Sales of luxury goods in Japan have soared due to a weaker yen and increased tourist spending. The luxury goods industry is facing decline in China, making the growth of the Japanese market crucial. Brands like Hermès thrive in Japan because they align with Japanese values of delicacy and quality.
Thank you for registering!
Access your favorite topics in a personalized feed on the go. Download the app
By clicking “Sign Up”, you agree to our Terms of Service and Privacy Policy. You can opt-out at any time by visiting our settings page or by clicking “unsubscribe” at the bottom of the email.
If you wanted to buy luxury goods in Japan this summer, you had to wait in line.
Amrita Banta, managing director of luxury goods information firm Agility Research & Strategy, said high-end stores are now requiring reservations to cope with the rush of tourists flocking to Japan to take advantage of the weak yen and cheap luxury goods. It is said that they have started accepting customers.
The surge in sales in Japan is a much-needed boost for the luxury goods industry, which has been hit hard by declining demand in China.
In the second quarter of 2024, LVMH’s sales in Japan increased by 57%, significantly outpacing other markets. Gucci owner Kering also saw sales rise 27% in Japan in the second quarter, but sales fell in other markets.
This year, Japan is crowded with tourists thanks to the weak yen. Rasmus Julkatam/Getty Images
However, in the third quarter, both LVMH and Kering reported a slowdown in luxury spending in Japan.
Japan’s shopping boom appears to be slowing down due to a combination of the appreciation of the yen due to intervention by the Japanese government and economic instability overseas.
Experts say that while tourist spending may have slowed somewhat, Japanese consumers are emerging from an era of frugality and are spending their money on luxury goods.
“There’s a lot of optimism about Japan in the market,” Morningstar luxury goods analyst Elena Sokolova told BI.
Daniel Langer, CEO of brand development and strategy firm Equite and professor of luxury at Pepperdine University, said in an email that rising wages and a strong yen are boosting confidence in Japanese consumer spending. told BI.
But the Japanese aren’t just throwing cash everywhere, which is a bitter pill for some luxury brands.
Understated luxury matches Japanese values
Hermès is an example of a brand that continues to have strong momentum in Japan.
Martin Rohr, global business strategist and senior advisor at consulting giant McKinsey, told BI that one reason for this is that its image is consistent with Japan’s core values.
The Birkin bag manufacturer’s hallmarks of consistency, craftsmanship, and “quality over flashy branding” are reflected in Japanese consumers seeking “subtle luxury that conveys a sense of tradition and exclusivity, without overt flashiness.” “The desire of the world,” he said.
“Hermès and similar brands have appeal here because they prioritize quality, delicacy and minimalism over flashiness. That’s the key to success in Japan’s luxury space,” Rohr said. spoke.
Related articles
Japanese audience nuances
Trend-forward brands have historically performed well in regions with younger populations such as India and China, but “Japan is a more stable and mature market,” especially given its aging population, Banta said. Ta.
Banta said brands such as Prada, Louis Vuitton and Hermès, long considered the epitome of luxury and with a carefully selected selection of cult favorites, will continue to gain traction among locals. He said he would maintain it.
Still, young, affluent Japanese consumers hold many of the same values as their elders, although they tend to be more selfish, Rohr said.
“This group is keen to invest in high-quality products that blend tradition with modern self-indulgence, and appreciates brands that offer a sophisticated but not over-the-top luxury experience.” Roll added.
Japanese values and philosophy are consistent with the trend of quiet luxury. Ducasse/Getty Images
Langer said luxury brands that did not participate in “greedflation” and raised prices after the pandemic also developed trust with Japanese consumers.
Japan has always been an important market for luxury brands, but in the early 2010s it was overtaken by China as the world’s largest market.
But now that China appears to be less of the luxury cash cow that it once was, brands looking to turn to Japan again will need to redouble their respect and understanding of the locals. .
“Cultural capital is the name of the game in today’s world,” Langer said.
“Brands need to be able to inspire Japanese audiences, and this means giving them what they want,” he added. “Brand storytelling, timelessness and meticulous quality are extremely important in this market.”
