Posted on: Monday, December 30, 2002
Job fear freezing Japanese consumer spending
By Lily Nonomiya and Yoshiko Matsushita
Bloomberg News Service
TOKYO — Sachiko Tanaka is joining the throngs filling the Ginza's most glitzy department stores, as she does every December. This year, though, the construction company clerk is out to ogle, not buy.
"My bonus was halved this year," the 32 year-old said, gazing at a jewelry display at Mitsukoshi Ltd.'s showcase store in central Tokyo. "I don't have an extra yen to spend just because it's the holiday season. I'm even worried about keeping my job."
Tanaka and many like her are increasingly reluctant to open their wallets and purses as they fret about job and wage security, holding back a recovery in the world's second-biggest economy.
"The outlook on consumer spending is pretty grim," said Yasukazu Shimizu, an economist at Aozora Bank Ltd. "Without a rebound in consumer spending, it's not easy to hope for a sustained recovery in the economy, either."
The tale of scrimping shoppers is much the same in Fukuoka, the biggest city on the western isle of Kyushu. For Yoshiko Mihara, the cancellation of her year-end bonus has left the 25- year-old secretary shopping only for essentials.
"I just can't spend on things I want to buy," Mihara said. "I really have to think about where I put my money these days."
Year-end bonuses can amount to two or three months' salary for many workers. This year, the December bonus will fall an average of 3.1 percent, to about $6,460, according to a Japan Business Federation survey of 219 companies.
In Tokyo, the story has been much the same all year. Department store sales have fallen every month this year as consumers worry about job and salary cuts.
The four largest chains nationwide — Takashimaya Co., Mitsukoshi, Daimaru Inc., and Isetan Co. — did manage to buck the trend in November as early discounts on some gifts lured shoppers.
But that spurt will probably dent takings in December.
Sales at Takashimaya in the first half of the month were down about 5 percent from last year, said company spokesman Kazuhiro Ozono. Revenue at rival Isetan's main store, in Tokyo's Shinjuku district, was about 4 percent lower, said spokeswoman Mikako Uchida.
The Topix Retail Index, which tracks the stock performance of 110 retailers, is headed for its third straight annual drop. The index reached a 16-year low Nov. 19, and has lost a quarter of its value this year, against a 20 percent decline in the broader Topix Index.
For discounters such as Can Do Co., a company that runs more than 30 outlets selling goods at 100 yen, business has never been better.
"People now come to 100-yen shops for everyday necessities before going to supermarkets and other retailers," said Norio Kosugiyama, a Can Do spokesman. Visitors to Can Do stores will increase by about a third in 2002, he said.
But that hasn't hurt Japan's perennial appetite for imported brands of handbags, shoes and other pricey goods. Japan is the second-biggest market after the United States for jewelry maker Tiffany & Co., contributing about 28 percent of sales for the year ended January 2002, said spokeswoman Tomoko Nakayama.
"Sales of luxury watches, such as Cartier and Dior, are doing well," said Isetan's Uchida. "We're seeing that luxury brands for women's clothing and accessories, such as Louis Vuitton and Hermes, are doing better than last year," echoes Takahiro Imazato, a Mitsukoshi spokesman. "People who have money are spending it on high-quality goods."
Daiei Inc., Japan's No. 3 retailer, expects full-year sales to fall 14 percent from the previous year, to 2.14 trillion yen.
Things may get worse. The nation's budget, approved by the government of Prime Minister Junichiro Koizumi yesterday, predicts unemployment will rise to a record 5.6 percent as economic growth sags to 0.6 percent in the year starting April 1, 2003, from 0.9 percent in the current year.
For Tanaka, the Ginza window shopper, Koizumi's decision to slash public works spending by almost 4 percent and his push to have banks shed bad loans only adds to her gloom.
The government's "plan to speed up the bad debt writeoffs will affect my company for sure," Tanaka said. "I used to spend a lot more when times were better and I was younger, but not these days."
