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Negative interest rate policy sparks unexpected changes in consumer behavior

A customer signs up for the "Tomonokai" service at the Takashimaya department store in Tokyo's Nihonbashi area, on Feb. 22, 2016. (Mainichi)

The negative interest rate policy adopted by the Bank of Japan (BOJ) is beginning to affect consumer behavior.

    Major department stores are seeing a surge in the number of people signing up for their "Tomonokai" services, plans allowing customers to set aside money for a certain period to eventually receive "high yield" gift vouchers and other items. In the car industry, some dealers have set up zero-interest loans in an attempt to win customers. In the meantime, safes for household use are selling well. As such, it is unclear whether the negative interest rate policy will in fact stimulate consumption as planned.

    After registering for the Tomonokai service at the Takashimaya department store in Tokyo's Nihonbashi on Feb. 22, a 55-year-old housewife from Shiki, Saitama Prefecture, said, "My husband and I talked it over and concluded that there's no point in depositing money with banks (offering low interest rates on deposits), and decided to sign up" for the service.

    Under Takashimaya's Tomonokai service, people primarily deposit 5,000 to 50,000 yen each month for one year. At the end of that year, they receive shopping cards worth the total deposited plus one month, which can be spent at Takashimaya-affiliated stores. It has no expiration date. The Saitama woman told the Mainichi Shimbun, "I didn't feel any attraction to it before, but I started to think it's a good deal after the negative interest rate policy was reported by the media."

    Takashimaya saw a 66.5 percent rise in new and renewing customers for its Tomonokai service in the first 21 days of February compared to the same period a year earlier. The company says there were also large increases in customers choosing high monthly deposit amount plans, with the number opting for its 30,000-yen course jumping fivefold, and 50,000-yen course subscriptions increasing threefold.

    In response to the BOJ's negative interest rate decision, major banks have lowered deposit interest rates. A Takashimaya public relations department official said, "There has been an increase in the number of our customers who think they can use their assets more effectively by signing up for the Tomonokai than depositing money in banks. We are encouraging (customers to sign up for the service) while at the same time advising them not to confuse it with a financial instrument."

    J. Front Retailing Co., which operates the Daimaru and Matsuzakaya department stores, also saw a nearly twofold increase in the number of customers signing up for new Tomonokai service contracts in the first 18 days of February compared to the same period in 2015. Odakyu Department Store Co. also saw a twofold increase in the number of new and renewing Tomonokai customers.

    In the auto industry, meanwhile, interest rates on car loans have been falling. Peugeot Citroen Japon Co., the Japanese unit of major French automaker PSA Peugeot Citroen, started a campaign to set the interest rate on some car loans at 0 percent for about one month starting in Feb. 20. By reducing the interest rate to 0 percent from 2.99 percent, the company can, for example, sell its 3.4 million yen compact car (with a down payment of about 1 million yen) about 140,000 to 150,000 yen cheaper on condition that it will be traded in for a new car in the future.

    "The 0 percent interest rate has a huge impact, so we are hoping that it will prompt people to visit our showrooms," a company official said. If the campaign goes well, the company will consider continuing it in April and after.

    Meanwhile, home center operator Shimachu Co. says that Feb. 15-21 sales of strongboxes for household and small office use jumped by 2.5 times compared to 2015 figures for the same period. A Shimachu official said that some of the stores have been advertising strongboxes as "drawing attention" in the context of the negative interest rate policy.

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