TOKYO — Don’t be fooled by the abundance of Christmas lights here — retailers have little to cheer about when it comes to the Japanese market.
Department stores are on track to post their 12th consecutive year of declining sales in 2008 and the outlook for next year is just as grim. Last week, Louis Vuitton and Dior cut their retail prices by 7 and 8 percent, respectively, joining a growing list of brands engaging in early markdowns here, including Prada, St. John, Tiffany & Co., Cartier and Montblanc. With spending slumping, Salvatore Ferragamo and Bally unveiled price reductions on fall-winter merchandise as early as the summer.
A Prada spokesman in Milan confirmed that discounts on private sales of certain items varied by country and that this was normal at this stage of the season. He added there was no change in company policy in this respect compared with previous years.
“They have to cut prices to get demand moving again,” said Harrison Bates, a Tokyo-based analyst with KBC Securities Japan. The retail environment continued to deteriorate in November ahead of the key yearend shopping season when Japanese get their bonuses, he said, adding he wouldn’t be surprised if department stores have to slash their full-year forecasts yet again. “The sales figures have been pretty awful.”
Last month, Japan’s largest department store, Isetan Mitsukoshi Holdings Ltd., trimmed its forecast for its fiscal year ended March 31. It now sees net income coming in at 27 billion yen, or $290 million, versus May’s estimate of 33 billion yen, or $355 million. Sales are seen coming in at 1.48 trillion yen, or $15.92 billion, compared with the previous forecast of 1.54 trillion yen, or $16.56 billion.
Japan’s sluggish economy was already struggling before the global financial crisis struck earlier this year, pushing it into an official recession. The country accounts for 12 percent ofthe 175 billion euro, or $225 billion, global luxury goods market, according to a recent study by Bain & Co. The consultancy said the Japanese market contracted by 2 percent in 2007 and will shed another 7 percent this year.
Bates said even department stores, like Isetan Mitsukoshi, that were once critical of other retailers’ discounting ways are starting to realize they have no choice in the current climate. “It’s sort of a defensive move,” he said.
But it’s clear that fashion houses aren’t restricting their approach to Tokyo by simply adjusting price tags in a quest to bolster their share of a shrinking market: with its scale — a population that’s still more than 125 million even if shrinking — and influence, Japan remains a significant place to be, and be seen. The slowdown in spending hasn’t discouraged fashion houses from staging a slew of recent events here, including the worldwide debut of Sofia Coppola’s range of handbags and shoes for Louis Vuitton, fashion shows for Etro and Missoni and the launch of Comme des Garçons’ collection for H&M.
Bulgari chief executive officer Francesco Trapani, who was in town recently to celebrate the one-year anniversary of the jeweler’s tower flagship in Ginza, said he’d seen sales trends “worsening” in November, although he’s bullish in the longer term — even to the point that the company is considering opening a second flagship in Ginza in a few years’ time.
“We think the luxury business will continue to exist in the future and Japan will continue to be a very important market,” he said.
European firms are justifying the price cuts due to the recent appreciation of the yen, which has risen about 40 percent against the euro since January. “The Japanese consumer expects price decreases-increases based on forex [foreign exchange] moves,” J.P. Morgan Chase & Co. analyst Melanie Flouquet wrote in a report Monday. Traditionally, Japan’s discounting takes place in January, but this year it’s already well under way.
Also on the price front, Japanese consumers are becoming more accustomed to affordable fashion at chains like fast-growing Uniqlo and H&M, which launched in the country this year to long lines and much fanfare.
“This kind of economic downturn that we have now, I actually think it’s a chance for us,” said H&M’s country manager and representative director for Japan Christine Edman. “When your purse strings are tightening, that’s when you want to get the best deal.”
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)