Japan’s Consumer Trends and Opportunities

Trends over the past several years have been heavily influenced by the devastating earthquake that hit Japan on March 11, 2011, a period known as post 3.11.

The disaster has changed the behaviour of the population who have become what is described as Eco-Ethical, more thought for others with a growing sense of ethics. There has been a shift from “disposable to sustainable” with an increase in value of the close family unit through stronger bonding.

There has also been a shift in the consumer mindset from “The more the better” to ‘Selective’ which in turn has resulted in well planned consumer activity in place of compulsive spending.

Smart Consumerism (SC) is a term that is being used to describe the trend, it encapsulates smart shopping; seeking goods made with recycled/eco-friendly/ethical background, goods with sound social linkage.  Some examples of SC include organic certified food and beverage products, FSC certified paper and wooden products, produce from earthquake challenged areas such as Tohoku to support the livelihood of those that have suffered and still affected by 3.11.  Products that help reduce environmental footprints such as cool-biz fashion wear (see below) and hand fans to reduce the use of electricity.

Smart Consumerism has given rise to “Smart” lifestyle which is attained through “Smart” shopping in turn equating to “Quality Life” Over the past year post 3.11, consumers have had to shorten working hours to cut power consumption and overtime, inadvertently this has resulted in a better work and life balance.  This increase in private time has been invested in family bonding, self development, hobbies, and leisure activities, but these must be at an affordable price.

The following gives a brief indication of some of the trends and opportunities in Food and Beverage, Personal Care, Fitness, Home, Information Technology and the Environment.

Food and Beverage There continues the be a strong concern on safety, with key attributes being traceability, natural and organic. Mothers of small children are especially keen on what they feed their families after 3.11. The other opportunity is in health food for the aged, the ageing population is focused on preserving their health through food, they are particularly concerned about hypertension prevention and improvement in their blood glucose levels.

Personal Care, Fitness;The Yama-girl (Mountain girls) and Tsuri-girl (Fishing girls) are terms used to describe ever increasing hobbies for woman that hike mountains and go fishing. These women begin their pursuits by buying all the latest fashionable equipment for the respective activities at a specialty store.  There is also a running or marathon boom populated not only by women but also by men from a higher age demographic, this has created opportunities for fashionable running wear and shoes, moreover for coaches and coaching services.

Personal grooming products for men are also tipped to rise over the next few years. Whilst this sector has been gathering momentum for the past five years or so in recent times there has been activity in the top end prestigious beauty care sector for men. With more time on their hands men have started taking better care of their bodies using skin lotion, cream, and various other beautifying products.

Home; The continued need to save power (electricity) for winter and summer until Japan can establish and manage alternate power sources has heightened the popularity of “warm biz and cool biz” which are essentially materials, appliances, apparel and so forth that can be used against extremities in the weather (chill/ heat) reducing the reliance on air conditioning and heating systems. The continued threat and concerns of natural disasters and the shift in thinking from high tech to enjoying nature has also created opportunities in long life food, camping equipment and other products that can be used for outdoor enjoyment or as disaster rebuilding aids. Other opportunities are daily necessities that leave fewer footprints on the environment including; eco-friendly detergents, cosmetics and toiletry products made from natural ingredients; but they need to be at an affordable price.

Information Technology; Software applications especially games, total spend on applications for smartphones in 2010 was just under $10 million with figures for 2011-2012 expected to show dramatic expansion. There is also an ever expanding market for accessories for smartphones / tablets, cases, and stationery products such as handwritten memo’s that can be downloaded, stored and filed on your device, as the “Shot note” from King Jim view it (Japanese only) http://www.kingjim.co.jp/sp/shotnote/

Environment; Alternate energy sources, such as solar power generators, Electricity companies now have in place a surplus buy back scheme. The number of installation of less expensive imported solar power generators has doubled however it is still only 10% share of the total market so further opportunity exists. Also opportunities for other forms of power generators, wind, water, and so forth.

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Inside Japan

We are all very much aware that Japan is in the grips of dealing with the aftermath of a horrendous natural disaster further compounded by the damaged Nuclear Plant in Fukushima. Having lived in Japan for more than 20 years these are difficult times, however the one bright spot that is my saving grace is the knowledge that these people are resilient, their discipline and dignity will help them recover to an even stronger nation both in social and economic terms.

Notwithstanding the huge task ahead to recovery the following are snippets of other news out of Japan over the first few months of 2011.

Government:  New Cabinet Initiative

Promotion of the US backed Trans Pacific Partnership (TPP) Agreement, regional free trade pact currently being negotiated by nine countries including the US, Australia, Chile Singapore, Brunei New Zealand, Malaysia Vietnam, and Peru.

Prime Minister Kan wants to wants to start an era of Japanese free trade and intends to reach a decision on entering the TPP by June 2011. New Trade Minister Kaida is a firm believer in the benefits of Japan  joining the TPP.

The TPP will require member countries in principle to reduce all tariffs to Zero within 10 years.  The sticking point to any past initiative such as this has been the agricultural sector, however Foreign Minister Saeiji Maehara mentioned in a forum in Washington earlier in January 2011, that the agricultural sector has lost strength and now only accounts for 1.5 % of Japans GDP.

Health, Natural, and Gourmet

These are key words according to confectioner Ezaki Glico who is aiming to develop products that will become necessities rather than items chosen on personal preference, an example is its product called Breo a tongue cleaning candy. Ezaki says that according to their surveys there is demand from women for products that easily fit into their purses and from men for business card size products.

Other hot products include calorie counters, a range of self massage items, goods that keep people warm, both clothing and food. Examples include Uniqlo’s heat tech clothing products and Ajinomoto’s supplements that contain red pepper components and Nagatanien which has marketed a range of ginger flavored foods and drinks.

JR East In-station Stores a Success

JR East have embarked on developing their retail portfolio and have had a lot of success in an otherwise subdued sector.  With station renovations and renewals in full swing across their organisation JR East have managed to lure shoppers to their retail outlets because of sheer location, people dropping in to do some shopping without having to deviate too far out of their way before heading home on the train.

Social Networking

The number of social network service registrants at the three major operators topped 65 million as at the end of September 2010 and increase of 40% over the previous year.

The three major providers are GREE Inc, DeNa Co. and Mixi Inc

Ageing Population

The population is projected to fall from 127 million to 90 million in 2055 – 40% of them over the age of 65%. This will place a heavy tax burden on workers.

I’m sure you will agree, the above does provide opportunities for companies looking to do business with Japan. We’ll be back with more soon, stay in touch.

Denis Zolin

 

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