With all the luxury industry’s hype about the up and coming Chinese market, India’s growing appetite, and Russia’s billionaires, there is one market that just ain’t what it used to be: Japan. Awfully quiet in the recent revival, it’s bizarre to see the Japanese are slowing down their consumption. As the undisputed leading market for luxury goods in the 80s, 90s and early 2000s, what can possibly change so abruptly? Deflation. Many luxury brands had their Faberge eggs in the Japanese basket and until very recently, had good reason to do so. It was standard practice in Tokyo to spend (equivalent) $2000 AUD on a handbag, or $200 on a tie. But times are changing, and a lack of consumer confidence has made ‘affordable’ all the rage. If in doubt regarding this statement, note the popularity of the first Japanese Hooters.
For the last few years, even prior to the GFC, luxury brands reported global growth across all markets with the exception of Japan. For the last two years, the US and the UK have been alongside Japan in regards to negative growth. Today, most key luxury brands seem to be reporting that the US, UK and European markets are picking up– and they are leaving Japan in their wake. Thankfully for luxury brands, Chinese neighbours can’t seem to get enough.
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