Japan Grows Leery of Luxury
An increasing number of Japanese consumers are avoiding conspicuous consumption and bling in the wake of Japan’s devastating earthquake, according to a survey to be released on Friday by McKinsey & Co., potentially dealing a blow to global luxury goods makers in their second-biggest market.
If it lasts, the weak consumer interest could hasten the decline of luxury brands in Japan—a country where the world’s top brand makers once drew fat profits from consumers willing to pay some of the world’s highest prices for high fashion. But soft economic growth has led a number of big names to pull back from Tokyo’s tony shopping districts in recent years as they look to China and other faster-growing Asian markets instead.
About two-thirds of the executives of 20 luxury-goods companies surveyed said March sales fell by more than 10% from the year-earlier period, according to the survey. For the rest of the year, 40% said they expect this year will be worse for them financially than last year. Among the roughly 1,300 luxury goods-purchasing consumers McKinsey surveyed, nearly half said they felt showing off luxury goods was in bad taste, a figure that nearly doubled from last year’s 24%.