You have to love the Japanese language — they have a word for pretty much everything.

A fine example is choiwaru oyaji — defined as a middle-aged man who is “slightly bad,” in a recent article.

Everyone knows the type: the naughty old guy in the office who likes to flirt with the receptionist and tell the occasional off-color joke at the water cooler. He’s not a “dirty old man” per se, but more of a rascally little boy who never fully grew up. He’s in his 50s but still young at heart, and he takes care of himself — he usually has a good haircut and will generally not be seen in public without a sports jacket and a classy pair of shoes. He’s certainly no beaten-down, everyman slob like Al Bundy (or Al’s Japanese equivalent).

Give credit to the Japanese for inventing a phrase that encapsulates this mental image!

The existence of millions of these choiwaru oyaji in Japan is one of the reasons that, despite two decades of recession, the country has remained the largest market in the world for luxury goods. After all, in addition to buying himself the requisite Rolex watch and Montblanc pen, he likely has to buy a Louis Vuitton handbag for his wife, daughter, mother, and possibly a mistress or two. Yes, the “slightly bad middle-aged man” has quite a few women he feels obligated to impress.

Not surprisingly, Japan absorbs roughly 30% of the world’s luxury goods, compared to roughly 20% each for the United States and Europe.

The luxury market is also supported by the other end of the spectrum, which — in typical Japanese form — also has its own word. A makeinu is a single woman in her 30s without children (the literal translation is “loser dog” — see sociological explanation here). These are essentially the Japanese equivalents of the Sex and the City characters. You can imagine that Sarah Jessica Parker’s wildly popular TV show would have never gotten off the ground had it been invented in Japan; “Loser Dogs and the City” just doesn’t have the same marketable ring to it.

At any rate, Japan is full of makeinu in their 20s and 30s who, in lieu of getting married and raising children, have opted to continue living with their parents rent-free and to spend their disposable income on shoes and designer purses.

Between “slightly bad middle-aged men” and “loser dogs,” it’s easy to see where Japan gets its appetite for luxury goods.

That appetite has started to wane, however. In the wake of the 2007-2009 global recession, the New York Times tells us that “Once Slave to Luxury, Japan Catches Thrift Bug.”

It appears that the recession has accelerated a generational trend. The choiwaru oyaji are aging out of the prime luxury spending years; men in their mid-60s and 70s are far less likely to splurge on luxury goods than a man in his mid-50s, at the peak of his income and power. Meanwhile, younger girls appear less interested in brands than their older sisters.

So, could Japan’s long love affair with luxury goods finally be drawing to a close? It’s too early to say, but it does appear that, at the very least, Japan’s demand for these products will moderate due to changing demographic trends. The real growth for the sector will have to come from emerging markets with legions of nouveau riche — such as China, India, and Brazil.

Charles Lewis Sizemore, CFA

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