Luxury goods in Japan - statistics & facts
Japan was once the second-largest luxury goods market worldwide but was overthrown by the booming Chinese market in 2015. Japanese consumers are brand-aware and relatively wealthy, but consumer confidence has not recovered from previous economic crises. Even though the country boasts the second-highest number of millionaires in the Asia-Pacific region, fears of financial insecurity hinder widespread luxury consumption. Demand for items like prestige brand fashion and jewelry has shrunk drastically following the burst of the economic bubble in the ’90s and the resulting economic slowdown. While most market segments have returned to a growth trajectory, brands must attract new consumer groups to achieve sustainable growth in an aging society.
The most renowned upscale shopping district in Japan is Tokyo’s Ginza, where flagship stores and headquarters of major luxury brands can be found. Luxury shopping is an in-store experience, with long waiting lines in front of stores being a common sight. The rising number of counterfeit products and the importance of personalized shopping experiences have drawn shoppers to brick-and-mortar stores.
A driver of luxury consumption in the post-COVID era has been inbound tourism to Japan. Stimulated by the chance of real bargains amid the weakening Japanese yen, overseas visitors contributed a significant share to the recovery of the luxury goods market. As the tourism industry is expected to remain strong in the coming years, prestige brands will likely benefit from the tailwind generated through inbound sales.
Between lipstick and glitter
The characteristic of the Japanese luxury goods market is a pronounced premium beauty segment, which outperforms the budget-friendly end of the market. As such, it comes as no surprise that cosmetic corporations dominated the ranking of Japanese luxury goods companies, with Shiseido Company at the top. However, in contrast to global conglomerates like Kering Group and LVMH that cover several consumer goods segments, Japan’s leaders focus mainly on one industry – primarily cosmetics or fashion.The most renowned upscale shopping district in Japan is Tokyo’s Ginza, where flagship stores and headquarters of major luxury brands can be found. Luxury shopping is an in-store experience, with long waiting lines in front of stores being a common sight. The rising number of counterfeit products and the importance of personalized shopping experiences have drawn shoppers to brick-and-mortar stores.
The spectrum of luxury consumption
Trust-based interactions with sales associates influence Japanese luxury sales. In the upper class, salespersons of department stores (“gaisho”) are dispatched to the homes of affluent consumers to provide personalized shopping experiences. While this VIP treatment does not apply to all luxury consumers, the feeling of exclusivity underlines high-end consumption in Japan. Even though the economic challenges of the last decades have toned down the drive for luxury among consumers, renowned brand goods are desired as status symbols. The rapidly rising secondhand branded goods sales have been a testimony to the return of aspiring luxury shoppers.A driver of luxury consumption in the post-COVID era has been inbound tourism to Japan. Stimulated by the chance of real bargains amid the weakening Japanese yen, overseas visitors contributed a significant share to the recovery of the luxury goods market. As the tourism industry is expected to remain strong in the coming years, prestige brands will likely benefit from the tailwind generated through inbound sales.
