Raw Japan

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.

Top-dollar dolls know no recession

I wrote about Japan’s traditional doll industry for the Reuters Luxury Summit this week, and I was surprised to find it’s not feeling much impact from the country’s deepest recession in decades – not bad, considering an average doll set can set you back 200,000 yen ($2,000).

One shop owner I spoke to even said sales had edged up in the all-important shopping season before the Doll Festival on March 3. Sales of some dolls have certainly dropped as consumers have gradually tightened their grip on their purses , but shop owners told me they’d seen solid sales this year of their “hina” dolls – the mainstay of their business.

These ornamental dolls in ancient court attire represent the imperial couple and their entourage, dressed to the nines on a staircase-like stage complete with mini-furniture, a carriage and other items. Families with daughters put the whole cast on display around the time of the festival.

Traditionally, the mother’s parents buy dolls for the first girl in the family, and while popular ones cost about 200,000 yen per set, some go for as much as 5 million yen. 

But it’s not just doting affection that leads families to splash out this much – shop owners said vanity is a key factor as many grandparents don’t want to be seen skimping on the doll duties by their families, in-laws and neighbours.

The pressure to show off is strong in rural areas, where tradition is more strictly followed, and in tight-knit communities everyone knows which family has the most sumptuous dolls in the house.