Imported Luxury Brand Market in Japan: Key Research Findings 2019

Significant Growth in 2018, driven by the Brands’ “Millennial Strategy”

Sales Growth of Major Brands Stood Out

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a survey on the Imported Luxury Brand Market in Japan, and has found out the current conditions, trends in imported luxury brands, and future outlook.

Imported Luxury Brand Retail Market Size Transition (15 major items)
Imported Luxury Brand Retail Market Size Transition (15 major items)

Market Overview

In 2018, the domestic retail market of the imported luxury brands (major 15 items) grew significantly by 6.8% from the previous year, attaining 2,442,000 million yen. Underlying factor is the rise in consumption of the wealthy population that is driven by high stock prices, demand increase by inbound tourists (visitors from overseas), and an uptick in the consumption of millennial generations*. After 2017, the imported luxury brand market has been boosted by the “millennial strategy” of the market players. The brands’ efforts to change their brand image drastically or to make radical innovations have led to the rise in consumption of not only the millennial generation, but also of existing customers (both the wealthy and some of middle-income population). The efforts already payed off in some of the brands in 2017, yet for the most brands the sales increase was achieved in 2018, which resulted in substantial expansion of the market size.

*Millennial Generation has been variously defined. In this research, it refers to those born between 1980s up to late 1990s, who reached working age at around 2000, the young generation in early 20s up to late 30s as of 2019.

Noteworthy Topics

Expansion and Challenges of Millennial Strategy

The full-scale marketing activities targeting at the millennial generation in 2017 are called Millennial Strategy, and it spread widely, not only to the major brands but also to most of the brands in the market. Specific examples of the strategy are such as product renewal by contracting new designers, eager investments on existing physical stores and e-commerce marketplaces to reflect the new brand image, strengthening interactive communication with customers, and collaboration with street-fashion brands or artists admired by the millennial generation. As a result, the millennial generation worldwide jumped at those brands just as expected, and quite a few brands experienced major shift in their customer segments.  Consumption by the millennial generation (including the inbounds) boosted in Japan as well, with “trend brands” as well as other brands successfully acquired many new customers. Moreover, as the brands were invigorated by the millennial strategy, it also led to expansion of the consumption by its existing customers (both the wealthy and some of middle-income population).

On the other hand, the brands are facing an issue of retention and purchase enhancement by the millennial generation. As the generation respond quick to the trend brands, it’s also true vice versa; their consumption behavior is said to be capricious. It is quite possible as the new brand emerges, not only do they shift to that brand, but may also switch their attention to things other than brand items. In addition, although the millennial generations will be the core consumer demographic in the years to come, in Japan it is concerned that their spending power is lower than so-called Baby Boomers or Boomer Juniors (the children of the baby boom generation) both by numbers and by value. Globally speaking, the luxury brands are assumed to roll out marketing promotions to retain and expand purchases by the millennial generations and Generation Z, the demographic cohort after the millennials. However, due to the reasons stated above, following that movement is not enough for retaining current business size in Japan. The brands are pressed to develop a vision for mid-to-long term business, define business directions and target segments, and create a connection with the customers including communication in the target segment.

Future Outlook

The market stimulation strategy by the imported luxury brands is likely to continue for 2019. However, compared to 2018, it is anticipated that the consumption by the domestic upper-class may be influenced by the instability of the stock price, and demand by the inbound tourists may decrease due to further appreciation of yen in the exchange rate. 

Moreover, by observing each of 15 major items, some may continue to expand in 2019 while the other may decrease as the repercussion from 2018.  Therefore, the forecast for retail market size of the imported luxury brand market in 2019 (for 15 major items) is 2,466,400 million yen, 1.0% growth from the previous year.

Research Outline

1.Research Period: March to July 2019
2.Research Object: Importers, makers, retailers, and Japan-based affiliates of European and American brands that provides clothing/fashion goods, watches, jewelries, crystal products/china, eyewears, and luxury pens.
3.Research Methogology: Face-to-face interviews by the expert researchers, survey via phone, and literature research.

Imported Luxury Brand Market

Imported Luxury Brands Market in this research refers to the market including the following 15 items, adding 5 new categories to the conventional 10 categories:  (1) women’s clothing, (2) men’s clothing, (3) babies clothing, (4) bags/leather goods, (5) shoes, (6) ties, (7) scarves/shawls/handkerchiefs, (8)leather wear, (9)belts, (10)gloves, (11)watches, (12)jewelries, (13)crystal products/china, (14)eyewears, and (15)luxury pens.  The items are limited to those imported from Europe and the United States. 

<Products and Services in the Market>

Women’s clothing, men’s clothing, babies’ clothing, bags/leather goods, shoes, ties, scarves/shawls/handkerchiefs, leather wear, belts, gloves, watches, jewelries, crystal products/china, eyewears, and luxury pens.

Published Report

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