Comments on: Friday Column | Japanese Luxury Fatigue

By: BTokyo

BTokyo — Sat, 06 Feb 2010 05:14:02 +0000

Right, some major brands have withdrawn entirely out of the Japanese luxury market over the last couple of years. I did my thesis last fall relating to “Gal” products in Japan (think Shibuya 109 as a reference point if you are unfamiliar with the term), and my study went from 1997 to 2009. It really seems that Japanese consumers are gradually abandoning major luxury retailers and moving more towards fast fashion products suited to their lifestyles. It all seems quite simple and inherent when considering Japan’s current economic station as it enters what may be the third “lost decade”.

But in contrast, I’m pretty optimistic about China. I think that we can at least give it few more decades before we start talking about people becoming disillusioned with brand fashion. My best friend’s the daughter of a Chinese politician, and if I know anyone that cares about luxury goods and branding, it’s her. She’s a testament to the current generation of luxury consumers in China. Of course, most Chinese people are nowhere near as wealthy as she is, but as Chinese consumers rapidly access more and more disposable income, they get closer and closer to that level.

China and Japan are both going through important shifts that I’m excited to bear witness to!

By: ale

ale — Thu, 11 Jun 2009 23:44:57 +0000

I am not surprised at all. In fact, luxury and the industry of (real) luxury – with very few exceptions- has been vanished since managers and executives form the FMCG (ex-super market and cleaning products companies) sector filled the posts in the advisory boards of the fashion/luxury/bling-bling brands.
“Luxury” has become commodity and i was so but so impressed to see, literally, in every corner of the streets of cities like Tokyo and HK stores of LV,Gucci etc. I am so sure that even 7-11 has less stores in each Asian city than fashion/luxury brands.

I find WC’s points that illustrate quite precise the differences of luxury consumption between Chinese and Japanese.

ps. By the way, i just found http://www.businessoffashion.com and i am really excited about it! Keep up!

By: tr3

tr3 — Sun, 07 Jun 2009 21:04:51 +0000

I don’t think Lauren was referring to the Chinese mimicking the Japanese as a conscious effort…

By: BS

BS — Sat, 06 Jun 2009 09:31:50 +0000

A copy of the full report can be found at http://www.mckinsey.com/clientservice/retail/

By: WC

WC — Sat, 06 Jun 2009 05:20:53 +0000

Hi All,

Apologies for the bluntness of my previous comment. However, I was not impressed by the comment about the Chinese mimicking the Japanese. This statement overly simplifies a complex relationship between the two countries and almost suggests that it is simply a case of following-the-leader now, and that the two countries and their people are very similar – which is not true.

A few simple points:

1) The Chinese luxury market is in an completely different stage of development than the Japanese luxury market – one is in early growing stages (not even mature yet), the other is currently in decline. If we are to quote Bain again in 2009: “Bain & Company predicted the Chinese luxury market would see growth of 20 to 35 percent in the next five years.” The luxury market in China continues to boom, along with the Chinese economy (which is supposed to grow at 6-8% this year while other parts of the world are in recession ,e.g. Japan) and is still in its early stages. The middle class continues to grow everyday and many are only beginning to understand what “luxury brands” are. Hence, to claim that Chinese consumers are “disillusioned” by luxury at this point in time or in the near future, cannot be further from the truth.

At present, the majority of Chinese consumers are still at the early stages of purchasing the: “logo embossed, mass produced crap!”

2) Secondly, luxury buying trends in China are likely to mimic those of Hong Kong, Europe and Taiwan (places where Chinese travelers travel to to purchase luxury goods or they are influenced through media) rather than Japan. If you walk to any luxury store in Hong Kong, you will see that at over 50% of the customers are tourists from Mainland China who are visiting Hong Kong in part to shop.

Furthermore, there are historical legacies between China and Japan which make it very difficult for many Mainland Chinese to
appreciate and want to “mimic” the Japanese – and this is even true among the younger, educated generation.

The case with Korea is different however, in the past 5 years or so, there has been an influx of Korean culture into China due to the Korean “hallyu wave” which is the mass influx and popularity of Korean entertainment in China. The Chinese have been exposed to Korean culture as of late.

3) Stores in 2nd and 3rd tier cities in China are paying off. If these places were not profitable anytime soon, brands would likely not open there! The luxury market in many of these cities is still at its early stages. There is a hunger for luxury goods in even 3rd tier Chinese cities where I know people who travel to 1st tier cities just so they can purchase luxury brands which are still not available in their cities because the brand has not opened a store there yet. The disposable income is there and growing.

What a long reply! Anyway, have a great day everyone.

Cheers…

By: moi

moi — Fri, 05 Jun 2009 16:44:28 +0000

I can’t say I agree with far eastern consumers becoming ‘disillusioned’ & buying Zara, H&M, Topshop? two entirely different markets. High-end consumers with disposable income (something highstreet shoppers do not have) are jumping ship & making more intelligent purchases, within multi-label directional designer stores. Luxury brands will have to accept that their consumers want quality & greater aesthetic appeal, as opposed to logo embossed, mass produced crap. Until this is addressed, their sales will continually decline….?

By: Lauren

Lauren — Fri, 05 Jun 2009 16:36:25 +0000

You’re right — I don’t know much about the Chinese market. But as far as developing markets go Bain did a study a few years back (2005) that showed Asian consumers were more likely to mimic other Asian consumers in their shopping habits, just as the Russians were more likely to mimic their European counterparts. I think I wrote on the study for the FT Business of Fashion supplement. Memory going with age.

By: Ashley

Ashley — Fri, 05 Jun 2009 11:02:57 +0000

I agree with Imran, or the FT article, as it were. Luxury companies have to maintain an element of uniqueness or rarity to survive in a market where global information and purchasing abilities prevail. When you can buy an item anywhere and everywhere (or even see other people with it everywhere you look online), it certainly loses some hefty “aspirational” value.
The Chinese market may be at a different point in the luxury cycle, but their purchasing values will continue to mimic those of the world around them.

By: Imran Amed, Editor

Imran Amed, Editor — Fri, 05 Jun 2009 08:40:48 +0000

@WC: Thanks for your comment. Clearly the Japanese and Chinese markets are different, and in particular, are at different stages of evolution. But I think Lauren’s point was referring to this part of the FT article referenced in the piece:

“Mr Salsberg said the brand makers, which created “a luxury bubble” with “a ridiculous number of store build-outs”, bore some blame for their predicament. He warned that they risked repeating the mistake in China.

China was the “growth story” for luxury but if makers flooded the market with stores as in Japan and people were able to buy such goods on every street corner, “the industry is going to destroy itself” there, he said.”

By: WC

WC — Fri, 05 Jun 2009 00:29:34 +0000

“The Chinese are most likely to mimic the Japanese in shopping habits. All those new stores brands are throwing up in second- and third-tier Chinese cities may never pay off.”

You obviously have very little understanding of the Chinese luxury market…