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Economic woes cramp style of Japanese luxury shoppers

(Agencies)
Updated: 2008-10-20 10:17

Louis Vuitton's Secret Bag

Inside the spacious boutique, smiling women greet visitors with a bow, while a handful of customers look at bags, shoes and ruffled dresses costing upwards of 500,000 yen ($5,000). When this boutique first opened, long queues would form outside.

A man passes a Louis Vuitton store at luxury goods mall in Macau. The question of whether the Asian market for branded handbags, watches, jewellery and fashion will be snipped or scalped by the likely global economic slowdown is dominating retailers' minds. [Agencies]

"Over the past year, fewer and fewer people have been coming to this shop," said shop assistant Takashi Hara. "The economy is decreasing. But we do see more and more rich Chinese tourists, they know rich Japanese people live here so they come here."

If there is one brand that has symbolised Japan's passion for labels, it is Louis Vuitton. Japan makes up 10 percent of the total revenue of LVMH, the world's biggest luxury group.

Louis Vuitton's strategy for Japan reflects the sector's broader effort to court the super-high segment.

Hara and his colleagues send birthday cakes to regular clients and even show them a "secret" bag made of crocodile skin that is not advertised nor displayed in shops.

The price tag: 6,000,000 yen ($60,000). Two or three Japanese have bought one so far.

But a hard look at the numbers seems to show that Japan's new billionaires, and even the rich Chinese, cannot offset the loss of thousands of Japanese secretaries who used to pay off the latest handbag in credit card instalments.

LVMH saw yen-denominated sales in Japan fall 7 percent year-on-year in the nine months to September 30. In contrast, they rose 22 percent in the rest of Asia and 9 percent in Europe.

Hermes and Italian jeweller Bulgari reported a modest rise in Japanese sales of 1.5 percent and 3.8 percent, respectively, for the six months to June 30. European sales rose 27.8 percent at Hermes and 7.5 percent at Bulgari over that period.

The young and female shoppers are now rarely seen in Roppongi Hills, where they cannot afford any of the goods on show.

Instead, they go to Ginza. They walk along the beautifully decorated windows of Gucci, Chanel, Bulgari, and Hermes, marvel at the rippling silk dresses, hand-stitched bags and sparkling necklaces, and then head to the newly opened Hennes & Mauritz branch for a little feel-good shopping.

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