Japanese retailers are planning elaborate promotions for the New Year's sales season to cope with the country's recent ailing economic factors.
To start, Japan's consumption tax was raised from 5 to 8 percent back in April. According to WWD, most retailers agree that sales have now returned to normal levels but they are now facing other sales complications.
This includes the country's rising commodity costs, which puts a strain on consumers' personal finances. Wages and incomes have not increased with the tax.
Japan's third-quarter real GDP came in at an unexpected 1.9 percent, putting the country into recession mode.
"We believe the difficult situation in the Japanese economy at the moment doesn't have so much to do with a reaction to the consumption tax increase as it does with things such as rising costs of energy and [things needed] for daily life, and the fact that incomes have not increased to catch up with these rising costs," a spokesman for Isetan Mitsukoshi Holdings told WWD.
"However, if you look at the trends of customers in our stores, the average purchase price per item has been rising starting from April and until recently, so we feel that more than price consciousness, customers want things with value," the spokesman added.
Being cautious doesn't mean not shopping at all — Japanese consumers are expected to just be more careful about how they spend their money.
"It's very likely that consumers will continue their cautious consumption behavior for a while," Eiji Kaneda, operating officer, corporate planning at Beams, told WWD.
"The positive and negative impacts on the Japanese economy are mixed, such as the cheap yen and low crude oil prices. Looking at the situation being reported in the media, such as the year-end general election, consumers have no choice but to be cautious," Kaneda said.
Japan's consumers have a reputation for being some of the most astute in the world. Many luxury brands have been making large expansions into the Asian market over the past few years.