Louis Vuitton canceled its plans to rent a 10 story tower in Japan for a flagship retail store. While they wouldn’t say why they had a change of heart, it’s hard to ignore slumping sales of luxury items like fancy handbags in Japan. While Japan is still the most profitable nation for Louis Vuitton Moet Hennessy, Japan’s share of their sales have fallen from 40% in 2001 to just 10% last year, reports the Wall Street Journal.
WSJ: What is clear is that the deepening recession is just part of LVMH’s woes. There are increasing signs that young Japanese women are finally tiring of the luxury brands that previous generations long snapped up.
This broader shift is forcing a rethink among many foreign brands, for which Japan remains a lucrative overseas market. According to a Bain & Co. study released last month, luxury goods spending in Japan alone makes up 12% of the total global sales of €175 billion ($240 billion); in comparison, the Americas makes up 33%, and Europe makes up 38% (numbers for other individual countries weren’t broken out).
But the Bain study said that overal luxury good sales in Japan are expected to decline by 7% in 2008, after a 2% decline in 2007.
Japan sales for LVMH may also fall for the full year this year. LVMH reported that Japan sales were down 7% in the first nine months of 2008, as world-wide sales grew 4.5% in the period to €11.6 billion.
And here’s a great quote from a Japanese lass. I’m sure her parents will be excited to read this:
“If it looks good, I don’t care what the label is,” says Izumi Sugano, a 21-year-old shop assistant in central Tokyo. A few years ago in high school, she coveted any bag with a Louis Vuitton monogram. “Now that I’m working, I realise it’s silly to spend so much on a single bag…there are so many cheap but cute things,” says Ms. Sugano, who recently sported a no-brand bag that cost her less than $100.