To Stimulate Consumer Spending

Toshifumi Suzuki Vice Chairman of the Board of Councillors, Nippon Keidanren President & Chief Executive Officer, Ito-Yokado Co., Ltd.

Recovery of consumer spending is eagerly anticipated as the key driving force for expansion of domestic demand and economic recovery. In recent years, it has frequently been said that we live in an era with excess supply and declining sales. This does not necessarily mean that the consumer's desire to spend has diminished, rather the problem lies with us, the retailers and manufacturers.

In a recent consumer survey conducted by the Ministry of Economy, Trade and Industry, one question posed was a choice between "lower prices for the same quality" or "higher quality at the same price." Many respondents chose the latter if they were buying men's or women's apparel or consumer audio-visual equipment. This is evident that lower prices do not necessarily result in an increase in sales. In the past when merchandise was in short supply, the empirical rule that "if it doesn't sell, lower the price" was valid. However, this rule is no longer applicable.

The foremost reason that merchandise is not selling is that the retailers and manufacturers are neglecting this change, sticking to old practices and failing to deliver the new value that consumers are seeking. Furthermore, functionality and quality, not to mention price, are natural requirements that no longer are guaranteed to arouse consumer interest. People are also seeking "new value that did not exist before," incorporating timely trends.

We must step out of the tangible and well-known realm of functionality, quality and price and enter into the intangible realm of psychology and information. The fact that "sense of security" and "reliability" are becoming keywords in society indicates a growing importance of psychological factors.

From a consumer psychology perspective, it is important to eliminate insecurities regarding the future by steadily enhancing structural reform and stabilizing the financial system. In addition, in our corporate world, it is indispensable to establish a wholesome corporate governance structure in a form that is transparent to the consumer. Consumer (general public) expectations for overall reform have been growing. It is imperative that we respond to those expectations by quickly presenting a new perspective.