Rise & fall of the Japanese luxury market Essay

Custom Student Mr. Teacher ENG 1001-04 17 February 2017

Rise & fall of the Japanese luxury market

I guess the main difference is the fact that Japanese people consume luxury in mass. Or at least, they did. Indeed, Japan is the first and only mass luxury market. This behavior finds its origins in the need of showing their identity and self-worth, and they do it by wearing luxury products. In fact, as there is not much space and lots of traffic jams there, the Japanese can’t build huge houses and own many cars, as we, Western people, do to show our social status and wealth.

The easiest way to do it in Japan is to buy luxury goods such as pieces of clothing, bags or accessories that you will wear to show people your status. As said in the article, the Japanese give, and have always given, a lot of importance to appearance and social status. This is a way of expressing your self-worth in the society. Before, it was the quality of Kimonos and Obis women were wearing that mattered. Now, it is still the way you dress that matters, but in luxury clothes. Also, another difference with other countries way of consuming luxury is the target of brands.

In Japan, the middle-class is obsessed by luxury. They will rather not eat or live in a small apartment, just in order to afford a particular item they are craving for. Indeed, one of the important categories of luxury consumers is the “office ladies” who are secretaries, or junior administrative, and who won’t get better positions, so they forget about their working life by buying luxury goods. Also, there are the “parasite singles”, who still live with their parents and then have more money to buy luxury goods.

Finally, the two last points are the fact that Japanese people travel so much to buy luxury goods to avoid the prices mark up, which is huge in Japan, and as well, the fact that they don’t buy that much of their local designers, since the most important thing is not to wear luxury but to wear Western luxury. This massive consuming and craving for a product you think you need to be accepted is something that is not as strong in other countries. There are trends as well, of course, but in France for instance, you don’t want to go without eating for a few days, to buy an expensive bag that 90% of your friends will have as well.

The need of identification and conformity of Japanese consumer is very specific to their country. But, as said in the article, this is starting to change. Ladies are less going to a store with a whole look of one brand printed out and ready to buy it all, without trying to mix and match styles and brands. 2) Why did the Japanese luxury retail market develop this rapidly ? At the beginning, in the 70s and 80s, luxury goods were sold in department stores. They have a very old history in Japan, which started in the 17th century, even before than in the USA.

Luxury department stores at the beginning proved to offer an upscale retail space and the right atmosphere for such brands. People could go to the store, have a lot of choice, and find what they wanted. They kind of played the role of authority in the luxury market. Indeed, when you enter a new market, it is easy to have a local partner, who know the market and the consumer behavior and can help you make a difference. But in the 2000s, things started to change and brands finally developed their own boutiques and flagship stores.

Brands changed their retailing strategy, since they found they had not enough space in the department stores, and were tired of their products mixed up with lower quality and famous ones, which was damaging their brand image and value. It started with Louis Vuitton’s glass facade flagship store in Ginza and became a luxury boutiques war. They were followed by Hermes, Prada, Chanel, Christian Dior … All the brands were trying to build the most exquisite and surprising boutique, where you could get the most advanced customer experience and privileges for VIP.

The goal was to attract many many consumers by offering them more products than they could find in the department stores, where the collections were not fully displayed. And it worked, the Japanese were queuing in front of the stores for their opening and buying a lot. Finally, there is an increasing number of unofficial channel distribution in Japan, that can be explained by the prices of luxury goods there. 3) What explanations can be found for the sudden change in luxury consumption in Japan ?

They are several explanations that can be found to explain the tremendous slowing down of the Japanese luxury market. First, there is the global economic crisis. People are afraid of the uncertain future. That’s why they are now spending less. Moreover, there is change in attitude. Luxury is not that attractive now. The Japanese consumers don’t want their style and buying habits to be dictated anymore. They have more confidence in their self and want to be able to mix and match styles and brands. They want more liberty and trust more their own choices.

They have developed their own tastes and want to show them off. This is comforted by the fact that fast-fashion brands such as Zara, H&M and Forever 21 have entered the Japanese market. They offer different ranges of affordable products, which can be mixed with luxury items. Women can chose whatever they want in the store without being judged or influenced. The mix marketing of these fast-fashion brands is to propose a product that can be described by fashion, quality and price. And the Japanese like it a lot. That is why Topshop is planning to develop there as well.

What’s more, they have sensibly changed their living habits. Indeed, luxury clothing is not the only important thing in their lives anymore, they are looking for promotion and sales, they travel to find better prices (Korea, Hawaii). And, they also want to enjoy life, that’s why, they will spend less money on luxury-only and will also go to spas, or nice restaurants … To put it in a nutshell, economic difficulties have resulted in a need for change. People are more careful and therefore are looking for either cheaper products or a way to find luxury items at a cheaper price.

This, paired up to a change in attitudes towards luxury in lifestyles, can explain why the Japanese luxury market has fallen recently. 4) Which strategies should European luxury brands develop for the Japanese market? Different strategies could be used to relaunch the Japanese market luxury market. First, the brands could develop different ranges of products, such as premium and accessible luxury products, to attract back the middle class, as well as superluxury products, to attract the upper class, which is always looking for the ultimate service and ultimate scarce product.

Indeed, if attitudes towards luxury are changing, brands will have to “westernize” themselves in Japan, as the consumers did. Indeed, they should develop more exclusive articles, to create a need for the product, and to separate its image from the conformity/identification image. The Japanese are developing their own taste and expertise and fashion, and that is why luxury brands should accentuate on this point. The final aim of any strategy in Japan would be to drag back the people into the stores, which would be the flagship ones, not the department stores.

Another strategy that could answer this problem, would be to reduce the mark-up cost, and develop a cheaper way to ship the products there. What’s more, the marketing strategy should take into account the global strategy there, and recreate the brands images. Brands will have to be exclusive and appealing to attract upper classes, as well as brands will have to offer cheaper collections, for office ladies of single parasites, who have less means, but still represent a huge part of luxury consumers.

An important component of marketing that should not be forgotten in Japan is the Internet, i.e. the brands’ websites and the social networks. A web presence is very important. The Japanese web consumer is also very important. That is why brands have to develop their websites in Japanese, if not already done, and offer a rapid shipping there, for instance. Moreover, the referencing should be improved, so that the potential consumer finds easily the brands when searching on the Internet. And, the brands should improve their presence on Facebook, Twitter and Ameba, the best-known blogging platform in Japan.

This will allow people to follow brands, see offers, get to know products, see ho many “likes” the brands have etc. Finally, there are several factors that could help relaunch the Japanese luxury market which are a confident brand image, a high quality, a competitive approach, a good communication and a proof of your competition in your country. Plus, the brands have to adapt to the Japanese culture (translations of websites and brochures) and keep in mind that in Japan a one-to-one relationship with the customer is of major importance, especially in the luxury market.

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