Tuesday, April 19, 2011

Rebuilding Japan: Self restraint threatens recovery

Post earthquake, luxury goods are out of fashion, and hurting the economy.

At the Mitsukoshi department store in Ginza, the counter girls have nothing to do. Far outnumbering their customers, they have been reduced to spending their days rearranging their displays of designer handbags.

It has become deeply unfashionable to be fashionable in post-earthquake Japan. Instead, a new sense of "jishuku" or self-restraint, has taken hold. Consumers have decided it is improper to splash out on luxury goods when so many Japanese are suffering.

For Ginza, Tokyo's equivalent of Bond Street or New York's Fifth Avenue, and for luxury brands around the world, the sudden parsimony of Japanese shoppers spells disaster.

Last year, Japan was responsible for 24pc of the world's luxury sales, compared with 20pc for the United States and 22pc for the whole of Europe combined, according to Deutsche Bank. Tiffany, the jewellers, depended on Japan for 18pc of its revenues in 2010.

"[Spending money on luxury goods] was a substitute for a low standard of living in other areas," said Roy Larke, a professor of international marketing and Japanese business at Tokyo's Rikkyo university. "Japan is a rich country but a lot of people still live in small apartments and lack the other measures of a high life." (read more)