“There is no path toward recovery in sight” – Research by THE SENKEN

“There is no reason to think that consumption will increase. Fashion consumption in particular has been hit hard” – tough words from the most recent Fashion Business Climate and Consumption Outlook Survey, a research survey targeting major companies in the fashion sector that is conducted every quarter by SENKEN SHIMBUN Co., Ltd.

There was almost no sense of a recovery over the April-June period, and the number of respondents expecting the climate to grow worse over the July-September period increased greatly on the previous survey, up to 35.5%. A total of 48.2% stated that fashion consumption had fallen in April to June, with 38.2% predicting that it will fall further still over the July-September period. Both figures are up from the previous fiscal quarter, and show how the fiscal climate is worsening.

Many who said that fashion consumption will not change also said that consumption continues to be down from last year and that the economy continues to be poor. This situation continues without any clear explanation.

One company responding that the climate had worsened also stated, “Fiscal policy has hit a wall and consumption is decreasing. The impact of decreasing inbound consumption (purchased by foreign tourists) also cannot be understated.” Many offered opinions stating that the Kumamoto Earthquake had put a continuing downward pressure on consumption as well.

The vast majority of respondents stated that they saw no sign of the market recovering in the future. Noteworthy were the responses that pointed out that Japan continues to suffer from a deflation that is pushing down commodity prices. There were also many who offered the opinion that the high value of the yen coupled with the weak stock market was having a negative impact. Some also expressed a sense of alarm related to the impact that the exit of the UK from the EU had on attitudes toward consumption due to temporary market confusion. Respondents worried that the inbound consumption they were previously relying on would decrease further based on the strength of the yen. A substantial majority of companies shared the view that there is no feeling in the market that consumption has been stimulated.

Most companies that said they believed fashion consumption would improve in the July-September period were work clothes/accessories manufacturers. They expressed their expectations of the hot weather and thoughts that higher humidity would have a positive impact for them.

The number of companies responding “Other” to a question about when they thought fashion consumption would start to recover increased greatly compared to last semester, reaching 74.5%.

As many feel that the economic climate will continue to be tough and that fashion consumption will fall further, respondents stated that they were unable to make predictions about recovery, with one even going as far as to say, “There is no path toward recovery in sight.” A number of companies answered that they did not have high expectations that consumers would be encouraged to spend more before the July-September 2019 period, when the consumption tax will increase again.

The survey was conducted between 21 June and 28 June, and 116 companies responded.