Why now is a great time to focus on Japan to expand your business?

-Time to focus on Japan – how the COVID-19 pandemic affected the retail industry

Japan detected the first cluster of coronavirus patients outside China after a cruise ship docked in Japan in February 2020. Thanks to strong containment and mitigation measures, they managed to keep the infection rate low so that the country has never had to go into lockdown. The brick-and-mortar stores, unlike many other parts of the world, have remained open, and the bars and restaurants have only had reduced hours in the evening.

As a result, the Japanese economy has not been affected as much as Western countries. In addition, the unemployment rate is still low compared to the US, UK and Europe, in particular,  and the under 25-year-old market, which has a high consumption rate, and the youth market are still thriving in Japan.

Japan 4.7% youth unemployment (15 to 24 year-olds; August 2020, data source; stat.go.jp)

U.K 14.7% youth unemployment (15 to 24 year-olds; May 2020, data source: data.oecd.org)

Since the WFH and stay home campaigns were introduced in the first wave, footfall fell in department stores, shopping malls, train station malls and independent stores. After the government lifted the campaign in May 2020, the whole nation apart from elderly people started their normal life, including socialising and traveling domestically. When the second wave hit in February 2021 and the government encouraged people to stay home, footfall in busy areas didn’t fall as much as the first wave and it has started to increase again after the lifting of the state of emergency in the metropolitan areas in March 2021.

-The retail sectors affected by the pandemic

The most dramatic impact has been in the cosmetics sector.  Lipsticks to be precise,  due to people wearing masks indoors as well as outdoors.  Because of this issue, the mask companies raced to produce a range of innovative masks which are designed not to touch the lips so that women don’t have to worry about smudging their lipstick while socialising. 

Meanwhile, the fashion industry had less demand while the movement of people was restricted.

-The retail sectors increasing sales in the pandemic

Despite the overall decrease of consumption in fashion, the sales in high-end jewellery increased. As many people refrained from eating out and invested in improving their lifestyle during 2020, premium food, home accessories, computing, wellness and skincare products are the top retail sectors increasing sales.

-Focus on Japan –  consumers

According to a report from JapanConsuming, Japanese consumers are wealthier than other nations. We have covered this topic in another post, but in summary, Japanese consumers have disposable income and are waiting to spend their money. Now that international travel is banned, people are missing the feeling of excitement in encountering foreign products more than ever. 

Why Japanese people are getting wealthier and how businesses can leverage

-Global shift to focus to the strongest market

The coronavirus pandemic has accelerated a rethink to shift focus to the strongest markets. Europe and the US are among the worst-hit economies, so we can anticipate significant variation in the recovery time between geographies. This is confirmed by a report, Deloitte Insights Dec 2020 on Economic outlook 2021, which states that “Japan’s relatively low infection rates and ample government support should foster a relatively strong recovery.” And according to an analysis by McKinsey and Business of fashion, “A brighter future lies ahead for companies that are heavily indexed in digital channels and the Asia-Pacific region.” 

In line with regional recovery rates so far, Japan looks safe, stable and strong with high levels of consistent consumption. Strategic plans should reflect better-performing geographies, with the localised roadmap so that companies can respond quickly to opportunities when and where they arise so now is a great time to focus on the Japanese market.