Cashmere sweaters at Uniqlo. Gourmet coffee and ice cream at 7-Eleven. These incongruously premium offerings by two of Japan’s biggest retailers are part of a strategy to lift profit margins by enticing thrifty shoppers to splurge on little luxuries.
Plans by Uniqlo brand owner Fast Retailing and 7-Eleven operator Seven & I to boost spending per customer are being challenged as Prime Minister Shinzo Abe’s aggressive economic stimulus has done little to loosen the purse strings of Japan’s traditionally frugal consumers.
While Abe’s policies have lifted the stock market and spurred spending on luxury goods, overall retail sales have grown only tepidly since he was elected last year.
A sales tax increase could also dent consumer spending once it takes effect in April. After luring customers through discounts and promotions, Fast Retailing and Seven & I hope to counter a further slowdown in spending through their value-for-money offerings.
“When it comes to day-to-day spending, people are still in penny-pinching mode. We can’t see any impact from Abenomics,” Seven and I president Noritoshi Murata said after the company reported a record operating profit for the first half of this year.
“Japan has a lot of people with money to spend,” Murata said. “If we make things of quality, of value, and at a reasonable price, we can breathe some life into the market.”