the japanese consumer: lifestyle & purchasing trends with specific

The Japanese Consumer:

Lifestyle & Purchasing Trends with

Specific Focus on Home Products

February , 2006

1Main(e) International Consulting LLC

I t d i JIntroducing Japan

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Japan US JP/US

Population (Million) 127 299 42%

Population Density (People per Sq mile) 128 32 400%

GDP per Capita (Annual - 2005) $36,575 $43,555 84%

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Interesting Facts about JapanJ i 70% t i• Japan is 70% mountains

• Japan is made up of over 6,000 islands• The Japanese use four different writing systems• The Japanese use four different writing systems• In Japanese, the words for “wrong” and

“different” are the same• At McDonalds the Hamburgers are the same size

as in America but the drink sizes are one size smallersmaller

• Normal Japanese kitchens don’t have ovens• The bathroom is not where the toilet is found in a

J hJapanese home• You don’t wear shoes in the house, you wear

slippers4

slippers • ·There are special slippers for the toilet

Interesting Facts about Japan (cont.)Interesting Facts about Japan (cont.)• You don’t wear your slippers into a tatami

mat room• In Japan even local calls are charged by the

minute• In Japan you eat your soup with chopsticks• In Japan you eat your soup with chopsticks• In Japan they drive on the left side• In Japan, fair skin is regarded as beautifulJapa , a s s ega ded as beaut u• Japan is the world’s largest consumer of

tropical rainforest timberT k i t t t ith• Tokyo consumers come into contact with as many as 3,000 advertisements every day.

• Traditionally, women are not allowed to5

Traditionally, women are not allowed to become sushi chefs.

The Japanese Economy and the Consumer…The Bubble Years of the 80s:• The Bubble Years of the 80s:– The now 40 – 60 year old are in their prime earning

years, having 12-16 months bonus salaries per year.years, having 12 16 months bonus salaries per year.– The Japanese consumer is totally brand focus and

retail price does not matter. – Imported branded Products are 60-80% more

expensive in Japan than in the country of origin.Real Estate Prices are inflated but consumers still– Real Estate Prices are inflated but consumers still invest in homes and condominiums.

– Japan’s large companies offer Life Time Employment

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The Japanese Economy and the Consumer…e Japa ese co o y a d t e Co su e

• The 90s… the Sun sets on the Bubble Years:The Real Estate Bubble bursts; Japanese consumers– The Real Estate Bubble bursts; Japanese consumers pay mortgages on homes that are no longer worth the mortgage amount

– Annual bonuses drop to 6-8 monthly salaries– Japanese consumers become more price conscious;

the government introduces a law that limits the price g pdifferential of imported branded products to 40%.

– Home Lifestyle Stores (Marui in the Room, Sazaby etc ) emerge in the marketetc.) emerge in the market

– US Mail Order Companies (L.L.Bean, Lands End) open stores in Japan

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The Japanese Economy and the Consumer…

• The 21st Century:– Uniqlo, a discount apparel chain emerges out of nowhereUniqlo, a discount apparel chain emerges out of nowhere

and caters to the new Japanese demand for cheap clothing. – 100 Yen Stores are the fastest growing retailers in Japan.– Japan becomes the 2nd largest internet user country– Rakuten is the #1 online price research site for any product.

O l i f d t fi d j b ft d ti– Only one in four graduates finds a job after graduation.– 30% of Japan’s workforce (20 Million) are part time or

contract workerscontract workers.

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Japan’s Economyp y

Source: Economist Data Unit

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L ’ h l k JLet’s have a look at Japan

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Japan is like thisJapan is like this…

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and like this… and like this

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and like this… and like this

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How does the average Japanese Family live?

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The Image we have…g

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The most commonThe most commonReality…y

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Traditional Japanese Housep

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House Style and Floor Plan Traditional

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Ofuro ‘Bathing Area’

Older (70s/80s)

22Newer (90s and beyond)

House Style and Floor Plan Semi Traditional

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House Style and Floor Plan Contemporary

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Apartment Older (70s/early 80s)

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Apartment / Condo Newer (90s and beyond)

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Marketing Approach by Muji, targeting Young SinglesSolutions to creating an attractive Lifestyle in small spaces

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J Ki hJapanese Kitchens

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Most common Style (non-system Kitchen)

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Ovens are an add on item and are not integrated with the stove top. Many consumers have microwave ovens only. Women that like baking oftenprefer a Microwave/Convection Oven Combination due to lack of space. Ovens

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in Japan are smaller than their European counterparts and tiny compared to US.

Note the lack of countertop space as well as the high positioning of the cabinets

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Note the lack of countertop space as well as the high positioning of the cabinets.Sink is twice the size of Germany. Stainless steel countertops are also quite Common in Japanese Kitchens.

Counter Top Dishwashers

• Hit Product Category since 2004$• Average Price Yen 65,000 plus ($580)

• Panasonic has 70% Market Share• Newer Models have UV Heat Lamppfor disinfection

• Water temperature higher than US or European Dishwashers (80 Degrees C)European Dishwashers (80 Degrees C)

• Potential issues for plastic and phenolic parts due to high water temp.and UV lamp

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Japanese System Kitchens – Example of a Model by National Panasonic

O 700 000 it f thi t f kit h b i ldOn average 700,000 units of this type of kitchen are being sold annually

The newer systemkitchens tr to make morekitchens try to make moreefficient use of the limited space (especiallycountertop space)p p )Spice Container Drawers,Dishwasher (still not thatcommon in Japan) andRice Dispenser areRice Dispenser are integrated.

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The new System Kitchens offer the following updates compared to the current standard:

IH R i t d f G• IH Range instead of Gas• More sliding drawers • Integrated Dishwasher• Pull Down Shelves• Integrated Rice Dispenser• Integrated Water Ionizer• Spice Drawers instead ofRacks/ShelvesRacks/Shelves

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Unique Elements of Japanese System Kitchens

Drawer likeIntegrated dishwasher

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51Dish Rack at Sink


52Component Sliding Racks for Toaster, Coffee Maker, Rice Cooker etc.


53Easy Access Storage Bins


54Large Sink with add one items (cutting board, tray, basket)

The next big Trend forJapanese Kitchens:Japanese Kitchens:

Combined Micro a e/Con ection O enCombined Microwave/Convection Oven

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Japanese Consumer Income & Spending

Based on 2004 Data ( JETRO)

Age Distribution of Japanese HouseholdsAge Distribution of Japanese Households

Age Distribution of Japanese Households

20.0%

25.0%

JP T

otal

)

5 0%

10.0%

15.0%

seho

lds

(J

0.0%

5.0%

-24 25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-of H

ous

29 34 39 44 49 54 59 64 69

Age

57Over aging of Japanese Society.

Age & Income Distribution in Japan

58Source: Japanese Statistics Office, 2004 Data

Age & Income Distribution in Japan• Consumers between 25 and 35 do not have much disposableincome = very price conscious consumersincome very price conscious consumers

• Consumers between 40 and 60 have the high incomes;they were in their prime earning years during the bubbleeconomy and their purchasing attitude has not changedeconomy and their purchasing attitude has not changedthat much.

• The majority of 60plus consumers do not have a high income; this is influenced by Japanese women getting mucholder than Japanese men but pensions for surviving femalespouses being only a fraction of the male’s spouses pension.spouses be g o y a ac o o e a e s spouses pe s oThis age group is also very price conscious.

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How do Japanese Consumers spend their income?

Source: Japanese Statistics Office, 2004 Data

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How do Japanese Consumers spend their income?

• Housing Maintenance Costs (e.g. Utilities) are high in Japan• Communication spending is high for all age groups

As more Japanese own a car car related costs (excluding• As more Japanese own a car, car related costs (excludingfuel are high for all age groups)

• Education related expenses are high for the 40 – 55 yearsolds as their children attend high education

• Personal Travel is high for the retired population• Home Furnishing related spending is relatively lowHome Furnishing related spending is relatively low

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Japanese Retail Marketp

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Retail Sales Developmentp

• Retail Sales have decreased due to the decrease in average consumer incomeconsumer income

• As a result small scale stores have decreased and thenumber of large scale retailers has increased

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Sales Composition by Store Typep y yp

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# of Stores by Retail Category

65Note the sales decline of department stores and growth in Home Stores

Japanese Retail and Consumer Behavior

• Price sensitivity, especially among the younger customergroup has driven the growth of discount and lower pricegroup has driven the growth of discount and lower priceretailers in all categories

• 86% of Japanese own a car; frequent US style strip mallshopping centers that have emerged all over Japan over theshopping centers that have emerged all over Japan over thelast 6 years. Most of these malls contain low price, high volume retail outlets

• Sales of Home Goods in Department Stores have droppedby 2% between 1998 and 2002 (and continue to decline);these sales are shifting to the new emerging Home Goodsese sa es a e s g o e e e e g g o e GoodsStores and Home Centers in suburban and rural areas. There are more than 4,000 Home Center Stores in Japan.All home centers carry household goods in addition to DIY

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All home centers carry household goods in addition to DIYproducts

Sales by Category in Home Centers

• Up to the mid 90s this channel did not exist.Up to the mid 90s this channel did not exist. • It has taken away sales from department stores and supermarkets in many categories.

• Because these stores offer free parking they invite consumers• Because these stores offer free parking they invite consumersto especially purchase heavy items.

• Younger consumers prefer to buy durable foods as well as

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other household essentials in bulk.

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