US Direct Marketers Are Cautious but Optimistic

TOKYO – The yen has bounced back to 115 levels, a welcome relief for American catalogs struggling to maintain business in Japan.

A weak yen has a direct effect on catalogs priced in dollars. Like many American catalogers, Hanna Andersson, Portland, OR, a publisher of children’s apparel catalogs, saw business suffer when the yen was at 145 during the third quarter of last year.

Evan Denhart, Hanna Andersson’s international marketing manager, said the yen’s 115 range “has helped lead to an early optimistic outlook for 1999.” He cautions, though, that prospecting has become “harder than before.”

Although it is on a more conservative course this year, the firm is committed to continuing its Japanese language catalog and Tokyo-based call center.

According to Rom Lee, general manager for REI Japan, the slow Japanese economy made it more affordable for the company to open its first Japanese store. The Seattle-based retailer and cataloger of outdoor apparel and accessories will open its store in April of 2000.

“As an outsider, we can bring a different sales and service concept to Japan,” Lee said. “If we can bring the same spirit, culture, and lifestyle approach to Japan as we have in the US, and tweak it to fit Japanese culture, we think we will be very successful.”

Japanese Continue to Save, Not Spend

Japanese consumers are still in the “save” mode, worried about their financial future. A survey showed that almost half of respondents spent less on the New Year holiday, Japan’s most important holiday, than last year.

Slow spending and changing times are two main reasons why Tokyu Department Stores, Japan’s oldest department store, closed its Nihombashi store after 337 years. Today, Nihombashi is more the “Wall Street” of Tokyo, and fewer shoppers combined with the slow economy marked its end.

What is a going-out-of-business-sale like for a 337-year-old store? Imagine every woman in Tokyo in the store at the same time, rushing from floor to floor to find the best bargains. Long walls lined with cash registers couldn’t keep up with lines of customers 15 to 20 deep that overflowed into aisles packed with yet more merchandise.

Every item had a special red “sale” tag that showed the sale price but not the regular price. Clerks indicated that merchandise was 50-75% off when I inquired about specific items. So why was the regular price not printed? I am told that in Japan, such “high-pressure” sales tactics are frowned upon.

As I left the store for the last time, I spied several weary husbands or boyfriends taking refuge on the steps of a back stairwell. They should only hope that the remaining department stores in Nihombashi-Takashimaya and Mitsukoshi, will ride out this economic downturn, lest they, too, are forced into a three-century sale.

Japan’s Leading Catalogs

The latest sales figures for Japan’s catalog firms were recently released. Japanese direct marketers think the most significant shift is that Senshukai, once the number three catalog in Japan, is now number one, surpassing Cecille, which held the first spot for many years. The seven largest Japanese catalogs and their revenue (in dollars) are:

Senshukai $1.59 billion

Cecille $1.58 billion

Nissen $1.17 billion

Fujisankei $602 million

Felissimo $575 million

Mutoh $549 million

Belluna $487 million

Time is Money

A few days ago, I was with several Americans from a US direct marketing firm who commented on how people in Tokyo walk so fast. Actually, Tokyoites are slow compared to their counterparts in Osaka.

According to a recent survey, people in Osaka walk an average of 1.60 meters per second, making them the fastest walkers in the world. Tokyoites only walk at 1.56 meters per second, putting them in second place.

If you do business in Osaka, you will notice the people have a completely different business style from their Tokyo cousins, based in large part on the notion that time is not to be wasted. Meetings are shorter, negotiations more direct, and tactics more aggressive.

So when coming to Japan on business, and especially if you’re going to Osaka, be in shape to walk fast if you don’t want to be left behind! With a slow economy, Japanese are bound to walk even faster.

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