Gyudon (beef and rice with teriyaki sauce) is a typical dish for ordinary Japanese. Beginning at the end of last year, however, it has also repeatedly been the stuff of headlines in Japan.

In December of last year, Matsuya, one of Japan's top three chain restaurants in the Gyudon (or "Beef Bowl") business, with a 44-year history, led the way in dropping prices on its standard Gyudon offering from 380 yen to 320 yen. Rival chain Sukiya promptly followed suit, slashing prices on its standard Gyudon offering from 330 yen to 280 yen.

Suddenly, Gyudon had become symbolic of deflation, and commentators even began bandying about the "Gyudon theory of national decline."

Here Come the Hodo-Hodo Zoku

Beginning in the 1990s, Japan's economy fell into long-term decline, now often referred to as that country's "lost decades." With the bleak economic situation, the system of lifetime employment crumbled amid layoffs and the rise of temporary and contract workers, dragging an already apprehensive Japanese population into greater depths of anxiety.

The effects of the economic malaise went as far as creating significant changes in consumer behavior. A McKinsey & Co. report noted that the younger generation now coming of age, having never experienced the halcyon years of the "bubble economy," tend to be pessimistic about employment prospects and consumer spending, and many have joined the underachieving subculture known as hodo-hodo zoku ("so-so folks").

Japanese consumers, who had previously shown a widespread willingness to spend more for quality and convenience, are now flocking to discount stores and online retailers to buy goods in quantity at lower prices. People are going out less and even packing their own lunches. The McKinsey & Co. report concluded that consumerism in Japan had by now entered a "new normal."

Three Emergent Consumer Phenomena

These changing Japanese consumers have different demands and modes of consumption from the previous behaviors of name brand pursuit and a willingness to pay top price in the quest for quality.

1. Rise of 'Good Goods at Good Prices'

Japanese consumers are now demanding greater value for their yen. Companies offering goods of comparable quality and functionality at a lower price are the newly emergent winners here.

"Right now in Japan, if it isn't cheap it's probably not going to sell well," says Akio Nitori, president of Nitori Home Fashion. "Even if it's cheap, you have to maintain quality and functionality, and you have to create goods that offer convenience and brand new functions."

Under the slogan "total pursuit of price and functionality," Nitori sells its goods for around half what its competitors charge for similar products, while still developing appealing products such as automatically adjustable reclining sofas and double-layered winter-summer quilts. This has kept both the company's sales volume and average profit continually on the rise even during these past several years of economic bleakness.

2. Rise of Exchange Economy – 'No Need to Own What You Like'

Japan was once a primary battleground for top-notch branded goods, as the world's number-two luxury goods market. Yet in 2008, Louis Vuitton, the label behind world-leading luxury product group LVMH, cancelled the planned autumn 2010 opening of what would have been its largest flagship store in Tokyo's ritzy Ginza shopping district. Lackluster Japanese consumer spending on luxury goods was cited as the reason.

Instead, luxury goods rental shops have emerged to satisfy the latent consumer desire to experience and enjoy brand-name luxury goods accompanied by an attendant unwillingness to go the extra mile in actually purchasing them. Aside from its environmentally friendly business practices, the success of the Book-Off Group, founded in Kanagawa Prefecture's Sagamihara City, is symbolic of changing Japanese attitudes towards "ownership" amidst a slack economy.

The secondhand bookseller has managed to grow into a chain of nearly 1,000 outlets across Japan despite the "lost decades" of economic decline and has even extended its reach into other goods. Here consumers can exchange goods for cash and can also purchase other goods at a relatively low price. Book-Off deals not only in used books, CDs, DVDs and video games, but also baby products, clothing and accessories and even golf clubs, as it creates a "used and reused" business empire.

3. Consumer Flexibility

As consumers have become more flexible, they have also become more astute in giving themselves a greater set of choices as to their consumption habits under any given set of circumstances.

For example, at the outbreak of the "Beef Bowl Wars," Yoshinoya, Japan's oldest Gyudon chain, did not immediately enter the fray, but as Yoshinoya Holdings PR Department manager Haruhiko Kizo admits, the price wars allowed them to "get to know those customers who need products in the under-300 yen price range."

In spring of this year, Yoshinoya set about developing products targeting this new customer base and in autumn formally launched its new 280-yen Gyunabedon meal.

The Gyunabedon has boosted Yoshinoya's customer visits by 40 percent. Actually, these customers don't necessarily order the 280-yen offering each visit, sometimes perhaps opting for more costly selections. On some level they are still seeking quality selections, but Japan's lost decades have clearly made consumers more liable to "pinch pennies according to circumstances."

Translated from the Chinese by Brian Kennedy