Indulging in Luxury? Japan’s ‘New Rich’ Consumers

Abstract

Japanese consumers are often said to be very affluent and to have a taste for luxury products. And, indeed, Japanese consumers do have the second-highest purchasing power in the world and, over the postwar decades, have accumulated the highest level of assets among all nations worldwide. The number of households holding financial assets of more than 500 million yen ($5.5 million) was around 52,000 in 2006. The enormous wealth accumulated in Japan over the past decade has led to a particular interest in luxury and Western-brand products. Japan became the first mass luxury market and, until 2008, the Japanese were the most avid buyers of luxury products in the world. With the economic crisis, however, Japanese luxury spending changed: sales have decreased very rapidly and ‘fast fashion’ companies offering cheaper products are becoming more popular. Nevertheless, the richest of the New Rich have not changed their purchasing behaviour and still enjoy luxury spending. This chapter discusses wealthy consumers in Japan – the so-called ‘New Rich’ (nyuu richi) – and how their wealth was accumulated. The chapter also sets out the major role that luxury products play in Japanese consumption and gives an overview of how Japan’s lust for luxury was affected by the economic crisis that began in 2008.