Asset-Reflecting Products

January greeted the start of a new year, and February heralded the beginning of a new season. But in that short period of a month or so, the environment changed dramatically. Nothing seems clear at all even for the immediate future, let alone the whole year. In particular, the confusion in the government is really worrying. Since the problem concerning the change of foreign minister, the "three weaknesses" (weak share prices, weak yen, and weak bonds) have continued, and political uncertainty has been brought into relief. Prime Minister Junichiro Koizumi's cabinet was made possible by the backing of the people, so his sharp drop in popularity is a big problem.

Mikio Aoki, the secretary-general of the Liberal Democratic Party in the House of Councillors, has criticized the political method of the prime minister of emphasizing the confrontation with focus of resistance and appealing his stance in favor of reform. In the morning edition of the Yomiuri Shimbun on February 12, Aoki said: "The discussions about the Japan Highway Public Corporation, government-affiliated financial institutions, and medical expenses all boil down to who wins and who loses. I would like the prime minister to be more careful with his words."

With the overwhelming support of the public, Prime Minister Koizumi was able to stand up to the resistance forces. But the remark by Aoki, who has been watching Koizumi's support ratio dive, was perfectly timed. In terms of foretelling what will happen to Koizumi politics from now on, it deserves attention. What undercurrents could there be behind this idea? At the very least, political backpedaling would bring nothing but a feeling of despondency among the public. Also, since the public burden will increase and some level of restructuring is bound to continue, consumer trends inevitably will shift to the protective type. Since the cap on bank deposit guarantee is going to be implemented soon, I think that asset-reflecting consumption will likely to become conspicuous.

Take Louis Vuitton for example. Its sales continue to be amazing, but what is different from before is the perception of the asset value element, that is, the perception that the product can be used forever (especially with Vuitton's thorough after-sale system). You can understand the popularity if you look at the shift from the show-off bubble period, when people simply displayed their valuable brand products, to the present, when people see the products as projecting an asset value element. There will be an increase of demand for gold, too. And because people will bring more valuable things into their homes, there will be an increase of crime, so the security industry is likely to grow rapidly. Louis Vuitton is just one example. But if you look at it from this perspective, many things make sense. How will the weakening of the yen (through coordination) change Vuitton prices? Given the character of Louis Vuitton it will probably link prices to the exchange market on a daily basis and show those prices as if it were the normal thing to do.

On the home theater front, plasma display panels (PDPs) are selling well. Projection TVs are also taking off, and interest in new types of display is increasing. Since displays and home theater systems go together, I would like to say first of all that I very much welcome this growth in displays. Whether added value can be attached at the time of the sale depends on the ability of the retailer. If the PDP alone is sold, then you are going to be dragged into the whirlpool of price competition. You can only survive by added-value sales.

PDPs and home theaters are also products that reflect assets. In particular, PDPs costing nearly \1 million are a good example. Since providing added value means increasing asset value, accumulating that sales know-how becomes an extremely important factor.

Happy families get their fun out of software entertainment, but that is no reason to forget about the satisfaction that comes from the asset value element of hardware. We have a large range of wonderful products that reflect assets. This awareness should be the stepping stone to building a heart-to-heart relationship with a large number of customers. The retailers, whether large or small, who can do this are the ones that will survive.