Standing Tall: Japana's Resilient Luxury Market
McKinsey Consumer and Shopper Insights
June 2012
Standing Tall: Japan’s Resilient Luxury Market
Brian Salsberg Naomi Yamakawa
Photograph: Abbie Chessler
2
In the immediate aftermath of the tsunami, earthquake and nuclear disaster that hit Japan last year, killing 19,000 people and battering the nation’s already shaky confidence, it was hardly surprising that people didn’t feel like shopping. At the time, the conventional wisdom was that such restraint was likely to last. People would still have to shop for essentials, of course, but the market for things like high-fashion apparel and luxury handbags was surely bound to suffer long-term damage.
Such thinking made eminent sense – except it didn’t happen. Fifteen months on, today’s luxury market looks a lot like the luxury market that existed the day before the Great East Japan Earthquake, much as we anticipated in last year’s report.1 Our findings at the time were necessarily tentative, coming as they did less than three months after the disasters. Today, we can assert this with more confidence. When asked if the disasters had changed their attitudes, for example, fewer than 20 percent of the 1,450 Japanese consumers we interviewed were less interested in shopping for luxury goods than they were before the disasters (Exhibit 1). The Cabinet Office’s Consumer Confidence Survey report from May 15, 2012, shows that consumer confidence has risen strongly since March 2011 (to 40.3) and is back to up to levels last seen in 2010.2 Moreover, in a small but telling sample, when we asked 20 Japan-based luxury company CEOs about their sales outlook, every single one said 2012 would be better than 2011, and almost three-quarters said that the disasters of 2011 had no effect (63 percent) or, counter-intuitively, had a positive effect (10 percent) on company performance. Seventy percent of CEOs
Exhibit 1:
A vast majority of consumers still have strong interest in luxury
Which best describes your own
June 2012
Standing Tall: Japan’s Resilient Luxury Market
Brian Salsberg Naomi Yamakawa
Photograph: Abbie Chessler
2
In the immediate aftermath of the tsunami, earthquake and nuclear disaster that hit Japan last year, killing 19,000 people and battering the nation’s already shaky confidence, it was hardly surprising that people didn’t feel like shopping. At the time, the conventional wisdom was that such restraint was likely to last. People would still have to shop for essentials, of course, but the market for things like high-fashion apparel and luxury handbags was surely bound to suffer long-term damage.
Such thinking made eminent sense – except it didn’t happen. Fifteen months on, today’s luxury market looks a lot like the luxury market that existed the day before the Great East Japan Earthquake, much as we anticipated in last year’s report.1 Our findings at the time were necessarily tentative, coming as they did less than three months after the disasters. Today, we can assert this with more confidence. When asked if the disasters had changed their attitudes, for example, fewer than 20 percent of the 1,450 Japanese consumers we interviewed were less interested in shopping for luxury goods than they were before the disasters (Exhibit 1). The Cabinet Office’s Consumer Confidence Survey report from May 15, 2012, shows that consumer confidence has risen strongly since March 2011 (to 40.3) and is back to up to levels last seen in 2010.2 Moreover, in a small but telling sample, when we asked 20 Japan-based luxury company CEOs about their sales outlook, every single one said 2012 would be better than 2011, and almost three-quarters said that the disasters of 2011 had no effect (63 percent) or, counter-intuitively, had a positive effect (10 percent) on company performance. Seventy percent of CEOs
Exhibit 1:
A vast majority of consumers still have strong interest in luxury
Which best describes your own