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Wealthy Retirees Boost Demand For Luxury Goods

The Daily Yomiuri

Japan

July 9, 2004

Domestic demand for big ticket items and services is growing.

Luxury cruises, vehicles and watches are among the things priced at more than 10 million yen that have sold well in recent years. The trend is also characterized by the debut of a credit card with an annual fee of 160,000 yen.

The strong demand for such high-end products and services is being put down to social changes, such as the increase in the number of affluent elderly people. The growing polarization of wealth in the country also means that there is an increasing number of very rich individuals able to buy such goods and services.

Leisurely travel

A round-the-world voyage on the magnificent Asuka cruise ship might be the perfect trip for retired couples who can travel the world without time constraints.

The ship boasts cabins of up to 60 square meters. Its best double-occupancy cabin with a balcony, called the Royal Suite, costs 16 million yen per person. Even the cheapest single cabin costs 3.4 million yen.

Despite such high prices, about 300 cabins were booked in March alone for a cruise scheduled to depart in April. After leaving Yokohama Port the ship will tour about 30 world cities, including Istanbul and Monte Carlo, over a 100-day period. Cruises departing in 2006 are now on sale.

According to NYK Cruises Co., the Tokyo-based operator of the Asuka, married couples account for 80 percent of passengers and the average age of passengers is about 70. The cruises win many repeat customers, the company said.

"Looking at the standard 3.5 million yen cabin, that works out at about 35,000 yen per day, which covers all accommodation, transportation and food costs. That's pretty reasonable, isn't it?" a company official said.

In April, JTB Corp. began offering a travel package featuring a chartered business jet at its special branch in Tokyo's Chuo Ward, called Royal Road Ginza. The branch was set up to enhance service for affluent customers.

The package allows customers to create their own travel plans. For example, the charter fee for such a jet on a round-trip of six days and four nights--a round-trip from Tokyo via Los Angeles, the Grand Canyon and Las Vegas--is about 30 million yen.

Costly cars

The trend also can be seen at a car showroom operated by Cornes & Co., a trading firm dealing in luxury imported vehicles. At the showroom in Minami-Aoyama, a famously stylish district of Tokyo, the Maserati Quattroporte is grabbing attention despite its high price--about 13.4 million yen. Since the company began taking orders from customers in March, about 150 of the cars have been sold. The model started shipping to customers last month.

According to the company, the car is mainly being bought by company owners, doctors and high-flyers in information technology-related businesses.

Besides the Maserati, a Rolls-Royce priced at 41 million yen and other luxury cars have been put on display in the showroom.

In the watch market, the sale of products equipped with a so-called tourbillion mechanism has been on rise. The mechanism keeps a watch from losing accuracy and dates back to the 18th century.

Only a few watch manufacturers, such as Audemars Piguet and Breguet of Switzerland, now have the skills to produce tourbillions, which even today can only be handcrafted by skilled artisans. Some watches featuring the mechanism are priced at more than 10 million yen.

Last year, a watch of this type priced at 43.5 million yen was reportedly sold at the Ginza Wako store in Tokyo. While some luxury watches are decorated with diamonds on their face, these unadorned watches are sought-after by those interested in mechanical things.

Plastic status symbol

American Express Co. has introduced a new credit card--the Centurion Card. The card, often called Amex Black because of its color, is fast becoming a status symbol among the moneyed classes.

The company said it was selecting potential card members from among its platinum-card holders. The annual fee for the black card is 160,000 yen.

American Express offers such cardholders exclusive customized services. For example, the company has standing reservations for rooms at various luxury hotels and tables at certain upscale restaurants to ensure they are available to cardholders.