March 2, 2009
Amidst the Gloom, Some Rays of Light
By Debbie Howard
Everywhere we turn these days, there seems to be some bit of bad
news. But not all companies are suffering, and in fact, there are
some interesting “winners” emerging in these challenging times.
On the product side, much of what is selling is food-related –
driven by consumers’ need to cut daily food expenses by eating at
home more (or if working, at their desks!), and eating out at lowerpriced restaurants and fast food outlets.
For example, both House Foods curry and Toyo Suisan’s noodle
products are selling well for home consumption, while Ezaki Glico’s
self-pay snack centers (called “Office Glico”) has become a growing
new channel.
And McDonald’s seems to be doing just fine . . . with reported sales
having grown 17% for the year ended December 2008, and 3% yearon-year in January.
Convenience store operators Seven &I Holdings and Lawson – and
supermarket operator Maruetsu – also showed gains recently, again
largely based on the fact that consumers are buying more lunch
boxes (bento) and other take-out foods for at-home and at-work
consumption.
One food area that has also experienced an uplift is that of highend sweets. It seems that consumers are willing to pay more for
“small pleasures” just now. Favorable sales can be seen for luxury
sweets such as Lotte’s Bacchus Bar (twice the price of its Ghana Milk
Chocolate), and in department store bakery goods.
In non-food areas, auto insurance available online at 40% lower
than via other channels is doing well. And movies and video games
seem to be moving, as do private brands of a variety of product
categories.
On the tourism front, higher-end seats and options on domestic tour
buses, trains and ships are selling well, even though the number of
domestic tourists is down overall, again pointing up a trend for
consumers to “trade up” for the sake of having a small luxury, as
with higher-end sweets. And business hotels that are slightly
upscale and larger than average are providing a nice alternative to
those who might otherwise stay at pricier hotels – and those who
would like something a notch up from old-style business hotels.
Even in the retailing sector, where many players are suffering, there
are some very bright spots. Apparel retailer Uniqlo, for example,
experienced its third consecutive month of year-on-year increases in
January, with store traffic improving by 6%. The company
reportedly has plans to open larger new stores, both in Japan and
abroad.
In the normally “high-end only” Ginza, one can see the advent of
mid-priced marketers such as new market entrant H&M from
Europe, as well as market veteran Uniqlo. Near the Ginza (Chuo
Dori and JR Yurakucho Station), several new mid-priced shopping
centers offer casual clothes and other products from shops such as
Tokyu Hands, and they are attracting notable traffic.
In addition to selected mid-priced retailers and convenience stores,
online sales are also doing well as a distribution channel. Rakuten,
long known as Japan’s leading online retailer, has experienced brisk
sales during the downturn through its virtual online mall – for
everything from seasonings for home cooking, boxed lunches,
women’s apparel, PCs and home electronics.
I would venture to say that Japanese consumers, “hardened” by the
long-term economic doldrums they experienced from the early 90s to
mid-2000s, are probably in better psychological shape than their
Western counterparts in this challenging economic situation, and are
gearing down their lifestyles with relative grace.