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KEY TAKEAWAYS

KEY TAKEAWAYS

1. Rethinking retirement

In summer 2019, a Financial Services Agency report sounded the alarm that households might need to save as much as ¥20 million for retirement. This shocking new estimate captured the attention of the country; today, it has the potential to reshape how ordinary Japanese think about spending and saving for the future. Though some government officials disputed the agency’s findings, the ¥20 million warning resonated with citizens who suspect that traditional pensions will no longer be enough to live on in old age. To that end, the new retirement math will likely spur interest in finance offerings that help ordinary people play the markets (Japan already has a formidable legion of day traders). Its long-term effect on retail psychology is more uncertain, but likely to be profound.

2. Reassessing the workday

Japan’s labor market is extremely tight, with the jobless rate reaching all-time lows in 2019. In addition to affecting migration policies, Japan’s new labor reality is causing society to rethink assumptions about the workday and work-life balance. As skilled workers become more in demand across certain industries, more people have begun to speak up about their desire to leave work earlier (a phenomenon given a comedic spin in the TV show “I Will Not Work Overtime, Period!”). And amid news reports on the strain faced by workers at Japan’s famed 24-hour convenience stores, major brands like 7-Eleven have announced that they will allow franchises to experiment with more abbreviated work schedules.

3. Putting a friendly face on automation

Greater automation could help ease the labor shortage in many industries. Some people worry, however, that this shift could occur at the expense of Japan’s revered customer service culture. This is a potential tradeoff that many Japanese brands will have to navigate in coming decade. In the nearer term, the upcoming Olympic Games offer a chance to demonstrate how automation can proceed while maintaining a friendly touch. Toyota is leading this charge, with its Field Support Robots assisting with equipment at track and field events; elsewhere in the Games, robot mascots Miraitowa and Someity will greet and orient visitors.

 

4. Digital payments on the move

Japan remains a largely cash-dominated economy, with digital payments accounting for about one-fifth of all transactions. With an eye toward making travel more convenient for Olympics visitors, the Japanese government has supported efforts to increase the ease of digital transactions; the country’s finance industry, meanwhile, sees payments and fintech innovation as a way to boost earnings in a time of low interest rates. Ordinary Japanese consumers, however, will only show up to digital payments if they offer exceptional convenience and functionality. Brands are trying to do just that with a variety of new payments formats ranging from Mizuho Bank’s QR-based J-coin system, to the messaging-integrated LINE Pay mobile money transfer and payment service.

 

5. Women find their voice

The Japanese government’s “Womenomics” initiative continues to be a lightning rod for debate: even as most people agree that Japan’s economy would greatly benefit from more and better participation by female workers, the question of how to get there remains an open question. In the meanwhile, ordinary Japanese women are seizing on grassroots social media tools to agitate for change from the bottom up. In one notable example, the “KuToo” digital protest movement against mandatory high heels in the workplace has captured the interest of women nationwide. Meanwhile, domestic inequality (in the form of the burden women face in cooking, cleaning, child-rearing, and doing the laundry) is another issue gaining public traction. Brands will be increasingly compelled to weigh in on these problems going forward; those that provide solutions for ordinary women trying to gain more control over their lives will gain legions of loyal customers.

6. Spotlight on accessibility.

The upcoming Paralympics has put a spotlight on the ways that Japan can improve its public infrastructure and consumer offerings to better integrate citizens with disability. This issue has been further amplified by the recent election of two candidates with severe disabilities to Japan’s parliament.  Brands will find that using innovative, empathetic design for accessibility can win them a new class of customers, and help them tell new stories of corporate responsibility. Accessibility is especially important in the context of Japan’s aging population, as senior citizens often face mobility and coordination challenges. Going forward, those businesses that ignore the accessibility imperative – as in the recent case of hotels that refused to create disability-friendly rooms for the Paralympics – could find themselves facing increasing public backlash.

7. Embracing the new frugality

Years of slow growth, as well as new recommendations about retirement savings, have contributed to a renewed spirit of frugality in Japanese culture. Modern frugality isn’t about sacrifice and deprivation. Instead, the focus is on ways to creatively do more with less – without compromising on service, beauty, and excitement. Brands have responded to this trend with new products and formats; examples in the BrandZ™ Japan Top 50 include JAL’s new budget international subsidiary Zipair, as well as new “100 yen” areas within select Lawson and Tsuruha Drug stores. E-commerce platform Mercari is also a major player in the frugal space, as consumers find that buying second hand allows them to enjoy luxury products in segments like beauty and fashion, at a fraction of their normal price.

8. Exploring diversity

At a time when Japan is reexamining its migration policies amid a tight labor market, Japanese citizens with foreign-born parents have also become prominent in sports and culture. Brand campaigns have played an important role in changing definitions of what it means to be and look Japanese. Notable examples include ANA’s sponsorship of tennis Naomi Osaka, as well as Nissin’s relationship with Osaka and basketball player Rui Hachimura. The rewards of supporting these popular figures are clear, but this support comes with a responsibility to navigate cultural sensitivities around issues like skin lightening and racial prejudice.

9. Olympics health halo

The 1964 Tokyo Olympics led to booming interest in health and fitness, and to the growth of a nationwide network of swimming and gym clubs that continues thrive today’s aging Japan. The 2020 Games should provide a similar boost to a modern health and wellness industry that has grown even more diverse and competitive in recent years – to the point that even convenience chain Family Mart has entered the gym business. Beyond the health club industry, expect a positive health halo in 2020 for Japanese brands like Pocari Sweat and Yakult, which promote healthy eating and peak physical performance. In the retail realm, meanwhile, convenience and grocery brand will continue to experiment with new “healthy” and “natural” store formats to serve their wellness-minded public.

10. Reclaiming public space

One consequence of Japan’s advanced urban development is that city-dwellers face a shortage of places to congregate in public, especially outdoors. This is despite the fact that public spaces like parks and pedestrian zones provide important health benefits by giving people a place to connect with nature and each other. Brands have an increasing role to play in reclaiming public space for citizens. The blockbuster example of this phenomenon is Ginza Sony Park, a “vertical park” structure in the footprint of the former Sony headquarters that allows visitors to stroll gardens and relax at cafes in one of Tokyo’s most crowded neighborhoods.

11. Digital Hub Life

Japan’s convenience stores are more than just a place to buy snacks; they’re life-support hubs that provide a wide variety of essential functions under one brand umbrella. Japanese digital platforms are poised to become similar hubs in the virtual world – provided that digital payments become more widespread, and that online brands continues their toward consolidation. To name a few examples: LINE’s new payment services could help the platform become the kind of “all in one” shopping, social, and gaming app that is popular elsewhere in Asia. Similarly, the integration of Zozo into the Yahoo! Japan universe could see the rise of a new digital universe that merges news and entertainment with native e-commerce functionality.

12. Immersive worlds

In an era where experiences are valued just as much as material possessions – and in a country like Japan, where traditions of hospitality and service run deep – it makes sense that beloved brands would look to expand into the realms of hospitality and immersive experiences. This year Muji opened its first domestic hotel in Ginza; it is envisioned as a place where travellers can experience the company’s “no-brand” product aesthetic in depth and in person. Nintendo is opening its first Japanese store in Shibuya – complete with an immersive Pokémon laboratory – and is partnering with Universal Studios Japan for its much-anticipated Super Nintendo World. Meanwhile, in more everyday life, Family Mart’s expansion of into the gym business is a good example of how brands are increasingly trying to provide lifestyle services in addition to products. Done well, these experiences provide excellent advertising for a brand’s larger array of products – while also giving brands the chance to test out new offerings and better understand their customers.

13. Retail leans on private label

Store brands in a variety of retail categories are increasingly seen as equally attractive to outside offerings. Brands are spending more time and money to improve their private label offerings, as executives realize how crucial own-brands can be for improving companies’ bottom lines at a challenging time for retail. When done well, private labels aren’t just the source of especially profitable SKUs – they can actually enhance and drive business to an overall retail brand. Recent examples of this phenomenon include Aeon (which has introduced an organic private label beauty brand, among offerings), Yamada Denki (which continues to expand its “HERB Relax” brand), and Tsuruha Drug (with its “kurashi-rhythm” range of products).

14. Reducing waste

Japan is already a society of enthusiastic recyclers, but evidence is mounting that this may not be enough to create a truly sustainable society. Recent news that deer in Nara are dying from eating plastic bags, and that Tokyo Bay has high levels of marine plastic residue, have raised awareness that more can be done to reduce waste at the source. Japanese consumers’ preference for plastic wrap – which has helped to make Japan the world’s second-largest generator of plastic packaging waste – won’t change overnight, but brands can take the lead in creating innovative new packaging solutions that are as convenient as they are sustainable. In the environmental sphere, packaging is just as important as product in determining a brand’s reputation for sustainability.

15. The pivot to logistics

With the continued rise of global supply chains, automation, e-commerce, and big data, many Japanese companies have found that they can diversify their business by becoming logistics and solutions consultants. These days, brands like Sagawa Express and Japan Post do more than just deliver packages: they also advise clients on how to improve and streamline their global operations. Similarly, tire maker Bridgestone has recently emerged as a data-driven “solution provider” in the areas of transportation and personal mobility, while Panasonic has become a leader in providing “spatial solutions” for its clients. The upside? Brands of all stripes should consider their processes and knowledge bases as marketable assets.