Is Japan'S Luxury Recovery Back To Its Previous Defeat?

In China

Under the shadow of ten years of rapid growth in the market, the Japanese luxury market has been struggling, but in the second half of 2014, it began to pick up.

It is predicted that by the year 2016, China will replace Japan as Asia's largest luxury market.

Is Japan's recovery capable of defeats? There is still a lot of resistance ahead.

The Research Report of Fflur Roberts, an analyst from the US quoted Euromonitor, shows that:

Japanese consumers are high-income people in the Asia Pacific region, and their purchasing power is considerable.

However, under the influence of Asian economic climate and political environment, the target of income and expenditure is not satisfactory, resulting in a deep downturn in the luxury market.

Japan's luxury goods market value 260 billion, second only to the United States, ranks second in the world, but luxury goods sales have just passed 8% of the total global luxury sales.

On the other hand, Japan's population outside Tokyo has been sharply reduced, putting more pressure on the financial sector.

Japan's per capita wages began to decline from a year ago, and the government needed to deal with the huge deficit problem.

The overall economic forecast for 2015 is not optimistic, and the middle class lacks confidence.

This has temporarily lifted Japan's economy and luxury sector from recession.

Why is luxury sales suddenly becoming stronger? It has become an interesting topic.

Economic situation

Since the Great East China Sea earthquake and tsunami occurred in Japan in 2011, economic growth has slowed down rapidly.

The sharp drop in national consumption and stock market prices further declines.

In 2012, the economy began to recover, but in 2014, Japan increased sales tax and preyed on large consumer spending, resulting in a slight contraction in the economy.

Many Japanese companies lack the ability to innovate. At one time, the high-tech industries in Korea, mainland China and Taiwan developed rapidly into competitors.

In particular, China's rise has become one of the most popular investment targets of foreign businessmen.

In recent years, the net inflow of foreign direct investment in Japan has barely improved.

Asia Pacific highest income region

In recent years, Japan's income imbalance has worsened.

One reason: with the advent of the aging society, the income of the elderly has declined compared with the working class.

Reason two: the profitability of large companies is steady, but it is not easy for small companies to create new jobs.

Reason three: the number of temporary workers has soared in the past ten years, which now accounts for about 1/3 of the workforce.

They get only half the income from the same jobs as the regular workers.

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Although Japan is the highest per capita income region in the Asia Pacific region and the second largest luxury market in the world, the growth of consumer goods is weak, the middle class is shrinking and the population is shrinking.

In 2009 ~2014, Japan's per capita gross income increased by only 0.8%, and the average level in the Asia Pacific region increased by 23.9%.

In this case, Japanese consumers are paying more and more attention to the cost of shopping, and tend to be more substantial private brand goods.

In 2014, 20.1% of the Japanese people earning more than $150 thousand a year were 40 years old ~44 years old; 18.3% were 45 years old ~49 years old.

But according to demographic statistics, the population of these two age groups accounts for only 14.5% of the total population.

In addition, senior white-collar workers in Japan are usually of this age group.

Because Japan's wage system is related to qualifications (as a reward for decades of service to an enterprise), and at the same time, more than 40 year old professionals are still young enough to master their own skills to benefit their employers.

By 2030, as an aging society, the elderly enjoyed the privilege of preferentially occupying high income ratio.

In 2030, Japan's annual income of 15 million dollars or more of the population, 45 years old, the proportion of ~49 years old population will be further reduced to 15.3%, second place is 50 years old, ~54 age range 14.4%.

"Two levels of differentiation" in 2014

In April 2014, Japan raised the consumption tax from 5% to 8%, and consumers rushed to scramble for goods before the implementation of the policy. In the first quarter, luxury goods sales in Japan soared.

Demand fell sharply in the second quarter.

Taking French luxury goods manufacturer Hermes as an example, sales in the first quarter of 2014 increased by 20% over the same period (at constant exchange rate), and the second quarter plummeted.

However, in the second half of 2014, the double digit growth was resumed in the second half of the year.

In the same year, the French luxury goods giant LVMH group also experienced a similar sales situation with Hermes.

The growth of Japanese luxury consumption in the second half of 2014 seemed incredible.

Behind this is that the boom in Chinese tourists has contributed to the growth of Japan's consumer goods economy, but how long can it last?

According to the survey, luxury goods sales in Japan reached 3 trillion and 100 billion yen at the end of 2014, and it was predicted that the figure would reach 3 trillion and 200 billion yen by the end of 2015.

Compared with the double-digit declines in 2012, the two data achieved an average annual growth of 7% and 3% respectively compared with 2013 and 2014 respectively. There are four main reasons:

1) a sharp increase in Chinese tourists

In 2012, the number of overseas tourists in Japan was 8 million 400 thousand, a total consumption of 1 trillion and 100 billion yen; and by 2014, the two figures increased to 13 million 400 thousand and 2 trillion respectively.

These data, on the other hand, show that the so-called regional sales mix in the luxury goods industry is potentially misleading.

For example, the sales of luxury goods in Greater China in 2014 dropped by 3%, while the number of Chinese tourists shopping in Japan increased sharply in the same year, while Japanese luxury goods sales increased by 7%.

In fact, the surge in the number of overseas tourists is directly related to the weakness of the yen.

The middle class in Asia sees Japan as a shopping paradise and resort.

Besides, for Chinese consumers, it only takes 2 hours and 40 minutes to fly from Shanghai to Tokyo, and a shopping trip can be completed in one weekend.

Tokyo has become the most ideal shopping destination outside Hongkong.

2) yen weakness

According to the latest travel data, the number of Chinese tourists to Japan in 2013 dropped by nearly 8%, while the number of Chinese tourists who visited Japan in 2014 increased by 34%.

The yen is weak, and a new luxury duty free shop in Fukuoka, a port city in southern Japan, has attracted a large number of Chinese tourists.

But after the RMB exchange rate was lowered, relative prices rose, and the attraction of shopping in Japan also declined.

The European and American luxury markets are also facing the same situation.

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In 2009 ~2014, the number of Chinese tourists to Japan increased by an average of 12% per year. It is predicted that in 2014 ~2019, the figure will be 6%.

Similarly, in 2009 ~2014, the number of visitors to the United States, France and the United Kingdom increased by an average of 286%, 141%, and 141% respectively, but in 2014, the average annual growth rate of Chinese tourists in the three countries during ~2019 was estimated to be around 30%.

3) mobile shopping

Mobile phone

And footwear retailers are most interested in a market.

Global smartphone sales have been on the rise. Research shows that by the end of 2015, the number of smartphone sales in Japan will reach 2830 million, which is 230% higher than that in 2010, and will grow by 40% in the next five years.

Japan is an example of luxury mobile commerce.

In 2014, mobile Internet retailing accounted for 35% of total Internet sales; in the past three years, sales achieved by smart phones increased by 200%.

This figure is much larger than that of other mature markets, such as Britain and the US.

Fashion products have become one of the most popular categories of mobile shopping. Women workers, students, or spicy mothers prefer to walk around and buy clothes with their mobile phones. Two.

4) wealthy elderly consumers

Japan's wealthy elderly consumers are the mainstay of economic recession. In -1997, Japan's population over the age of 65 exceeds the age of 0~14. In 2014, the population aged over 65 reached 26.7%, with an age gap of nearly 50 years.

Consumer company sees the elderly as the most important market.

Japanese retailer Aeon group calls the elderly consumers "Grand Generation (G.G.)". The company introduces comfortable functional underwear designed for women over the age of 60.

In addition, targeting elderly single people, the introduction of healthy ready to eat food, there has also been designed for women over the age of 40 make-up brand "THE GOLDENSHOP".

It also makes humanized adjustment in shopping malls, such as font enlargement of sales points.

In terms of luxury consumption, a large proportion of the Japanese affluent are elderly people.

Compared with young people, they are not susceptible to economic fluctuations, and are truly against economic recession.

At present, the population over 65 is over 1/4, and is one of the most populous countries in the world.

It is Japan's "grey dollar" (the elderly consumption) and the booming tourism market brought about by the exchange rate stimulation that led to the sudden counterattack of the Japanese luxury market in the second half of 2014.

Although Japan's economic environment is uncertain, Tokyo's luxury retail industry is likely to continue to maintain a strong momentum in the future.

In contrast, China's economic development in emerging economies is fast, but it is also facing an aging problem because of the large population base.

At present, China's population over the age of 65 is 5 times that of Japan.

By 2030, the number of people over 65 years of age in developing countries will reach 828 million. Aging is an economic and social issue that the global community must pay attention to.