In mid-January, the market had not yet resumed operations following Japan’s biggest holiday — the New Year. Dealers were busy visiting clients and customers to exchange New Year greetings, but “no substantial trading has started,” said Masahiko Akaike of Orient 4Cs, a jewelry and gemstone manufacturer/wholesaler. During the holiday season, the most popular items at Orient 4Cs were in the $200 to $300 [20,000 to 30,000 yen] wholesale price range, which translates to $300 to almost $500 [30,000 to 50,000 yen] at retail. “But business was not good,” said Akaike.
Tourists BuyMichio Fukui, president of the Tokyo Diamond Exchange (TDE) and president of Fukui Diamond Co., Ltd., reported that business generally was slow throughout the holiday season, even at major department stores and for international name brands. Foreign visitors, the Chinese in particular, were among major buyers for fine jewelry, while sales to Japanese shoppers were weak.
“The economic downturn is most prominent in the western part of Japan, particularly west of Nagoya,” said Fukui. In cities in that area, some retailers have closed their businesses for good and storefront shutters are down, turning once-bustling shopping quarters into “Shutter Town.”
“The cause of this phenomenon is political,” Fukui explained. “The bipolarization of society, in which the rich get richer and the poor get poorer, has advanced further since the Koizumi regime,” he said, referring to former Japanese Prime Minister Junichiro Koizumi, who served from 2001 to 2006. At the same time that mom-and-pop stores are dying, pointed out Fukui, major corporations are reporting healthy profits and international name brands have descended on Ginza, as Japan still is a reliable consuming market. Fukui represents Mellerio dits Meller in Japan. One of five grand French jewelry names, it did better in the holiday season than the previous year.
In the eastern part of the country, in the city of Sendai, Ikuo Sato, president of Intergem Co., Ltd. and also a director of Japan Jewelry Association (JJA), reported that his sales were neither bad nor good but at the same level as last year.
“I do not compete with Christmas merchandisers,” said Sato. “There are numerous companies that manufacture the lower end of products targeted at the Christmas season, and I don’t want to fall into one of them.” Sato’s products are priced above $1,000 [100,000 yen], with the main lines closer to $2,000 [approximately 200,000 yen], making them less affected by seasonal sales.
Success StorySato’s store is located on the seventh floor of an office building, an unusual location for a successful jewelry retailer, “but people come, if you send them honest information,” said Sato. He does not advertise in newspapers, because, he said, “people don’t read newspapers these days.” Neither does he advertise on TV, because “people record TV programs, skipping the commercials.” He advertises only in community papers, providing information on wedding rings for younger potential customers.
Sato launched his website in 1999 when he decided the internet age was here to stay, but he does not sell on the web. His objective in using the web is to reach masses of people in a very large, geographic area. His customers come from six prefectures, the entire northeastern region of Japan. “My store is within a one-hour train ride from all these prefectures.”
Sato started his business in 1975 as a gemological laboratory but became a retailer in 1976, after people started asking him to buy gemstones on their behalf. That was when he realized that honest information is crucial to the business, he said. Sato continues to look for opportunities to sell in unconventional ways. He hosts parties several times a year in his store, for example, but they are not sales parties, simply occasions for his customers to enjoy themselves. At one party that he runs annually, he invites a fortune-teller from Osaka and has him consult with the customers, not on what stone to wear, but on various matters in their personal lives. The customers always return.
Sato’s unique business philosophy caught the eye of organizers of the International Jewellery Tokyo (IJT) show, and he was asked to lecture at the IJT show, held January 24 to 26, on “how to run a successful business in economic hard times.”
Sato blamed the downfall of Japan’s jewelry retailing sector on the bad habits that Japanese jewelry manufacturers and wholesalers have developed over the years. He complained that manufacturers and wholesalers send their goods on memo and run trunk shows and exhibition sales shows using their own merchandise, sales personnel, catalogs and sales promos, while all the retailers have to do is to bring their customers to the shows. He pointed out that the practice means there’s no risk involved on the retailers’ part. “Suppliers have spoiled retailers. It’s a bad habit they have to stop, although I know they won’t,” admitted Sato. “The retailers have become too dependent on the scheme.”
Article from the Rapaport Magazine - February 2008. To subscribe click here.