When East Met West: Examining the Japanese Fashion Market

While China has been the new obsession for fashion companies seeking new territory, Japan was the first Asian market to openly embrace Western luxury brands into their economy and it remains the country with the third largest retail spending in the world. When the Japanese economy took off in the late 1960’s, the large Japanese middle-class found that they were ready to start living a more grandiose life-style. In another country, one might have expected to see the construction of impressive mansions, but in densely populated cities like Tokyo, this proved to be an impossible feat. Instead, the Japanese turned to high fashion, dressing themselves in expensive silks and furs, and accessorizing with lavish jewels and expensive leather wallets and handbags. Japanese consumers claimed that they decided to buy luxury products for reasons of durability, yet researchers believe that a larger sociological mentality plays a bigger role in the Japanese obsession with high fashion. Japan is both a classless (85 percent of Japanese citizens believe themselves to be middle-class ) and conformist society, and the combination of the two makes them very receptive to brand marketing. Dana Thomas writes that, “by wearing and carrying luxury goods covered with logos, the Japanese are able to identify themselves in socioeconomic terms as well as conform to social mores. It’s as if they are branding themselves.”
With the Japanese focusing on logo-centric fashion brands, it is no wonder that Louis Vuitton is so successful in the country. Vuitton pioneered the Japanese market when it began retailing in five different Tokyo department stores in March 1978 and another in Osaka six months later. In the first year, those six stores sold 5.8 million dollars worth of Vuitton products and had doubled sales to $11 million by 1980. In 2007, it was estimated that approximately 2/5 of the Japanese population owned a Vuitton product. Vuitton’s success let countless other fashion houses, such as Prada, Gucci, and Hermès to try and get their products to Japanese consumers. Clay Chandler, journalist for Fortune Magazine, writes that even “after the ‘bubble economy’ burst, with Japan’s jobless rate hovering at an all-time high, stocks languishing, and bankruptcies raging - shoppers still can’t get enough $4,000 handbags and $1,500 shoes. The fashion industry is counting on shoppers in the industrial world’s sickest economy to keep it afloat.” Today, analysts estimate that 20 percent of all luxury goods are sold in Japan and another 30 percent to Japanese citizens traveling abroad, meaning that Japanese buy half of all luxury goods sold in the world today.
While the market in Japan has been historically important for the luxury goods industry, it may soon be giving way to markets like China, Russia, and India. The Economist reported in September 2008 that the Japanese star of the luxury goods industry may be losing its shine, as sales slid in Japan for brands such as Hermès, Gucci, Tiffany, Chanel and Armani. Pioneer brand Louis Vuitton experienced a six percent slide in the first six months of 2008, the first time sales have dropped for the company since its arrival in the country in 1978.
Many factors play into the decreasing demand for high fashion in Japan. Primarily, the weak economy and the steady appreciation of the euro against the yen in recent years have made it more difficult for Japanese customers to bring themselves to buy European luxury imports. Furthermore, the population of young, single, wealthy Japanese citizens still living at home with their parents (and subsequently, a large customer base for ostentatious purchases) is starting to age, leaving fewer fashion-crazed consumers in their place. Lastly, it seems as though tastes are starting to change in Japan regarding luxury purchases – there is more of an interest in craftsmanship and long-term value in each purchase, instead of simply buying logo-covered status symbols. The important question is whether Japan is an isolated example, or whether it signals a broader shift in consumer values, as explained earlier in the paper. If customers in other developed countries are no longer impressed by logos, will the big brands change their companies’ images or will they come to rely more heavily on fast-growing emerging economies, where the new rich will continue purchasing status and glamour at any price?