TOKYO, Japan – “Welcome home.” With those words Jun Morimoto, CEO of Alfred Dunhill in Japan, warmly ushered me into the new Alfred Dunhill flagship in Tokyo’s Ginza district, where it rubs shoulders with the impressive architecture of some of the world’s most famous luxury brands. But all is not rosy in Tokyo’s legendary luxuryland, with reports that sales for some international luxury brands in Japan are down as much as 20% versus last year.

As Morimoto-san showed me around the store, the first of a few Dunhill ‘Home’ flagships which will be opening around the world, he also demonstrated how brands like Dunhill are leading the way in adapting their stores and product offering to meet the evolving expectations of the Japanese luxury customer.

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TOKYO, Japan - While younger Japanese customers may be veering towards local brands that are in tune with prevailing fashion trends, others are looking for something altogether different. They don’t care about trends. Their closets are already full. They have bought countless branded luxury items over the years. So, if they are going to spend their money on anything, it has to be perfect.

That’s where my favourite Japanese tailor comes in. ICHO is a small, family-run business with a spiritual figurehead and designer in the form of Toru Icho, who was born in 1947 in Kyoto, the historical home of some of Japan’s best luxury artisans. His son, Mits and daughter-in-law Satoko work full-time to translate Toru’s vision into a bonafide business. This is good old-fashioned luxury.

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TOKYO, Japan - “I wanted to start a movement of new generation, young fashion designers in Japan,” Arashi Yanagawa tells me over coffee in Tokyo’s hip Nakameguro neighbourhood. He is speaking of the genesis of John Lawrence Sullivan, the menswear brand he started almost five years ago.

But Arashi hasn’t always been a fashion designer. At first, he followed in his father’s footsteps and spent 13 years in professional boxing. Then, with no fashion training whatsoever, he used his fight money and worked with local pattern cutters to perfect his first collection of two blazers, using vintage garments as a starting point. As a nod to his former life, he named his brand after the 1880′s American bare-knuckle boxer and today, JLS is Japan’s hottest menswear label, known for its slick tailoring and modern accessories.

Despite his non-fashion background, or perhaps because of it, Arashi is at the vanguard of a group of promising, young menswear brands that are taking Tokyo by storm. They offer high quality clothing at prices lower than Lanvin and Thom Browne, but still packing a design punch.

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TOKYO, Japan - Once upon a time, for big luxury brands, Japan was the largest and most important market in the world. Japanese customers, young and old, rich and middle-class, would faithfully spend their money on standard Louis Vuitton bags, Hermès scarves and Gucci shoes. These loyal customers could deliver up to 35% of a luxury brand’s global revenue, a reliable cash cow, even while the Japanese economy was sputtering in the 1990′s and early 2000′s.

And so, a formula for luxury brands slowly gelled over the years: build gigantic retail temples of luxury, influence the editorial of powerful magazines that have a grip on the Japanese psyche, and appeal to the innate Japanese desire to fit in and show status.

But, what would the luxury brands do if this tried-and-tested business model stopped working its magic?

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