November 2, 2009
How Are Post-Crisis Consumers Adjusting? Pretty
Well, Actually
By Debbie Howard
During trying times, it’s important to periodically stop, take a deep
breath and reassess where things stand.
Many analysts mark the “anniversary” of the global financial
meltdown with the collapse of Lehman in September 2008, which
resulted in a domino effect, felt the world round. Ever since, the
entire world has been readjusting itself and its ideas of how things
work, both on a personal and business level.
One interesting impact comes from the world of academia, where
MBA and business schools are incorporating lessons from the crisis
into their programs, adding classes on the meltdown, its roots and
consequences. Professors are encouraging students to question their
assumptions about financial models, to probe for better information
about complex products and to better understand the roles of
regulatory agencies and governments.
At the same time, the shock of what happened has become the new
status quo, and consumer statistics are beginning to show that stress
levels – while still high -- are at least lower than they were 6
months and 1 year ago.
For example, several U.S.-based surveys have shown that American
consumers – who were at the epicenter of the financial meltdown –
are already beginning to report lower stress levels. Although these
percentages still remain quite high and show that many Americans
are still suffering significantly from economic stress, they also
indicate that people are beginning to adjust to a new reality.
Here in Japan, it is also interesting to consider the effects on the
consumer. In a market where “risk assets” (i.e., stocks, mutual funds
and investment trusts – particularly foreign products) were just
beginning to gain a foothold as a growing percentage of household
assets, the meltdown might well have meant a complete reversal of
Japanese consumer investor appetite. Indeed, there have been some
shifts – i.e., from foreign-denominated to yen-denominated
investments, from higher- to lower-risk products, and from risk to
non-risk assets.
But at this point, it appears that the bursting of the bubble in the
early 90s caused much more of an emotional shock among
consumers, even though it had a lower impact on their
pocketbooks. At that time, many consumers were so frightened that
they exchanged nearly all of their risk assets in favor of non-risk
savings products.
Then again, Japanese consumers went through a huge and
everlasting emotional adjustment during the 13-some-odd years of
economic stagnation throughout the 90s and the early
2000s. Throughout this period, Japanese consumers were forced to
adapt to a new reality, having faced a number of dramatic “psyche
changing” events such as the end of lifetime employment and the
uncertainty related to company and government pensions. In the
years since, many have had to find new ways to make a living,
including part-time jobs and entrepreneurial activity.
Today, at least some Japanese consumers seem to have become less
risk-averse as regards their investments, presumably as a natural
aspect of their having become more familiar with such
products. This time, many are not allowing the past year’s events to
scare them away from some sort of investing. This more adventurous
behavior translates to other product and service categories as well,
ranging from fashion brands to retail channels to travel destinations
and beyond.