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Business trends

One year on, 'Premium Friday' loses its shine in Japan

Government-business push for less work, more consumption fails to take off

Isetan Men's department store in Tokyo's Shinjuku district offers workshops on caring for shoes and watches on Premium Fridays.

TOKYO -- Almost a year after its introduction, "Premium Friday," a campaign promoted by the Japanese government and businesses to encourage people to leave the office earlier and open their wallets wider on the last Friday of every month, has failed to catch fire.

The campaign, led by the Economy, Trade and Industry Ministry and the Japan Business Federation, Keidanren, a business lobby, will mark its anniversary on Feb. 23.

But many of the shops and restaurants that offered special deals for Premium Friday, hoping for a surge in customers, have been disappointed. Such businesses are quietly dropping their promotions.

On Jan. 26, the final Friday of last month, about 15 men were taking advantage of shoe polishing service offered by Isetan Men's, a department store in Tokyo's Shinjuku district. An employee of Columbus, a Tokyo maker of shoe-care products, was giving hands-on instruction on how to better polish one's shoes at a table spread with cleaning products and brushes.

"The service is free, so it is more likely to encourage customers to use it, and it also gives a bit of a boost to sales," said Hiroaki Matsudo, who was taking care of the customers.

The service is just one of many sales and Premium Friday offers, but Isetan Men's total sales for the day were up just 1% from the last Friday in January a year ago, a significant slowdown from the very first Premium Friday, in February 2017, when year-on-year sales growth reached 14%.

Isetan is not the only retailer for whom Premium Friday has been a flash in the pan. Supermarket chain Aeon ran a limited-time sale on the first Premium Friday at all of its roughly 350 supermarkets, expecting a jump in sales. Now it offers specials for the day only at certain outlets in the Tokai region and Nagano Prefecture in central Japan. Aeon has run regular sales offering 5% discounts on 20th and 30th of the month since before the Premium Friday campaign began. Because one or the other of these days is close to the date of the last Friday of the month, there was little reason to continue special offers for Premium Friday, one company insider said.

Seven-Eleven Japan introduced high-end sweets at 7-Eleven convenience stores on three consecutive days, including the final Friday of June 2017. But that was the only time the company used the words "Premium Friday" as a promotional tool. Starting in July, the company continued rolling out new products each month but called them "monthend sweets," focusing its marketing effort on the end of the month, when many people are feeling wealthy. Many people receive their pay on the 25th of the month.

By some measures Japan's economy is thriving, but anemic wage growth has hampered consumer spending. These days, Japanese are thought to be more interested in buying experiences than in seeking to own things. But the tourism industry, an expected beneficiary of that shift, does not appear to be getting much help from Premium Friday.

When the campaign started, things were different. Travel agency JTB's online reservation service had a 20% on-year rise in hotel stays in February 2017, apparently in response to the start of the Premium Friday program. Sales of travel packages to relatively nearby foreign destinations, such as China and Thailand, jumped threefold, year on year, at Hankyu Travel International that same month. But growth tapered off later at both companies.

"Maybe we need to do more than just targeting" demand driven by Premium Friday, said Hiromi Tagawa, chairman of JTB.

The Prince Hakone Lake Ashinoko, a hotel in the hot spring resort of Hakone, west of Tokyo, introduced a stargazing package that took guests 1,300 meters above sea level, but it ended the package after two months, apparently due to a lack of interest.

So how are Japanese spending their extra leisure time?

According to a survey last July taken by an entity related to the public-private Premium Friday Committee, the largest share of respondents, 63%, said they spend the time at home on Premium Fridays. Only 20% said they go shopping or dine out. The survey also found people spent an average of 6,969 yen ($65) on Premium Fridays.

The results show most people are spending their extra free time on home parties, internet video binges and online shopping, reducing the benefit for bricks-and-mortar stores and restaurants.

Still, some have done well from Premium Friday. Kushikatsu Tanaka, a bar and restaurant chain that specializes in kushikatsu (deep-fried pork on skewers) has had a 20% increase in sales on Premium Fridays, compared with ordinary Fridays, since the campaign started. On Premium Fridays it sells all kushikatsu items for 100 yen, generating a lot of repeat business.

Kushikatsu Tanaka is one restaurant that has used Premium Friday to create a sustained rise in sales.

Watami's two Nippon Maguro Gyogyoudan bar-restaurants in Tokyo have also seen sales rises of 10-20%, with customers attracted to special offers like all-you-can-stack tuna sashimi.

The problem is, shops that are drumming up sales from Premium Friday often do not typically offer discounts. The extra business is not coming from those offering "premium goods and experiences," as promoters of the program, such as Keidanren, had hoped. Shops and restaurants will need to offer something more than discounts to overcome the guilt many workers feel about leaving the office early.

Despite the setbacks, not everyone has given up. A METI official involved in promoting Premium Friday believes the campaign will take off in time. "Premium Friday is known to about 90% of the population," the official said. "The game is just starting."

Promoting the campaign is one thing, but affecting consumer behavior is another. One key to doing that is creating a work environment where employees can find it easier to take time off. The July survey found that only 11% of respondents left office earlier than usual on Premium Fridays.

In Osaka, 500km west of Keidanren's Tokyo headquarters, executives are said to need reminders about the existence of lifestyle campaigns like Premium Friday. Few companies there behave like Daiwa House Industry, which encourages employees to use up their paid leave, as backers of Premium Friday such as METI had hoped.

J. Front Retailing President Ryoichi Yamamoto believes Premium Friday needs persistent effort over a long time before it can take root. "Halloween is now a big event for Japanese, but it took decades before it was accepted," Yamamoto said. "By the same token, you have to be patient in promoting Premium Friday."

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