Prada flagship store in Omotesando, Tokyo

LONDON, United Kingdom — The scariest news I have recently read about luxury was in Tuesday’s Financial Times. The Japanese, it seems, have stopped buying luxury goods. Luxury imports in Japan were down 10 percent and sales of LVMH in the country were down 18 percent in the first quarter.

And no, it’s not just the recession. “This is not a blip. This is a long-term shift in the market,” Brian Salsberg, the author of a McKinsey report on the Japanese luxury goods market, the world’s second largest, told the Financial Times. This is concrete evidence of a trend first reported on BoF one year ago.

The Japanese were once the industry’s most-favoured fashion consumers because of the speed with which they would adopt new trends. The evolution of a luxury market is a tricky thing you see. First new consumers will gravitate to the brands they’ve heard of, like Armani. Then they’ll begin to explore ones that are more niche, say Balenciaga. Then, if the Western world is anything to judge by, they’ll get disillusioned with the whole thing and just start buying their clothes at Zara, H&M and Topshop.

Here in the West, we’ve been working our way through the cycle since the Second World War. But those clever Japanese have moved through the whole evolution in just thirty years.

This is seriously bad news for the luxury brands that depend on Asian shoppers, which is most of them. And, it does not bode well for the post-future landscape either. 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.

So what will they do?

Patrizio di Marco, one of my favourite luxury executives, has recently moved from Bottega Veneta to Gucci. It was a brave career step. Gucci, with its reliance on logo-driven product, is a brand in transition. Di Marco told Bloomberg that to adapt to these trying times he’s refocusing the logo-driven merchandise and putting more attention on the mid-price range by doing things like adding exotic trims to fabric bags, and moving away from lower price points to retain luxury allure.

But will consumers want the bags with logos, crocodile trim or no crocodile trim? Personally, I’d rather carry a bag with no logo. And it seems increasing numbers of crucial Asian consumers are with me on this one. But, for Gucci’s sake, let’s hope I’m wrong. Next week they’re opening a store in Shanghai—it’s their 28th outlet in China.

Lauren Goldstein Crowe is co-author of the critically-aclaimed book, The Towering World of Jimmy Choo.

Danielle Scutt and Roksanda Ilincic, courtesy of Mandi Lennard Publicity

LONDON, United Kingdom — I was surprised to see that a number of big-name sponsors have signed on recently to support the upcoming round of fashion shows.

In London, Henry Holland’s show will be sponsored by Sebastian, makers of hair care products. And Barbie is making an appearance in both New York and London — thanks to the fact that it is her 50th birthday. Mattel, makers of Barbie, have signed a three-year partnership deal with the Council of Fashion Designers of America and become a sponsor of New York Fashion Week while in London they’ve hired Roksanda Ilincic and Danielle Scutt to design dresses for their little dolls and also sponsored their shows. This is notable in a climate where a lot of fashion show sponsorship has simply dried up.

“People really don’t realise what a struggle it is to finance a collection when you are starting out, so to gain support from a company such as Barbie at this stage of my label, is brilliant,” Danielle Scutt told The Business of Fashion.

For Ilincic, it’s a blast from the past. “I am delighted with the Barbie sponsorship! As a little girl I used to make special dresses, hair and make-up for Barbie, she says, “and to be able to do the same thing today, but with a little bit more knowledge, is such a treat!”

As for the rest … well there’s no doubt that it will be a much quieter season than years gone by. But that might be a good thing. Pretty much everyone involved from the PRs, to the editors to the retailers was sick of the fashion show parade and the sheer number of shows that were packed into the schedule.

Then again, shorter does not necessarily mean sweeter. So far it looks like the mighty — not the worthy — will survive. Eagerly anticipated shows by influential designers, loved by press and retailers alike, including Peter Som in New York and Duro Olowu in London have been shelved, and are being replaced by presentations or appointments. Yes, those are nice ways to see the clothes up close, but they cannot replace the excitement of a runway show.

Will the designers staying on the schedule reap the reward of less competition? Probably. Nothing looks quite as good in a fashion wrap-up issue as a runway shot and it’s likely retailers will fall back on the security of the big names when placing orders. But for attendees of the shows, it’ll make for a pretty dismal season, watching collection after collection by mega-brand after mega-brand.

Unless, of course, they have young daughters at home. Because it’s shaping up to be a banner year for Barbie. Such a sponsorship deal may have got lost in a flurry in earlier seasons. Now she has the biggest show in town.

Lauren Goldstein Crowe is co-author of a book on Jimmy Choo to be published by Bloomsbury later this year

Stars take to the red carpet, surrounded by paparazzi

LONDON, United Kingdom – According to analysts, we’ve just come through the worst holiday selling season in 40 years.

If that’s not bad enough, Chanel announced that it is laying off 200 people in Paris. Chanel! That surprised everyone I spoke to in the industry. For one thing, Chanel is not masstige — it wasn’t catering to the masses, the part of the market said to be most impacted by the recession. For another thing, it’s French — meaning layoffs have to meet the stiff criteria of French social laws and union rules. And finally, it’s privately held — meaning the company wasn’t under shareholder pressure for short-term results and could therefore take a longer-term perspective. And still, they were compelled to let 200 people go. (The employees laid off were on fixed-term or temporary contracts.)

It seems we’ve got an unmitigated disaster on our hands.The New Year toasts I heard amounted to “let’s just get through it.” So, if you’re an emerging designer or independent retailer, just how do you do that? Here’s some advice I have gleaned from seasoned luxury goods executives:

1. Hoard cash. The consumer is doing it and business folk should too. Why? Because you still can’t trust the banks. In this regard a big debt may be better than a small one. A small one can be easily called in by a bank in trouble, larger debts are more complicated to reclaim — particularly if it is going to force a business into bankruptcy. One executive I spoke to said that anyone with an open line of credit should take all the money, pay the interest, and keep it in a separate cash account.

2. Negotiate, negotiate, negotiate. If you rent space, call the landlord. If you’re a manufacturer, call the factory. If you’re an advertiser, rip up your contracts and start over. Now is the time to re-evaluate terms.

3. Cut costs. I’ll be closely watching the Oscars this year. I’m curious to see if luxury companies will be as open with their pocket books as in past awards seasons. The conventional wisdom had become that the money was well-spent because of the number of images generated by the red carpet and then seen around the world. And certainly, getting a dress on Uma Thurman helped Prada achieve household brand-name recognition, but that was 14 years ago. Does anyone really care anymore? Aren’t consumers, particularly luxury consumers, all-too-aware of the games being played behind the scenes and doesn’t that detract from the impact? Also expect more ad campaigns to be shot in studios, not on location and expect to see fewer of them. Even if you’re not courting celebrities or producing massive ad campaigns there are smaller costs that can be cut in marketing, promotions and expenses.

Lauren Goldstein Crowe is co-author of a book on Jimmy Choo to be published by Bloomsbury later this year

Prada S/S 2009 campaign photographed by Hedi Slimane, courtesy of Prada

LONDON, United Kingdom — At the Luxury Briefing Conference held in London last month, Claire Kent, former Morgan Stanley analyst and current luxury goods consultant, spelled out her thoughts for the future of luxury.

“Regardless of the credit crunch there was growing fatigue about luxury brands,” she said. “People want a redefinition of luxury. People don’t want to be buying the same brands as the people they have working for them.”

So, what are the key elements of the new luxury?

Brands need to focus on innovation, creativity, individuality and service. (She noted that it’s been hard to convince the sharpest minds to mind the shop floor, something that may change with the number of layoffs we’ve seen.)

The ‘It’ handbag, she says, is over. Carrying a bag because Gwyneth Paltrow carries one means that you don’t have your own point of view, stylistically speaking. This of course is why people started following celebrities in the first place — because it was easy. But now we’re going to have to fend for ourselves.

For evidence of this impending change in attitude, she pointed to the car industry where the groovy people (Ok, some of whom may be celebrities) are driving cars not much bigger than their dogs, while the SUV has become a symbol of shame.

Aside from better-made things, there are a few sectors Kent sees as ripe for rapid expansion. The categories are hers, the reasons why are mine. (Budding luxury entrepreneurs, take note):

1. Jewellery. Although we’ve sent the big groups and the watch brands get more active in this area, the vast amount of jewelry sold is still unbranded and comes from mom-and-pop shops, not big chains.

2. Men’s Shoes. Where, oh where, is the Christian Louboutin of men’s footwear?

3. Men’s Grooming. Yes, there are more men’s products on the market than 10 years ago, but none dominate.

4. Eco Luxury. Along with Eco everything else.

5. African Culture. Obama, Obama, Obama. Did someone say Obama?

6. High-end Food. Because once you experience the difference, it’s impossible to go back. Just like with Louboutins.

According to Kent, one element is a return to craft. Her big problem with fashion apparel is that, if it’s not based on craft, these days it’s simply too hard to compete with the Zara’s of the world. Therefore, luxury consumers will become more discerning and spend more per item, but buy fewer items. It is the ‘masstige’ brands that will suffer most.

And, based on personal experience, I have to agree with her. It is increasingly hard for me to justify a designer purchase. The fact that I know margins have been improving (for the brands, not for the consumers) does nothing to quell those fears. So this winter the few things I bought from anyplace outside of Zara and its ilk, I bought from Bamford & Sons.

The brand is owned by the family that made its money selling JCB diggers (or tractors) and also produces the Daylesford Organic range of foods — clearly a family with their finger on the pulse of what luxury shoppers want. I was particularly impressed by the men’s offerings and I thought I’d tell my boyfriend never to shop anywhere else. Now I am not so sure.

For the prices, one would expect it all to be of impeccable quality. But within a month, the tassel on a pair of £400 Bamford boots I bought fell off and a £225 cashmere scarf I bought my boyfriend was looking a bit worse for wear.

The quality versus price conundrum is a tough one for designers. They’re supposed to be selling a vision, but Kent, and I, think that increasingly people are going to want value for money — in the old fashioned sense of the word.

This should make second lines all the more important. If brands will still have value in the credit crunch future, it holds to reason that consumers will shift down to Marc by Marc Jacobs before landing where I am, at COS (Collection of Style, the upper end of H&M).

This makes the recent decision of Zac Posen to shutter its Contemporary line all the more puzzling. The company only recently brought in a team to produce it, but they’ve all been fired. The remaining 70 percent of employees have been told they will be taking a 15 percent pay cut and, as for bonuses, forget it.

To be fair, the decision wasn’t made purely on market decisions. An expected influx of cash from their backer, Ron Burkle, never materialised. As with many other brands, Zac’s fashion show sponsors have backed out, putting his runway show, like many others, in jeopardy. Will the world weep? Doubtful. I think that everyone, from the buyers to the editors to the consumers were sick of the fashion show circus.

It’s hard to know what to do — particularly for the majority of luxury goods executives who have never had to live through times like these before. But I wonder if, finally, we’re about to see a return to an idea of luxury that’s more, well, luxurious.

The Business of Fashion welcomes Lauren Goldstein Crowe, our new Friday columnist.