Post-3/11 fashion consumption is showing a rapid recovery trend. Although immediately after the earthquake, business cooled off (“Why fashion? It’s unnecessary and not urgent.”), thanks to the reopening of retail businesses in affected areas and supportive consumption in non-affected areas, the speed of recovery increased through April, May, and June. As for recovery in Tohoku, it is making little progress, due in part to the government’s arbitrariness, but business people’s minds have become more bullish as consumption is doing fine.
However, with the rapid appreciation of the yen accompanying irregularities in the global economy such as the unstable European economy and the business downturn in the US, the risk that we will see a further business slowdown is increasing. Even most of the not-so-bad numbers on retail floors are irregular, having coming from late, out-of-synch demand from March, the biggest sales month in the spring-summer season, and bridal-related and other “disaster special demand.” It is also said that there is no lack of shelter-dwelling survivors who are spending extravagantly in order to forget their troubles.
According to Commercial Sales Statistics (preliminary report) by the Ministry of Economy, Trade and Industry (METI), from March, the retail industry sales totals that had been “beneath the surface” went up 1.1% in June to finally make an above-water showing. “Fabrics, clothes, and personal items” showed particularly high growth at +4.1%. President Osamu Shigematsu of United Arrows LTD., which achieved increased revenues and profits in the first quarter (April through June), believes that a portion of the money that went unused for travel and eating out due to the effects of the earthquake was directed toward fashion consumption.
Demand for high-priced products is even coming back at department stores in the disaster area of Tohoku. Sendai’s Fujisaki Department Store saw increases of 20% in June and 23% in July. Rival Sendai-Mitsukoshi had increases of 16% in June, 9% in July, and 13% through the 7th of August.
The survey on bankruptcy trends announced in August by Teikoku Databank (TDB), Japan’s largest corporate credit research company, stated that retailer bankruptcies had decreased by two digits from January through July, partly due to special demand under the Cool Biz energy-saving campaign aimed at addressing power-saving in connection with the nuclear plant accident.
In the Survey on Fashion Business Economic Conditions and Outlook, carried out by The Senken every quarter, 33.1% of the 115 companies responding felt that fashion consumption would move toward recovery from July through September. Since 36% of companies had already stated that fashion consumption had recovered in the immediately preceding quarter, this shows that at the present time 70% of companies have a positive outlook regarding fashion consumption (either “recovered” or “on the way to recovery”). This may appear surprising to someone looking at it from overseas, but the consumption market is not hurting as much as previously thought.
The concerns are over the impact exerted by the increasing burden on citizens from now on that will accompany the unstable global economy and the earthquake disaster recovery.
With the developments in the Euro Zone, where there is simmering unease over financial crises in several countries; the American economy, which is clearly in economic slowdown at this point in time; and China, which is frantically trying to eliminate inflation, the world economy is clearly in a state of modulation. Risk-averse money has headed to the currency of Japan, the country that has held its status as the world’s No. 1 creditor nation for 20 consecutive years, and is pushing up the value of the yen above its actual worth. A high-yen recession is starting to become a reality.
The apparel import penetration ratio has already reached 95%, and domestic textile-related manufacturers are taking a beating. TDB’s analysis revealed that the number of bankruptcies in the manufacturing industry recorded an increase from January through July due partly to the yen’s hovering at high levels. They also believe there is a possibility that the great earthquake disaster further spurred this development. The situations of the retail and manufacturing industries are drastically different.
Put dryly, production output within the Tohoku region is a mere 6%, with figures for the retail market even lower. In contrast, there are worries that, should there be increases on the citizens’ burden, such as tax increases associated with the Tohoku recovery, there would be immediately adverse effects on consumption, which had clearly been in recovery mode from the fall of last year.
Even as the problem of the nuclear accident remains with no end in sight, the panic immediately following the earthquake has completely subsided, and fashion consumption is gradually in the process of returning to its powerful pre-3.11 form. This is the shape of last fall’s business, which had significantly taken back the helm of product planning; from the “quick, cheap, and good-tasting” fast-fashion themes it had been bombarded with and then went along with, to “value-conscious” themes.
Furthermore, now after the earthquake, much of business is in the process of returning to normal conditions, not only in product planning, but also in the form of re-examination of company structure and speeding up the further promotion of business transformation. We will need to pay attention to what happens in this fall’s trade wars, which have already started.