By Dominic Carter
Since 2017, CarterJMRN has published a yearly index of consumer sentiments in Japan. We have gauged the Japanese response on a range of topics including their thoughts on the United States and major brand associations. This year, the surveying of consumers coincided with the onset of the coronavirus outbreak. With this in mind, we asked survey participants to think further forward in terms of what they were likely to do rather than simply look at the current moment.
This article highlights long term trends within Japan as well as some short term feedback of what’s going on right now. Last year, and with the dawn of Reiwa, there was a sense of promise, social change, and a renewal in society.
CarterJMRN identified four megatrends within Japan society.
Dealing with dramatically less people of working age, which is leading to quite a serious labour shortage, the first mega trend is the changing world of work. We are seeing automation being deployed in greater numbers. We are also seeing an increased participation of women in the workforce. As well, there is an influx of foreign workers helping counteract the labour shortage. CarterJMRN is also keenly interested in exploring the impact of teleworking on traditional working norms.
Women Power, which is not just about women being more likely to hold down jobs, is our next mega trend. It’s actually about women having economic power, wherein women not only have the run of household finances, but can spend their own income unfettered. This is going to be a powerful trend that will play out in Japan in years to come.
The third mega trend, generational dynamics should be apparent as Japan has one of the most aged populations in the world. What is particularly interesting is the disparity of younger people in comparison. How does generational values play out? What is the scarcity value of younger people and what does that mean?
The final megatrend is internationalization as foreign influence continues to grow in Japan. Becoming more international is a very important trend for the Japanese. A prominent question is, in order for Japan to remain healthy, do working habits need to change? Between 2019 and 2020, we had a significant increase to 68 percent from fifty nine percent of people agreeing to a need for reformation.
Just like in America, the Japanese economy, as of late, has been quite strong, where we had a 2.4 percent unemployment rate in January of this year.
Impacts of the Coronavirus Pandemic
It’s definitely a seller’s market. In Japan, there has been a strong degree of optimism around the Olympics. Fifty five percent of surveyed participants are looking forward to a positive impact the Olympics will bring to the Japanese economy.
But unfortunately, in Japan, disaster always seems like it’s around the corner. As a matter of fact, we can say disasters are kind of part of life in Japan. It’s kind of an interesting mindset that Japanese people tend to expect things to go wrong in some ways.
Seventy percent of people in our survey basically agree that disaster is part of life in Japan. I’m sure that would be a much lower number if we were to ask people in America if disaster is a regular part of life.
As a result, we’re likely to see a reordering of needs in many consumer categories as we move out of the crisis. For example, depending on how bad things get, and how personal priorities shift because of this, the luxury category may not recover as quickly as expected. People may not really want to spend two hundred thousand yen on a handbag. Their wellness may be much more important to them than buying these sorts of things – and that will have some implications for a lot of marketing campaigns.
In mid-March, we took a snapshot of the way people were responding to the crisis as travelers were beginning to arrive back from Wuhan and schools were being closed – which was somewhat of a shock. The Olympics would be postponed pretty much the following week. Now, Prime Minister Shinzo Abe has declared a state of emergency in most major cities in Japan.
So we looked at the economic downturn, the restrictions on their activities, transportation, job security, availability, the daily necessities, the well-being of their family and food and water safety. In real time, the economic downturn was the key concern discovered at fifty six percent surveyed to be on Japanese consumers’ minds.
Of those in that percentage, twice as many people positioned the economic downturn over than their own job security. Interestingly, personal safety is not a major concern as sensible precautions are being taken and that they are viewed as being proportionate to what the situation is.
Asking whether the Japanese government is giving consumers confidence to maintain a normal lifestyle and spending habits, we found that 46 percent disagree that the government has capacity to support this theory. So we certainly hope that governments do what they can to mitigate the situation.
So how is the US perceived through the crisis?
Sentiment about America has improved incrementally year on year.
Perceptions of President Trump are becoming more positive or less negative on an annual basis. Since the time we have been tracking his presidency, 2020 scored President Trump his most positive approval rating with the Japanese. A very interesting point is that younger people are more positive about Trump than other demographics. Younger people in Japan are more conservative than you’d expect.
An insightful dynamic of the way young people think and behave in terms of perceptions of U.S. brands is consumer expectations of those brands and how they associate their own popularity with them. Some of these brands are Apple, Google, Amazon, and Microsoft for tech companies. Coke and McDonald’s from the food and beverage industry. As well as some fashion brands such as Coach, Ralph Lauren and Tiffany. These are all powerful brands with presence and influence in Japan.
In terms of asking people where their preferred destinations for international travel was, the US has been doing very well year by year compared to other markets. The US is actually doing well as a perceived safe destination.
Japan’s seniors, who are pretty much health obsessed, provide a long term boost to wellness as a trend to watch. Japanese consumers look at culture and design as a commodity in a sense that they exist to make life worth living in a way. They intersect to establish interests and status and create content for brands that will truly connect to an individual’s needs and desires. American brands and culture are very creative and continuously have a lot to offer to us in Japan.
The established traditional cliches you may know about, what Japanese people like, are not necessarily true anymore. Therein lies the great opportunities to make products and services to meet those needs. Especially when you have a business in the US that represents the best practice in your own market. This is likely to be very well-regarded in Japan.
If we look at the world of work, in areas such as recruitment tech, it has become extremely hard to hire people in Japan due to competitive rivalry of pre-existing firms. The varying solutions for hiring people has become commonplace for example, shared work spaces such as the WeWork building just around the corner from our CarterJMRN offices in Tokyo, or teleworking and other services/ platforms that support off-site employment.
The premium categories have flourished as women have more of their own money to spend. They are going to want to spend it on things that make them feel good and express themselves. In this way, we see diversity as something that Japan needs to address and be adopting. To be clear, in Japan, diversity generally relates to the role of women in the workplace.
Transparency and genuine engagement will be a must to maintain trust moving forward. There’s a structural need for more transparency in Japan – and it’s a longstanding goal. But as we go through this crisis, who knows what will unfold from here? There is going to be a real focus on who we can trust.
Who should I listen to? No one does business with anyone in Japan without trusting that person or trusting a brand. Trust is absolutely the first point. So I think there’s going to be more focus on that. And to cut a long story short. US businesses that solve problems will do especially well.
Representative Director & CEO
A double major graduate in marketing and Japanese studies from the University of New South Wales, Dominic came to Japan from Australia in the late 90’s to launch and develop the Japan business of a major global research company. His career highlights include being local managing director for a top ten global research agency, founding his own business in Japan and helping some of the largest brands in the world use research to influence real improvements in their Japanese business performance.