Five years ago, when Japan last raised its consumption tax rate from 5 percent to 8 percent, many Japanese consumers rushed to buy everything you can think of—from houses and cars to daily goods and food—before the policy changed. In the year that followed the tax hike, Japan experienced a significant economic downturn.
By contrast, on October 1 this year, when Japan increased its consumption tax rate from 8 percent to 10 percent, there were reports of some last-minute shopping sprees, but not nearly at the same scale. Instead, Japanese consumers reacted quite calmly.
Why is that?
There are a variety of factors at play here, but one of the macro-trends is a gradual shift in consumers’ mindset, behavior and lifestyle. As Japanese author Atsushi Miura pointed out in The Rise of Sharing: Fourth-Stage Consumer Society in Japan, consumers have started to own less and share more, and this trend can be seen not only in Japan but across Asia and around the world.
At the same time, consumers are increasingly shifting away from the pursuit of owning goods, and towards more experience-focused goals. According to a 2019 survey that interviewed 3,200 people from five countries, including Japan, 76 percent of general consumers prefer having an experience over having goods.
The rise of sharing and rental services and the preference for experiences over goods are not the only changes in how people spend their money. The rapid growth of the whole organic food industry, the increasing visibility of fair trade products and new market entrants with sustainable goods are signals of the same story: consumers care about not only the visible, tangible product in front of them, but also the stories behind that product—who made it, how they made it and what impact their consumption has on the world.
How people spend their money is the reflection of what they care about. And like a savvy, modern investor reviewing a company’s CSR report, the consumer of the future wants to spend her money wisely and in a way that engages the values that matter to her.
And this reality is important not only for the business bottom line. It is also crucial that companies’ communications match with what people care about and react to. Corporate narratives and talking points must be aligned with what the brand stands for to meet the expectations of values-based consumers, deliver that message in a context where it will resonate, and support it with stories that directly engage consumers and even empower them towards shared action.
Consumers of the future have their own wants, and it is the responsibility of every corporate communicator to lean in, listen and craft an approach to deliver them.