Japan Goes Post-Luxury
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With sales of luxury goods declining in Japan, an article in the Financial Times argues that we might be witnessing an evolution, or at least permanent change, in consumer behavior there. In the article, Michiyo Nakamoto says that Japan became a mass-luxury market in the 80s and 90s where owning a Louis Vuitton bag or Hermes scarf was a middle-class rite of passage – but mow consumers have grown confident in mixing and matching luxury items with cheaper ones:
“This is not a blip. This is a long-term shift in the market,” said Brian Salsberg, the author of a McKinsey report on the Japanese luxury goods market, the world’s second largest… While luxury sales throughout the world are being hit by the recession, Mr Salsberg said that the implications of the latest slump for Japan were likely to be more serious and long-lasting.
… The growing confidence of shoppers in mixing and matching cheap and expensive products, coupled with competition from a growing array of luxury services such as spas and expensive restaurants, have robbed the brands of their hold on such spending.
Mr Salsberg said the brand makers, which created “a luxury bubble” with “a ridiculous number of store build-outs”, bore some blame for their predicament. He warned that they risked repeating the mistake in China.
China was the “growth story” for luxury but if makers flooded the market with stores as in Japan and people were able to buy such goods on every street corner, “the industry is going to destroy itself” there, he said.