1. Key characteristics of Japanese consumer behavior, lifestyle,
purchasing habits and service expectations in 2010
Anyone retailing in Japan will probably quickly spot specific Japanese differences
compared to western standards, the most obvious being the level of service offered to
customers. Talking about Japanese consumer behavior, lifestyle, purchasing habits and
service expectations, there is indeed vast differences with American features: Egalitarian
vs Individualistic, Formal vs Informal, In-group oriented vs out-group oriented, risk
averse vs risk taker, High context culture vs low context culture, monocultural vs
heterogeneous…all those specificities draw a specific Japanese mindset (see chart
below1) and impose specific service and marketing implications for any company willing
to retail in Japan. I will address only few of them.2
1
Japanese mindset model by Aurelie Boccardi
2
Please refer to Service in Japan, WMF publications, Kenneth Alan Grossberg for full coverage on Japanese vs American
characteristics
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2. Japanese specific taste
To begin with, Japanese consumers have never been entirely comfortable with
conspicuous consumption the way other newly rich populations often are. The Japanese
way of behaving inherited from Edo period (each class had its own code) and the
collective memories of bubble economy ending catastrophically still influence Japanese
way of buying. If we are talking about luxury, lower-end range will massively sells while
exclusive or exuberant piece would be rarely seen in public. Brand orientation is
important as it conveys a double message: social appurtenance and insurance of quality.
It is however true that current crisis as well as the new way of thinking of younger
generation (more individualistic, which can be seen in the way they tend to accept less
corporate social obligations and privilege personal or family activities) tend to challenge
this affirmation. Future will show to what extend, but in the meantime above affirmation
is however still prevailing.
Importance of quality and service
Indeed, when it comes to quality, Japanese are said to be the most demanding
customers. We should however realize that notion of quality does not exactly correspond
to western criteria and is always very linked to service (and after sales service). For
example, it is not rare to see ATM closed on Sundays for the reason that the Japanese
bank would not privilege the convenience such as would do a western mind but will
prefer making sure that an employee is present to assist on the spot if the card remains
blocked. Overstaffing in retail shops derives from the same notion: there should always
be someone to attend in case of sudden high affluence. Japanese are (were?3) willing to
pay a premium price for those extra cost as they value more product quality and view
information such as brand, service, packaging and advertising as important variable in
assessing quality and making decisions.
‘Shopping as a recreation’ current changes
It is also important to mention the importance of shopping as a recreation. This is
because alternative entertainment such as theater, musical is less affordable in Japan than
elsewhere or because ‘cocooning’ (home entertainment) option is not as desirable as in
Western Europe or USA due to the size and quality of Japanese average house.
3
Current crisis seem however to change the ‘cheap price, cheap product’ way of thinking of Japanese: Wall Mart in Japan is now
gaining large market shares with its everyday low price policy while Uniqlo is a success story
2

3. Yet, consumer habit are currently changing with a shift to lower brand or a search for
better value for a brand, which reflects current uncertainty in current Japan society.
Basically Japanese are still shopping but they do spend less or better and buy what is
necessary. Strong decline of department stores sales or ‘diversification’ of Ginza area,
where more and more fashion brands are opening clearly reflect this trend.
Consequences for retailers are:
 Acquisition is difficult, retention is even further key.
 Be imaginative in marketing. Encourage impulse purchases (limited edition, one-
off deal) urging sense if urgency of shoppers.
 Multiply sales channels: department stores used to be a favourite destination for
Japanese consumers. They are now turning towards small private brand stores
where items are merchandised in ultra-limited quantities. Even though department
stores may remain a must (it also reflects the brand image not only in Japan but
also with Chinese customers shopping in Japan), other selective channels should
be considered, included internet.
 Adjusting down: consumers are very cautious in buying and do spend more in
checking prices (even abroad), comparing and seeking advice. Value for money
(in creating an excellent shopping experience, or extra value on top of the
product) is also key. Finally, current reduction of prices of all luxury brands
reflect this current trend and seem to put an end to traditional over positioning of
luxury goods in Japan versus rest of the world.
 Consumer are still brand loyal but we can see the high success of promotion or
year-end sales (and development of outlet malls)
 Finally, there seem to be a clear tendency to value product conveying values such
as ethic, charity and green product for example
Japanese social demographics and psychographics
Finally, when speaking of Japanese consumer behavior, we should not forget about
three main characteristics of Japanese consumers
 Japanese aging population
 Bi-polarization
 Life cycle
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4. As any other developed country, Japan is an aging population, but it is aging much
faster than any other country4, due to one of the longest life expectancy and one of the
lowest birth rate. It is also important to take into account the fact that there is a clear
change in consuming between the baby boomers (now 60+5) and their children (baby
boomer junior, now 30+) who started looking for a job during the so-called “lost decade”.
Consequences for retailers are a clear switch to “silver market”: ‘age 55 and over’
segment is due to increase by 19% from 2006 to 2020, while overall population is
shrinking.
Once all middle class society has also clearly shifted to a bi-polarized society, as a
consequence of 90s deregulation and current crisis. NEET6, non regular workers7 or even
net cafe refugee hit the headline since 2004. On top of it, decreasingly homogeneous
middle-class’s needs keep moving away from status and belonging aspirations towards
some kind of authenticity and immaterialism. As an example, the category that used to be
luxury brands’willing target - office ladies ‒ has new priorities, like travelling or going to
spas. A new individualism is shifting Japanese consumers’expectations from the obvious
power of a logo to a more hidden and exclusive conception of branding. Brands are still a
symbol of tradition, quality and trustworthiness, but they are also expected to be one of
genuineness and to match each individual’s tastes.
Finally, life cycle is another key factor to consider when segmenting retailers’ offer. Two
positive phases in consuming can be distinguished: 22-26/29 year-old (from graduation to
wedding) and 50/60 year-old (kids have graduated and 2 income revenue) in contrast
with two negative phases : 26-50 year-old (single income and raising kids) and retirement
(more saving than spending due to uncertainties and low retirement wages)8
Those social demographics and psychographics components shall lead retailers to
redefine the way they segment their market and retail channels.
4
except Italy and Sweden
5
Broad definition : 10.4 million born 1946-1950
6
Not in Employment, education or training
7
see popular TV drama ‘haken no hinkaku’
8
For further coverage please refer to « Le marché des produits de marque au Japon » by Jean Barthélemy
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5. As a conclusion, there are still various segments with potential on the Japanese
market, the most obvious one being that of senior consumers. Retailing in Japan requires
a complex mix of humility and audacity in a mature market that seems to be evolving
towards more conscious consumption. Some industries, such as luxury brands, will have
to reinvent themselves in the next decade. More than ever, Japan remain a retail
laboratory and interesting experiments are to be closely monitored.
Renaud PRETET, January 2010
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Sources
Le marché des produits de marque au Japon, Jean Barthélemy (JETRO seminar, April 2006)
Service in Japan, Kenneth Alan Grossberg (WMF publications, Summer 2006)
Three Dimensional, Masaaki Kotabe and Crystal Jiang (MM April 2006)
Downsized indulgences, Kenneth Alan Grossberg (Japan Close-up July 2009)
BCG notes for ETP Japan, July 2009
Luxury goods in Japan, Mc Kinsey Asia Consumer and Retail, April 2009
Distribution system in Japan, Aurelie Boccardi, (ETP Japan promo27)
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