Despite the uncertainties and negative factors, such as the COVID-19 pandemic, which has lasted for more than two and a half years, and the outbreak of the war in Ukraine by Russia on February 24, 2022, sales of high-priced items such as jewelry and luxury watches have increased. It’s doing well. Tomoyuki Isoyama, an up-and-coming economic journalist, analyzes and considers the background and the latest outlook.
Tomoyuki Isoyama: Coverage and writing Text by Tomoyuki Isoyama
Mikio Ando: Illustration Illustration by Mikio Ando
[Article published in the September 2022 issue of Chronos Japan]
A boom in luxury watches with high “asset value” due to a full-fledged depreciation of the yen and inflation
Last time, in this column, I wrote, “Finally heading for inflation. Will the prospect of price rises create last-minute demand for luxury watches?” Japan’s consumer price index rose by 2.1% year-on-year in April 2022, exceeding 2% for the first time in 13 and a half years, excluding the temporary increase immediately after the consumption tax hike. %, rising 2.2% in June, surpassing 2% for three consecutive months. Electricity bills, gas bills, and imported foodstuffs have risen sharply, and the actual cost of living is far from 2%. “Inflation” has become clear to everyone, and you may be starting to feel that the real thing is still to come.
Inflation is when the value of the currency falls, that is, when the value of the “yen” falls sharply and the value of things rises. The point of the previous article was that if you have assets in yen, they will gradually decrease, so there will be a movement to exchange yen for real assets, mainly in the wealthy class, and a last-minute surge in luxury watches will occur. Since then, things have progressed as expected.
Watch departments open one after another at department stores in Nagoya
“Luxury wristwatch boom is heating up in Nagoya. Why is it attracting the most attention nationwide?” News) articles appeared in the media. The trigger was the successive opening of new watch sales floors at department stores in Nagoya. On July 6th, the Matsuzakaya Nagoya store renovated the watch section for the first time in 14 years and opened as “GENTA The Watch”. The area has been expanded to 1,200 square meters, about twice the size of the previous one. At the Nagoya Mitsukoshi Sakae store, on June 20th, a stand-alone shop of the Swiss luxury watchmaker Patek Philippe opened on the 1st floor.
At the opening of Matsuzakaya’s watch section, it was reported that a limited edition wristwatch with blue sapphire encrusted in the world by Antoine Preziuso, an independent Swiss watchmaker, was prepared for 181.5 million yen. On the other hand, Patek Philippe mainly sells products in the price range of about 20 million yen, and it is said that it handles products close to 200 million yen. It targets customers who are completely focused on “property”.
Department store art, jewelry, and precious metals sales doubled year-on-year
As the Japanese economy is recovering from the impact of the spread of the new coronavirus, sales at department stores have also increased significantly. According to the Japan Department Stores Association, nationwide department store sales in May increased by 57.8% compared to the same month of the previous year, marking the third straight month of positive growth. The growth rate in May was 97.5%. In other words, sales have doubled from the previous year. Money is heading for precious metals and jewelry such as luxury watches at once.
The Swiss watch export statistics compiled by the Swiss Watch Association for June clearly show the boom in Japan. Exports to Japan amounted to 140.2 million Swiss francs (about 19.9 billion yen), an increase of 16.1% compared to the same month of the previous year. The global increase is 8.1%, so Japan’s growth is double that. The cumulative total from January to June has increased by 19.5%. It seemed that the world economy would slow down due to the war in Ukraine and interest rate hikes in the United States and Europe, but global consumption of luxury goods is still strong.
An environment for an “inbound consumption boom” is ready
In addition to the shift to “real assets” in anticipation of the depreciation of the yen, there are also positive effects on Japanese watch sales. This is due to the increase in the number of foreign tourists due to the depreciation of the yen. Japan continues to restrict the number of people entering Japan, and is still in a state of isolation, but still according to the Japan National Tourism Organization (JNTO), the number of foreign visitors to Japan in June was just over 120,000, compared to a year ago. 10 times more than 9251 people. In the future, if the number of tourists visiting Japan in earnest increases, there is no doubt that inbound consumption will rise at once.
Especially in the case of high-priced items such as watches, the prices of products purchased before the depreciation of the yen were not sufficiently revised. state. From 2013 to 2014, when the yen depreciated at once, the environment is in place for another “inbound consumption boom” to occur when Chinese tourists flooded Ginza, Tokyo. In that case, not only super-expensive high-end products, but also mid-range products of around 1 million yen will sell at once.
Tomoyuki Isoyama
Economic journalist / Professor at Chiba University of Commerce. Born in Tokyo in 1962. He graduated from the School of Political Science and Economics at Waseda University. At Nikkei, he worked as a securities department reporter, deputy director, Zurich bureau chief, Frankfurt bureau chief, and deputy editor-in-chief and editorial board member of “Nikkei Business” before leaving the company in 2011 to become independent. He covers a wide range of political and public affairs. His publications include The Completion of the International Accounting Standards War and The Secret of Brand Kingdom Switzerland (both published by Nikkei BP).
http://www.isoyamatomoyuki.com/
