Mobility trends are consistent with Japanese consumer behavior throughout the pandemic
Given Japanese consumers’ high sensitivity to changes in the country’s COVID-19 outlook, B2C firms need to continue to adopt flexible distribution and demand planning strategies, as swift changes in consumer behavior have the potential to disrupt business plans. Similarly, a substantial emphasis on digital distribution channels is likely to be a rewarding strategy for MNCs in 2022.
Further, to make the most efficient use of resources, marketing and promotional campaigns will be best utilized by B2C firms when community spread of the virus is minimal. Promotional campaigns designed to bring consumers out and about during outbreaks are unlikely to translate into higher sales.
Overview
Consumer mobility in Japan plummeted at the start of the year, falling from a peak of 9% above the pre-pandemic baseline at the end of December to 15% below that threshold early in February for retail and recreation outlets. Strikingly, consumer mobility levels started falling at the beginning of January, before community spread of Omicron became widespread, with daily new cases averaging only 2,230 in the first week of the month.
Furthermore, emergency restrictions were only introduced by policymakers on January 22, at which point consumer foot traffic in retail and recreation outlets was already trending 13% below the baseline. Consumer mobility levels in essential stores—grocery and pharmacy outlets—have followed a similar pattern but stabilized between 2% and 4% above baseline once emergency restrictions were introduced. These mobility trends are consistent with how Japanese consumers have been behaving over the course of the pandemic. Since February 2020, consumer mobility levels in retail and recreation stores have crossed the pre-pandemic baseline just twice, and for very short periods of time.
Our View
Until recently, Japan had been highly successful in limiting the spread of COVID-19. At the start of this year, just over 1.7 million of its 125.4 million population had been infected with the virus, representing a mere 1.4% of all residents. However, the country’s success in containing the virus has come at the cost of a severe reduction of consumer mobility, leading to poor levels of discretionary spending over the past two years. In addition, Japan’s vaccine rollout effectively came to a halt in late October when the country’s Delta outbreak subsided. As a result, both booster adoption and natural immunity levels were low among the Japanese population ahead of the country’s massive Omicron outbreak.
Moving forward, we expect Japanese consumers to maintain low levels of mobility in retail and recreation stores in the short term, limiting discretionary spending through the current Omicron wave. Consumer behavior is likely to follow similar patterns in case of future outbreaks as well. However, as seen in Q4 2021, when virus transmission in the community is low, consumer foot traffic in nonessential stores is likely to bounce back quickly—along with discretionary spending levels.
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