Luxury goods in Japan - statistics & facts
Japan was once the second-largest luxury goods market worldwide but was overthrown by the booming Chinese market in 2015. Japanese consumers are brand-aware and relatively wealthy, but consumer confidence has not recovered from previous economic crises. Even though the country boasts the second-highest number of millionaires in the Asia-Pacific region, fears of financial insecurity hinder widespread luxury consumption. Demand for items like prestige brand fashion and jewelry has shrunk drastically following the burst of the economic bubble in the 90s and the resulting economic slowdown. While the market has gradually returned to a growth trajectory again, brands must attract new consumer groups to achieve sustainable growth in an aging society.
The most renowned upscale shopping district in Japan is Tokyo’s Ginza, where the flagship stores and headquarters of major luxury brands operating in the country can be found. Luxury shopping is an in-store experience. The rising number of counterfeit products and the importance of a smooth shopping experience draws shoppers to brick-and-mortar stores, despite the recent growth of e-commerce in the country. This is apparent in major foreign brands’ investment in their large store network, with LVMH operating almost 500 stores in Japan alone.
Apart from domestic consumption, the luxury goods market generates a significant share of its sales from shopping tourism. Chinese nationals represent the largest and most spendthrift visitor group, with jewelry and high-end fashion being popular target segments. Amid the weakening of the Japanese yen and the booming tourism industry, the luxury goods market is benefitting from the tailwind generated through inbound sales.
Between lipsticks and glitter
The defining characteristic of the Japanese luxury goods market is a pronounced premium beauty segment, which outperforms the budget-friendly end of the market. As such, it comes as no surprise that the ranking of Japanese luxury goods companies is dominated by cosmetic corporations spearheaded by Shiseido Company. However, in contrast to global conglomerates like Kering Group and LVMH that cover several consumer goods segments, Japan’s leaders focus mainly on one industry – primarily cosmetics or fashion.The most renowned upscale shopping district in Japan is Tokyo’s Ginza, where the flagship stores and headquarters of major luxury brands operating in the country can be found. Luxury shopping is an in-store experience. The rising number of counterfeit products and the importance of a smooth shopping experience draws shoppers to brick-and-mortar stores, despite the recent growth of e-commerce in the country. This is apparent in major foreign brands’ investment in their large store network, with LVMH operating almost 500 stores in Japan alone.
The spectrum of luxury consumption
Trust-based interactions with sales associates influence Japanese luxury sales to the point that personalized experiences at affluent consumers’ homes are a common sight in the upper class. Salespersons of department stores, known as gaisho, are dispatched to a customer’s home to present a selection of luxury goods tailored to their preferences. While this VIP treatment does not apply to all luxury consumers, the feeling of exclusivity underlines luxury consumption in Japan. Even though the economic challenges of the last decades have toned down the drive for luxury among consumers, renowned brand goods are desired as status symbols. The rapid rise in secondhand branded goods sales are a testimony to the tentative return of aspiring luxury shoppers.Apart from domestic consumption, the luxury goods market generates a significant share of its sales from shopping tourism. Chinese nationals represent the largest and most spendthrift visitor group, with jewelry and high-end fashion being popular target segments. Amid the weakening of the Japanese yen and the booming tourism industry, the luxury goods market is benefitting from the tailwind generated through inbound sales.
