Raw Japan

Wanted: Japan’s next fun fad

I’ve always seen Japan as a nation of trend lovers. From Tamagotchi digital pets and “print club” photo stickers to the morning banana diet and Billy’s Boot Camp, people here seem ready to jump all over the latest fad.

But 2009 wasn’t much of a year for fun and games in the world’s second-biggest economy, according to ad agency Dentsu’s latest Hit Product Recognition survey.

With the exception of flu masks, the Top 10 in this year’s survey was dominated by low-priced retail merchandise and eco-friendly products as consumers pinched pennies and took advantage of government stimulus subsidies.

Hybrid vehicles topped the rankings while other low-emission vehicles eligible for tax breaks and subsidies placed fourth.

Inexpensive fashions ranked third while cheaper store-brand items came in at No.9, as cost-conscious shoppers sought out bargains at budget retailers such as Fast Retailing’s Uniqlo chain.

For a story and list of the top 20 click here.

Retailers do the limbo

For some of Japan’s retailers trying to jumpstart consumer spending, setting prices is like doing the limbo: How low can they go?

Japanese retailers reported mostly dismal first-half earnings results, with the industry stuck in a slump as shoppers remain reluctant to open their wallets even as the economy emerges from recession.

With no sales pick-up in sight, stores seem to have no choice but to continue their race to undercut rivals, with prices dropping for everything from cars to clothes to milk.

On the surface it sounds like a shopper’s paradise: Who wouldn’t mind paying less than 1,000 yen ($11) for a pair of jeans?

But it could also lead to a deflationary spiral in which consumers put off spending in hopes of further falls in prices.

And what’s more, these price cuts are slicing into already razor-thin profits at companies, which are then forced to pass on the pain to employees in the form of lower paychecks.

“It’s a death march,” said Junji Ueda, CEO of FamilyMart, Japan’s No. 3 convenience store chain.

Cheap treat keeps Japan sweet

What is sticky, shaped like a fish and helps Japanese people shrug off the lingering effects of the country’s worst recession since World War Two?

The economy is struggling but sales of a traditional, fish-shaped sweet snack are going along swimmingly, thanks to its low price and auspicious name.

Taiyaki, which means baked sea bream, is a pancake stuffed with a sweet bean jam and served hot and cheap in stalls all over the country.

The name helps. “Tai”, Japanese for sea bream, sounds similar to the word for happiness.

With a price tag of as little as 130 yen ($1.45), the snack, which celebrates its 100th anniversary this year, is making a lot of people happy — including those needing a job as the stalls are easy to get going. 

“Taiyaki has been around from ancient days but I still want to eat one once in a while,” Masako Kano, a 69 year-old housewife queuing outside a new store, told me. “Compared to other cakes, which normally cost around 200 yen to 300 yen, its price is attractive.”

Fancy Corporation recently opened its 45th taiyaki outlet in Kawasaki, just south of Tokyo, saying the cheap snack is as popular as ever in tough times. 

Denim deflation

James Dean smouldered in his, the Marlboro men looked rugged in theirs, and now me and hordes of other Japanese people can feel frugal in ours. Jeans — practical, durable and with just a hint of  rebelliousness — are at the centre of a price war in Japan, as struggling retailers look to lure cash-strapped customers back through their doors.

With the country slipping deeper into deflation and its jobless rate rising, shops have for some time been marking down almost everything from bags of cereal,  to laundry detergent and bicycles.

But curiously it is jeans that have emerged as a symbol of this deflationary race as major retailers roll out dirt-cheap denim in bids to undercut each other.

Fast Retailing, which operates the Uniqlo casual fashion chain, started the phenomenon in March when it said it it would start flogging jeans for 990 yen (about $11) a pair at its g.u. stores.

Back then, this was widely seen as an astoundingly cheap offer — the price was around a quarter of  some jeans sold at Uniqlo, a chain known for its competitive pricing. The 990-yen jeans drove up sales at g.u., which had suffered from little consumer recognition until that point.

And the move sparked a round of tit-for-tat discounting, that this week continued with supermarket operator Seiyu, a Japanese unit of Wal-Mart, starting to sell jeans for 850 yen. “We would like to keep our price leadership,” a Seiyu spokeswoman said.

The trend could also indicate that deflation in Japan is worse than government statistics show as this kind of price competition is not fully reflected in official figures.

Retailers do well by going cheap

Japan is back in deflation, and price falls look like gathering pace as shoppers’ bargain-hunting leads stores to cut prices further to weather the worst retail slump in decades.

Retailers large and small reported hard falls in quarterly profits last week, and the few bright spots were focused on those drawing in thrifty shoppers with their cheap but well-made goods.

Fast Retailing tops the list, as its Uniqlo stores thrive in tough times by selling T-shirts for $10 — that’s cheap here — and other clothing at similar bargain prices. The company is also seeing strong sales growth at its other basic apparel chain g.u.

g.u., the cut-rate sibling of already-cheap Uniqlo, had a low profile for years but shoppers started flooding in after it slashed prices across the board and started flogging $11 jeans and $5 T-shirts this year.

Shoe retailer ABC Mart, which also saw solid growth in its quarterly profits, said its sales of heeled sneakers jumped three-fold after it lopped almost 50 percent off the price-tag back in spring.

Even convenience stores, which had been thought to be pretty well immune to price competition, are starting to cut prices. Seven-Eleven, Japan’s largest chain, has marked down some household items like shampoo recently.