Japan's Luxury Sales Are Booming, Even In a Weak Economy
Japan's economy is hobbling out of a recession, inflation is a quarter of the central bank's target and wages adjusted for price changes fell last year. And yet sales of luxury goods are growing and the stock market hit a 15-year high.
Sales of high-end imported cars and luxury goods have been rising since Prime Minister Shinzo Abe took office in December 2012, outpacing the increase of total retail sales. Department stores sold 333 billion yen worth of luxury goods including watches, artworks and jewelry in 2014, up 20 percent from 2012. Over the same period, total retail sales rose 2.6 percent.
There were 16,198 foreign-brand imported cars worth 10 million yen or more sold in 2014, a 63 percent jump from 2012, according to the Japan Automobile Importers Association .
Efforts to end two decades of stagnation with unprecedented stimulus has driven up stocks. The 76 percent rise in the Nikkei 225 Stock Average since the end of 2012 increased the wealth of those with financial assets. That historic rally boosted the value of Japanese shares held by households to 89.1 trillion yen as of the end of September 2014, a 43 percent jump from the end of 2012, according to the Bank of Japan.
The number of households with net financial assets worth more than 100 million yen ($843,000) rose to 1 million in 2013 from 810,000 in 2011, a survey by Nomura Research Institute shows. The rise in stock prices has made a large contribution to the increase in the assets of the wealthy, according to the Institute.
The increase in sales of high-end goods is also due to the surging numbers of foreign tourists, as the weaker yen has made it cheaper for them to shop in Japan. 13.4 million foreign visitors came in 2014 and spent 2 trillion yen, up from 1.1 trillion yen spent by 8.4 million tourists in 2012. 71.4 billion yen of that was spent on shopping, according to the Japan National Tourism Organization.
The rise in luxury goods sales may be a manifestation of a growing income gap in Japan, which was expanding before Abenomics. The Gini coefficient, a gauge of a country's inequality, rose to 0.55 in 2011 from 0.47 in 1999, the most recent data from the Ministry of Health, Labor and Welfare show. Wages adjusted for price changes fell in every month from July 2013 through December last year, as inflation and a sales-tax increase cut into people's purchasing power.
"The gap between the haves and the have-nots has been widening under Abe government's reflation policies, '' said Koya Miyamae, an economist at SMBC Nikko Securities Inc. "The surging sales of luxury goods is one phenomenon showing this widening income gap.''