Thu, Apr 27, 2017 - Page 10 News List

Japan still a powerhouse in luxury spending

AFP, TOKYO

Christian Dior Couture CEO Sidney Toledano, right, guides Japanese Princess Takamado during a preview of Dior’s new shop at the Ginza shopping district in Tokyo on Wednesday last week.

Photo: AFP

Tight-fisted shoppers, unsteady economic growth and a shrinking population: Japan does not exactly fit the image of a spending powerhouse these days.

However, you would never know it in Ginza — Tokyo’s answer to the Champs-Elysees or Fifth Avenue — where a new 13-story upscale mall is proving that Japan is still a whale in the luxury business.

The nation logs about US$22.7 billion in annual spending on top-end goods made by brands including Chanel, Dior and Prada, ranking it as the world’s No. 2 luxury market behind the US.

“Luxury products may be more expensive, but they are very well-made,” 79-year-old Toshiko Obu said, carrying her longtime Fendi bag outside the Ginza Six building, which has been drawing big crowds since last week’s opening.

Japan is renowned among the world’s priciest retailers for its discriminating clientele — Chanel tries to keep local customers physically separated from tourists packing more cash than class.

“You shouldn’t forget that a big portion of the luxury clientele is here in Japan,” Christian Dior Couture chief executive Sidney Toledano said at the opening of the 241-store building.

“It remains a strategic market for luxury and, I’d say, true luxury,” he said.

Dior is counting on Japan’s luxury market to rise this year, while rival Chanel is also expecting an upbeat year, after global sales of personal luxury goods barely grew last year.

“We did not lose our character,” said Richard Collasse, head of Chanel in Japan.

“There are brands that are suffering — the ones that at some stage stopped investing in Japan because China was the new El Dorado, and today they are biting their fingernails,” he said.

Few brands predicted that deep-pocketed Chinese shoppers visiting Japan would support its luxury market — tourists account for about one-third of top-end spending.

Japan is hoping to land 40 million visitors in 2020, the year that Tokyo hosts the Olympics. Last year, about 6 million Chinese visited, compared with 2.4 million in 2014.

“Historically, [Japan has] been a very insular luxury market where 90 to 95 percent of the spending was by locals,” said Joelle de Montgolfier, Paris-based director of consumer and luxury product research at consultancy Bain & Company.

But now about 30 percent of sales are generated by foreign visitors owing to tourism, she added.

A stronger yen dented visitors’ purchasing power last year, with luxury sales down 1 percent, after a 9 percent rise in 2015.

Toledano said it is an opportunity to refocus on Japanese clientele.

“We don’t ignore tourists, of course, but we’re not a duty-free shop,” he added.

Some Chanel shops in Tokyo have a separate cosmetics and perfume section reserved for top Japanese customers, in a bid to keep them away from the nouveau riche crowd. It also tips off local clientele about the expected arrival time of tourist buses so they can avoid them.

“The loyal Japanese clients tend to run away from customers who were not very well-raised and are wearing whatever or lying all over the sofa, touching everything,” Collasse said.

Dior’s haute couture show at the new mall’s opening featured Japanese-inspired dresses, underscoring a focus on the local market.

However, warning signs lurk behind smiling clerks and glitzy interiors at the new property on one of the world’s priciest shopping streets.

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