, a homemaker shopping at a Keikyu supermarket in central Tokyo. “Instead of brands, I now look much more at cost.” Thrift is being expressed even in unlikely measures like umbrella sales, which have spiked as more Japanese opt to brave rainy weather on foot rather than hail a taxi, according to a survey by the Dai-Ichi Life Research Institute.
U.G. — the sibling brand of Uniqlo, the global clothing retailer known for its low-cost fleeces and T-shirts — started a jeans war when it introduced pants for 990 yen this year. Aeon soon followed suit with jeans selling for 880 yen. Seiyu, the wholly owned Wal-Mart subsidiary, says it plans to sell similarly priced jeans this year. Thrift has propelled Hanjiro, a secondhand clothing store chain popular among young Japanese, to 19 stores, from just one store in 1992. When Hanjiro opened a new store in Saitama, which borders Tokyo, in April, about 1,000 eager young fans lined up for a door-buster 290-yen T-shirt special. Of course, frugality is good for Wal-Mart, which posted better-than-expected second-quarter earnings last month. Japanese consumers are snapping up Seiyu’s $6 bottles of wine — sourced through Wal-Mart’s international network — as well as $86 suits and $87 bicycles.
In fact, Seiyu has ignited a price war of its own, with its “bento” lunch-in-a-box of rice and grilled salmon for 298 yen. Abandoning a custom here for supermarkets to make their bento boxes on site, Seiyu cut costs by assembling the lunches at a centralized factory. Seiyu bet that Japan’s frugal consumers would not care about the change, as long as the bentos were cheap. Seiyu was right; the bentos have set off a line of copycat supermarket bentos. “Price is No. 1 in my mind,” said Chie Kawano, an elderly shopper at Seiyu’s Akabane store in northern Tokyo, a bento box in her basket. “I don’t need anything fancy.”