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National Spending Patterns Change with Lifestyles

October 7, 1997

People are spending more money on a wider range of goods and activities. (Photo: Kyodo)

Household spending, a determinant of individual consumption and savings, is undergoing structural change in Japan. More people are shopping round the clock, single women in their 30s have become a major market force, and senior citizens have begun to attract notice for their deep pockets. The underlying factors seem to be diversification of lifestyles as family structures and employment practices evolve. These changes in the pattern of household spending are having a major impact on production and consumption, the pillars of the economy--something the retail sector cannot ignore.

A "New Black" Market
The traditional idea that we live by day and rest by night is no longer valid. With more purses and wallets being opened in the dark of the night, we are fast approaching a time when consumer spending is a 24-hour affair. At a Tokyo gentleman's outfitters that started staying open round the clock in 1992, one third of annual sales are to customers who come in between 10:00 P.M. and the early morning. With each customer spending an average of 40,000-60,000 yen (330 to 500 dollars at 120 yen to the dollar) on a purchase, compared with around 30,000 yen (250 dollars) in the day, it has expanded its catchment area to outlying prefectures. Many customers are office workers on their way home. "I don't want to waste a day off buying work gear," says one, "so I do most of this kind of shopping at night on a weekday."

Instrumental in creating this late-night shopping trend were the 24-hour convenience stores. At one big chain, nearly 20% of daily customers come in between 11:00 P.M. and 7:00 A.M. The number of payments of electricity, gas, and other utility bills made after banking hours has jumped 2.4 times since last year to 4.3 million a month.

According to a 1996 think tank survey, 15.1% of men and 2.9% of women were out and about at midnight on the average Saturday night. With more single people worrying less about when they get home, retailers have become interested in the night-owl crowd whose spending habits get freer after 9:00 P.M. Companies are trying to create new markets: One example is major travel agencies with plans for discount tours that start and arrive at their destination in the middle of the night.

Costs of Communication
This has become the age of the portable communicator. One person in five owns a mobile phone, personal handyphone system (PHS) terminal, pager, or similar device. With more people using the Internet and e-mail on a daily basis, the rapid increase in the proportion of household spending devoted to information technology and communications has begun to raise eyebrows. According to a survey by the Management and Coordination Agency, the average household in 1996 spent 123,000 yen (1,025 dollars) on information technology and communications, including telephone bills and purchases of communications devices and personal computers, an increase of 8.5%--even though overall consumer spending has declined slightly in each of the last three years. Telephone bills alone rose 8.8% from 1995 to 74,000 yen (620 dollars).

We tend think of digerati as being young, but now they are common among those of middle and advanced age. One Internet magazine found in a survey that around 70% of its readers were 30 or older, and had splashed out at least 100,000 yen (830 dollars) on communications peripherals over the previous six months. In many cases, people are investing in their own future: Businessmen in their 50s, for example, are keen to avoid being left behind as their companies get wired.

Looking to Women's Wallets
For real estate agents, single women are now a catch--not as wives, but as customers. One big player has sold all of its roughly 300 upscale apartments for singles in the center of Tokyo, each costing around 31 million yen (260,000 dollars). According to a survey by a financial institution, the value of residential real estate and lots held by households comprising or headed by single women in their 30s was an average 8.8 million yen (73,000 dollars) in 1994, almost double the level five years earlier. Women have overtaken men, whose real estate booty averaged 7.9 million yen (66,000 dollars), an increase of only 1.4 times over the same period.

According to the Ministry of Labor, in 1996 the average monthly income of women from 30 to 34 was 240,000 yen (2,000 dollars), while for women from 35 to 39 it was 247,000 yen (2,100 dollars). Both sums were about 30% less than what men got, but they showed growth of at least 40% in the 10 years up to 1996. The corresponding growth rate for men was in the 20-29% range. This boom in women's financial power has created a stir across the economy. A department store in the fashionable Shinjuku district of Tokyo that set up a special section for clothing for women in their 30s enjoyed some 20% growth in sales over last year. The section attributes its success to the purchasing habits of women who were in their 20s during the bubble economy period and developed a taste for overseas travel and brand-name goods.

Free-Spending Seniors
At the other end of the demographic scale, the aged are beginning to be seen as a linchpin of Japan's evolving consumer-oriented society. According to a 1996 survey by the Central Council for Savings Information, the number of people in their 60s who say they intend to spend all their accumulated assets "to be able to enjoy old age" has risen 1.4 points from 1993 to 22.0%. A peep into the housekeeping books of retired people of 60 and over shows that savings stand at 23.8 million yen (198,000 dollars) per household and their annual income at 4.5 million yen (37,500 dollars). In terms of freely disposable assets, a household consisting of senior citizens without education, mortgage, or other expenses to pay is richer than a young household.

A major target of their spending money is domestic and overseas travel. The number of people of 60 or over heading abroad in 1995 was 1.75 million, a whopping 70% more than in 1991. Companies are beginning to gear themselves to the needs of the members of this well-endowed demographic group, who were once regarded as the most vulnerable members of society. Particularly striking is the way some companies are adapting their strategies to the baby-boomers born just after World War II, who will be the dominant force in the "gray society" just around the corner. Typifying this reorientation is one top car maker, whose marketing department predicts that the roughly 30% share of demand accounted for by people of 50 or over will become much bigger, that is focusing on postwar baby-boomers. The companies that succeed in riding the gray wave will probably be at the forefront of the coming consumer-led society.

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Trends in Japan Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.
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