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Japan’s Luxury Market is Booming. But For How Long?

By Shilpa Dhamija06 juin 2024

Japan's luxury market is soaring with epic sales driven by tourists and the weak Yen. However, when the Yen strengthens, will this boom fizzle out? Explore our in-depth analysis of Japan's luxury market prospects beyond the Yen.

Japan is experiencing a record influx of visitors and welcomed over 3 million tourists in March 2024, boosting tourism spending by 50% compared to 2019. Pictured here is Ginza Mitsukoshi, the luxury department store in Tokyo's Ginza district (Isetan Mitsukoshi Ltd)

Japan's luxury market, driven by tourists, is dependent strongly on the exchange rate of the Yen

Claudia D'Arpizio, Head of Luxury Products at Bain & Co

Living in Tokyo's affluent Ginza district, Haruhiko Saionji, a major luxury goods consumer, has grown accustomed to seeing long queues of foreigners outside the opulent stores that decorate its high street. This year, Japan is experiencing a record-breaking influx of tourists. For the first time ever, Japan welcomed over 3 million tourists in a single month in March. Tourist spending increased by nearly 50% in the first three months of 2024 versus the same period in 2019, propelled by the weak Yen. Indeed, business is flourishing for local and international luxury maisons. LVMH, with about a quarter of its Asia stores located in Japan, noted double-digit revenue growth in Japan in Q1 '24. Hermes saw a 25% hike, while Ermenegildo Zegna group's APAC (Asia-Pacific) revenues grew by nearly 29%, mainly powered by the Japanese market.

In 2023, Japanese department stores saw sales jump 114% in April, boosted by tourist purchases in Ginza. The Bulgari Ginza Store in Tokyo in the photo (Bulgari)

Japan's department stores are also experiencing unprecedented growth. According to a Savills report, last year, tourists contributed more than half of total sales in several luxury stores in Ginza. Isetan Mitsukoshi, which operates one of Japan's biggest department-store networks, noted over 114% year-on-year growth in sales this April. In Japan, luxury boutiques are housed in department stores, not malls, as Japan does not have traditional malls.

Under-valued local customers

most luxury stores aren't prioritizing local customers who continue to shop despite the currency's devaluation

Haruhiko Saionji, luxury goods consumer

While Japan's luxury retail relishes a surge of overseas big spenders, Saionji feels "most luxury stores aren't prioritizing local customers who continue to shop despite the currency's devaluation, except for a handful of reputable brands like Rolex, Audemars Piguet, and Patek Philippe, who avoid selling rare items to foreigners," he informs. A trend observed by local resident Jessica Cho, also a luxury consumer: "Big luxury fashion and handbag brands treat foreigners and locals the same and sell on a first-come, first-served basis," she tells Luxury Tribune, adding that only a few stores discreetly reserve special items for local clients.

Louis Vuitton's artistic collaboration with Japanese artist Yayoi Kusama. Modeled by Chinese actress Zhou Dongyu (LVMH)

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