Lessons From Japan & UK: The Impact Of Frugality

The New York Times recently ran two stories that provide hints at the potential impact of the recession on the consumer mindset and their purchasing behavior. In Japan, the paper reports that the “economic malaise” of the 1990s changed Japanese relationship with brands when they changed their habits to make everything stretch that little bit further:

To better compete, companies slashed jobs and wages, replacing much of their work force with temporary workers who had no job security and fewer benefits. Nontraditional workers now make up more than a third of Japan’s labor force.

Younger people are feeling the brunt of that shift. Some 48 percent of workers age 24 or younger are temps. These workers, who came of age during a tough job market, tend to shun conspicuous consumption.

They tend to be uninterested in cars; a survey last year by the business daily Nikkei found that only 25 percent of Japanese men in their 20s wanted a car, down from 48 percent in 2000, contributing to the slump in sales.

Young Japanese women even seem to be losing their once- insatiable thirst for foreign fashion. Louis Vuitton, for example, reported a 10 percent drop in its sales in Japan in 2008.

“I’m not interested in big spending,” says Risa Masaki, 20, a college student in Tokyo and a neighbor of the Takigasakis. “I just want a humble life.”

Japan’s aging population is not helping consumption. Businesses had hoped that baby boomers — the generation that reaped the benefits of Japan’s postwar breakneck economic growth — would splurge their lifetime savings upon retirement, which began en masse in 2007. But that has not happened at the scale that companies had hoped.

That final point about Baby Boomers is interesting – what would happen if the American and European Baby Boomers decided not to stop spending because of concerns for their future?

Meanwhile a report from the UK argues that putting cooking oil in your car instead of diesel is going mainstream. While people have been doing this for a while, the paper says, recent price fluctuations encouraged people to try the cheaper fuel option which has perceived eco benefits too:

Here… the direct-to-the-tank approach is gaining a bit of mainstream popularity, attracting people like Mr. Roost, on his way to work, dressed in a suit. The oil, he said, is “good for the environment and it’s cheaper than diesel, even now that prices have dropped.” It costs $4.88 per gallon, which is about 10 percent less than diesel costs now — and about one-third less than diesel cost at its peak last year.

…Vegetable oil is cleaner than either gas or diesel, producing virtually no carbon dioxide, the main greenhouse gas linked to climate change, and far fewer of the tiny airborne particles in pollution that are harmful to human health. But if the cooking oil is not adequately filtered or prepared for use in cars, studies show, it can also produce high levels of another chemical, NOx, the main component of smog.

…Two years ago, in the affluent London suburb of Leatherhead, Chris Leveritt starting filtering oil from his restaurant, Trattoria Vecchia, to run the family car. He is now creating a small commercial factory to produce 132 gallons a day in his backyard. Mr. Leveritt’s partner, a wine distributor, picks up jugs of used oil when he delivers wine to dozens of restaurants in and around London.

But still, many motorists hesitate, Mr. Leveritt said. “There is a lot of resistance,” he said, “to putting something into your precious car that you brewed in the kitchen sink.”

When Consumers Cut Back: A Lesson From Japan
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