Inheritance Power

It is my hypothesis, and also my belief, that the "inheritance generation" should be the core of corporate strategy. The inheritance generation is centered on people in their thirties, and these people exert an influence on all other generations. You might well ask, why the thirties? As far as people aged over 50 are concerned, people in their thirties typically are on the defensive in their lives. They have almost no disposable income, and they are busy raising children, acquiring homes, and repaying mortgages. Accordingly, in terms of consumer behavior, people in their thirties and forties have been labeled as the lost generation, of whom little can be expected.

Nowadays, however, people in their thirties have become the central power in consumption, especially in the purchase of such products as audiovisual equipment and automobiles. Why is it that people in their thirties have such power?

Our Hometheater Phile magazine, the only quarterly journal of its kind in Japan, has a feature introducing the home theater systems of readers as case studies. These people are all respondents to a request on the Phile-web portal site for AV and home theater. More than 100 people send introductions of their home theater systems via e-mail, and about five or six of them are carried in each issue of our magazine.

They all live in good-looking homes. Almost all of them are under 45, and most of them are in their thirties. I was puzzled at first, because it is precisely this generation that should be fully preoccupied by matters of everyday life. Then I realized that they were getting support from their parents. One of the reasons for this is the tax system, and especially the inheritance tax. At present, when a child purchases a home, support of up to \5 million from parents is deductible. If a couple receives support from both sets of parents, the husband and wife can afford a home theater environment. In addition, since either the husband's or wife's parents are probably going to live under the same roof sometime in the future, the pressure of purchasing a home is not so great as before.

At present before-death gifts of up to \1.1 million a year are permitted, and the government's Tax Commission wants to raise this figure to \3 million - \5 million a year. In other words, the government wants to transfer assets from the elderly to the active generation. Assets do not help the government to achieve this goal if they are kept hoarded in chests of drawers at home, either. Since the aim is to pull the economy off the bottom by boosting consumption, the government hopes for a shift of assets to the generation that has the strongest propensity to consume.

Thus, the generation of the thirties, which covers people born in the second baby boom, has come to attract attention. Specifically, this means people aged from 25 to 45, centered on people in their thirties. They are essentially different from people in their fifties or over, who, for example, just have a simple liking for personal computers. People in their thirties have mastered computers and use them just as they use their own arms and legs, and fundamentally they have a strong yearning for entertainment. They dislike uniformity. Instead, they place great importance on their own high-quality lifestyle.

I also came to realize through my investigations that this inheritance generation is also a check generation. Instead of impulse buying, they make the purchases that are the most necessary based on careful planning. In other words, they do not buy things armed only with images. They search the Internet, investigate magazines, talk with friends, and then decide on what purchases to make. And their parents, people in their sixties and seventies, consult with them about what to buy. This is especially so in the case of AV equipment.

The features that this generation in their thirties looks for in products are advanced level, quality, reliability, cost performance, and after-sale service. The reasons why they have disposable cash are that they remain single, or both spouses work, or they put off having children, or they decide to have just one child or no children at all. This generation has been through hard times. People now in their thirties were in their teens in the period of the speculative bubble economy in the late 1980s and in their twenties in the years after the bubble burst. This factor also has probably exerted an influence on their lifestyle building.

Only companies that have the support of this generation will grow stronger.