Shiseido's goal is made tougher by Japan's third recession in a decade. Household spending fell for a ninth straight year in 2001 as wages slipped and unemployment climbed to a record.
Top designer brands have continued to sell well -- "We've never heard of Dior cutting their prices," said Nakajima, the Norinchukin Zenkyoren fund manager -- while Lion Corp and other makers of household products have been forced to cut prices.
"Brands located in the middle level -- where Shiseido is -- are facing tough times," said Muneyori Yamada, an analyst at Fuji Investment Management Co. "People who can afford it buy overseas cosmetics, and people who care about costs may buy self-service brands at discount stores. Shiseido's cosmetics don't match the current times."
A survey last spring by Tokyo-based advertising agency Hakuhodo Inc showed that more people prefer to find bargains, or buy high-priced goods, than pay mid-range prices. Thirty percent of respondents said they prefer to buy products priced at less than half the norm, 18 percent said they would buy at more than double the typical price, and only 2.8 percent said they seek products priced at the middle of the range. The rest expressed preferences between the extremes.
Shiseido faces an uphill battle in getting consumers to think of its goods as premium products.
"Appealing to Japanese consumers with the same image as overseas is no longer possible," said Hajime Yagi, who manages about US$3.8 billion in investments at Meiji Dresdner Asset Management Co. "The image in Japan has already been colored."
RSS