Top Picks || Arts & Entertainment || Business & Economy || Education & Society || Science & Technology || Sports & Fashion || Search || Back Numbers SUMMER-GIFT BLUES: Scandals, Recession Hurt Chugen Market September 8, 1998 Retailers hope to see more summer-gift customers like these. (Jiji Press) Among other things, summer in Japan is the season for presenting chugen gifts to clients and others to express your thanks for what they have done for you. Chugen usually provide a business bonanza for department stores--along with the seibo end-of-year gift-giving season--but this year was different. With many companies deciding to abolish their gift-giving habits and with personal consumption remaining sluggish, department stores and other retailers have had to stage a fierce sales war to win over customers, for example by offering free delivery and by suggesting new gift ideas. Despite these efforts, sales were invariably lower than last year's level. Double Blow Chugen and seibo originate in Buddhist ritual and have been part of Japan's culture of gift exchange since the Edo period (1603 to 1868). As an expression of gratitude to superiors, clients, and others for their guidance, patronage, or kindness, the chugen practice neatly matches Japan's corporate culture. As a result, a vast market has been created. Chugen gifts are usually large, lavishly packaged boxes of everyday items for consumption or practical use, either delivered or carried by hand to the recipient. Among the favorites are beer, coffee, dried somen noodles, and soap. A single gift package from a department store or similar retailer will normally cost from 4,000 to 5,000 yen (30.00 to 37.00 U.S. dollars at 135 yen to the dollar). Sales were considerably lower this year, as corporations rushed to ban gift exchanging owing to a recent spate of scandals. Since 1997 there have been revelations of lavish entertainment for senior Finance Ministry and Bank of Japan officials and of payoffs to corporate extortionists. This delivered a body blow to department stores' chugen business, which is about 40% dependent on corporate demand. But the pounding intensified when personal spending likewise cooled due to the prolonged economic slowdown. The average number of chugen packages bought per customer at one department store fell this year to 6.9 from 7.2 in 1997, showing that gifts were given to fewer people. Free Delivery Anticipating the thinning of corporate demand, department stores focused their sales campaigns on the individual customer. A major Tokyo department store that had begun offering free delivery for a limited range of items during the 1997 seibo season greatly expanded the range of products this year. This prompted its rivals to either do likewise or offer a flat delivery rate for any domestic destination. Mindful of individual customers' heightened cost-sensitivity, retailers also introduced monetary incentives, such as participation in a draw for 50,000 yen (370 dollars) worth of gift certificates with any chugen purchase of over 10,000 yen (74 dollars), and 30% price reductions from the start of the chugen season. Practical-use gifts remained popular, but many stores also augmented the traditional product lineup with items that have become popular among discriminating customers, such as wines and organic vegetables and eggs. After the chugen season, department stores usually sell off leftover items by removing the large packaging and offering them in smaller lots at bargain prices. The stores are now hoping this sort of clearance sale will help them make up some lost ground, even as they look forward expectantly to this year's seibo season. Back to Main Index 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. Ministry of Foreign Affairs   Japan Information Network