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

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.

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.

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.