Luxury brands bullish on Japan, despite weak economy

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Although Japanese spending has taken a downturn in many Asian travel-retail markets, sales in brand boutiques within Japan continue to experience high demand, with a number of luxury brands making major retail investments this year.

Spurred on by a shift in spending away from department stores, deregulation of retail laws and lower property prices Prada, Hermes, Gucci, Cartier, Giorgio Armani and Christian Lacroix have all outlined major expansion plans for the Japanese market. By opening large flagship stores with a European ambience and a greater selection than is available in department stores luxury brands are using the opportunity increase their profile with Japanese consumers.

This June Hermes opened a 14-story 6,040sq m (64,990sq ft) flagship building in Ginza, one of Tokyo's most prestigious shopping areas. Giorgio Armani enlarged its existing flagship store in Kioicho, Tokyo near major hotels, in April. Emporio Armani will open a larger store in Omotesando, another prestigious Tokyo shopping area next month where it will be closely followed by new outlets for Louis Vuitton, Christian Dior, Gucci, Yves Saint Laurent, Boucheron and Alexander MacQueen. Gucci experienced a 33% year-on-year increase in sales in Japan last year and doubled the area of its shop-in-shop in Matsuzakaya department store.

In addition, Cartier and Bvlgari plan to open large-scale stores in Ginza .LVMH-owned Christian Lacroix has launched a new retail concept in Tokyo, in partnership with fashion trading company Sankyo Seiko Co. This venture is expected to open 50 Christian Lacroix outlets in Japan and bring the brand more in touch with younger Japanese consumers, with sales of swimsuits, childrenswear and more menswear

Many analysts believe the current wave of aggressive marketing by luxury brands in domestic retail will be a permanent feature of Asian markets as the high cost of travel continues. In a recent interview with The Nikkei Weekly, Noboru Ikeuchi, a researcher of Yano Research Institute, commented: "In order to provide a wider variety of products and high-quality services, luxury brands have found it necessary to open their own stores, rather than increasing in-store shops where both customer-gathering potential and atmosphere are affected by each department store."