Japanese market still lucrative for luxury brands

Wednesday, 18 July 2012
The Japanese market has been very lucrative to British and international luxury brands, and after several seasons of stagnating sales, is finally picking up again. Just twelve months ago, the giants of the fashion and luxury sector presumed the Japanese market had reached its peak, after the tsunami, explosion and a troubled economy. Things have turned around, however, and for the first time in the last four years, Japanese sales have grown 4%.

Japan has turned itself around with surprising velocity and the luxury sector has revived consumers and the economy. The Japanese luxury industry has always been difficult, made up of demanding and hard to please consumers, particularly in the fashion division.

Japanese consumers are not easy to please, as they have extremely high standards of quality, difficult to reach even for the most meticulous manufacturing companies. Patrizio di Marco, President and CEO of Gucci, which has 62 stores in Japan, explained: “Japan is one of the biggest and most important luxury markets in the world, with sophisticated and technological consumers. In the last ten years, the most important brands went through times of difficulty, and the situation is still complex. The year 2011 was a time of recovery both in terms of revenues and brand recognition among Japanese clients. Last year’s tragic events only temporarily hit our business. We are still investing a lot, both in terms of quality and marketing, there probably is no other market other than Japan in which Gucci’s positioning is more appropriate”.

Japanese consumers are continuously proving themselves to be more aware of high-end materials, and appreciative of exclusive clothing and accessories. Jeanie Chen, financial analyst in Tokyo commented, “I think that people here have decided to buy clothes of little interest. They prefer to save for more important purchases. They look for exclusive items, that last long that won’t go out of fashion after one season. There was a notable increase in jewelry sales, especially in precious watches”.

After the tsunami, the logic of Japanese distribution is changing. Many stores have left big cities in order to reorganize quickly in the suburbs, and a new wealthy Chinese clientele is arriving in Japan. Whether this is due to close proximity to the country, or the variety in products, isn’t clear, but sales are soaring. It is difficult to renounce fashion, and Japan is proof of this.

Image: Comme des Garcons