Eleven days after the earthquake and tsunami, it’s still highly
uncertain how the devastation that has hit Japan, the world’s third-largest
economy, will impact U.S. retail and consumers brands in the near-term and
Most directly, a slew of U.S. chains that have opened stores in the
nation over the last few decades will take a hit. Coach and Tiffany each derive
as much as 20 percent of their sales from their Japanese retail operations.
Others with stores in Japan include Walmart, Costco, Toys ‘R’ Us, Gap and L.L.
Bean, as well as McDonald’s, Yum Brands Inc. and Starbucks on the restaurant
side. While a few deal with physical damage and blackouts in a near-term, there’s
a concern that Japanese consumers may curtail spending in the same manner U.S.
consumers responded after Hurricane Katrina and 9/11. Tourism to Japan is also
expected to slide.
While not the force they were five years ago as the nation’s
economic growth has stalled, Japanese consumers also remain big buyers of
luxury goods and higher-end gadgets. About 17 percent of the revenues of Callaway
Golf, for example, stems from the country. Still, a Women’s Wear Daily report
saw no long-term impact on the luxury market’s rebound. Observers interviewed
didn’t see the Japanese changing their spending habits long term.
"The Japanese are by their nature the most discerning luxury consumers
in the world," said Guy Salter, luxury investor and the deputy chairman
of Walpole, the association of British luxury goods. "While this disaster
is so appalling on a human level, it’s not going to affect their aesthetic
or desire for quality. I’m absolutely convinced of that."
the car industry will certainly undergo some turmoil, the big fear for consumer
electronics retailers is shipment delays or outright shortages of hot product.
Beyond computers, electronic gadgets and video games, Japan supplies about
a fifth of the global semiconductor market and is a major producer of memory
chips used in smartphones.
Stores in Hawaii, meanwhile, are also bracing for
a significant drop-off in Japanese tourists. But Japanese visitors to New York
City has reportedly dropped significantly since the nineties. Greg David, the
former editor at Crain’s
now a business columnist, told ABC Eyewitness News, "The Japanese
economy has been stagnating for 15 years. It has affected virtually everything;
their investments in New York, the tourists who come to New York."
wider scale, the concern appears to be any backlash against nuclear power
and the overall impact the U.S. economy’s recovery. Some see U.S. firms adding
jobs as part of Japan’s rebuilding effort. At the same time, economists note
that there’s no historical reference to help measure a disaster of this
size in an advanced economy like Japan’s.
"There’s nothing obvious that says we’re going to get smacked by this," Carl
Weinberg, chief economist of High Frequency Economics, told the Chicago
can be a lot of trickle-downs. We just don’t know."
- U.S. Retail Industry Feels the Aftershocks of the Japanese Earthquake and
Tsunami as Stock Prices Suffer Collateral Damage – about.com
- Some US Businesses Reeling From Japanese Earthquake And Tsunami – ewireinformer.com
- Luxury’s Rebound Expected to Withstand Japan Crisis – Women’s Wear
Daily (Sub. required)
- Japan’s Crisis Creates Uncertainty For Electronics Retailers – Dow
- NYC tourism takes hit after tragedies in Japan – ABC News
- Hawaii Braces for Downturn in Travelers From Japan – ABC News
Nuclear Melt Down – subversify.com
- Japan earthquake’s effect on U.S. economy hard to predict – Chicago
Discussion Question: What effect will Japan’s tragedy likely have on the U.S.’s consumer brands and retailers? Which companies do you see getting hit the hardest, if at all?