In fashionomics, the art of bling loses its appeal during economic woes and fashion houses have been careful to take on board the public mood so as to sell their collections and stay relevant in tougher times. The luxury downturn has not bypassed Japan and one fashion house is finding its wares a difficult sell.

As the anaemic Japanese economy casts its spell on the public psyche, ostentatious displays of wealth have given way to more sober fashion. Therefore it was perhaps appropriate on Wednesday when Versace said it was preparing to pull out of Japan after closing its three directly-owned stores.

Sales of luxury goods have dropped dramatically following the demise of Lehman Brothers, says Kazuhiro Saito, president of Vogue Japan. But the global luxury market has been saturated for the past four to five years, and the financial crisis simply brought the problems into relief, he says.

Mr Saito, who believes Versace’s woes had more to do with problems back in Milan than with weak sales in Tokyo, is nonetheless convinced that Japan’s luxury market is no longer the powerful force it used to be when every woman office worker toted a Louis Vuitton bag or let a Hermès scarf peep from below her suit jacket.

In an effort to seduce consumers, luxury goods companies built ever-more elaborate and costly flagship stores by big-name architects, loading them with extras (a cafe at Gucci; a concert hall at Chanel) and filling them with “only in Japan” product lines.

Though some executives note that these flagships still serve an effective marketing purpose, as they attract Chinese tourists in Tokyo who then take the brand image back home with them, the Versace closings suggest that a new era of pragmatism may be dawning in the luxury world.

Indeed, a recent study by Yano Research, a market research group, underlines the trend of weakening Japanese demand for luxury goods. Sales of top-end luxury goods in the country dropped nearly 11 per cent last year, to Y1,064bn ($12bn), Yano reports. It also estimates that Japan’s market for imported brands has shrunk by about Y800bn since 1996, with further declines ahead.

Japanese consumers have also developed a taste for outlet shopping and value-for-money clothing, such as those offered by H&M, Forever 21 and Uniqlo. Recent openings of these stores have attracted long queues.

Image: Japan luxury
Source: Financial Times

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