By and  on August 3, 2010

TOKYO — Japanese consumers, who are already shunning luxury labels in the current economic climate, are being asked to pay significantly more than shoppers in the U.S. and Europe to snag the exact same goods.

The markups of imported luxury items in Japan can be as much as 50 or even 60 percent for some products. It’s only logical that goods almost always cost less in their country of origin than they do abroad, thanks to import duties and shipping costs. But the price differentials seem especially steep at a time when Japanese people are especially hesitant about spending money.

What’s more, it’s easier than ever for individuals to comparison shop on the Internet, whether through the brands’ own Web sites or those of third-party retailers. Meanwhile, outlet malls are mushrooming up around the country. Japanese heading to Europe for their summer vacations are getting much more for their money by shopping in Paris or Milan.

“Some manufacturers choose to charge more for their products in Japan simply because they can. Historically, they have been able to get away with it, due to a relative lack of price sensitivity and transparency and a disproportionate focus on the quality of the item and the shopping experience over the price,” said Brian Salsberg, a principal at McKinsey & Co., Japan, and leader of the consumer, retail and apparel practice. “But going forward, it is going to be a lot more difficult to continue to have materially different pricing across markets.”

Katsu Kuwano, president of the Japanese operations of Gilt Groupe, the online retailer that sells designer goods at a discount, voiced a similar theory: “Five to seven years ago, consumers thought high price meant high quality, so people took advantage of this.”

A detailed price check reveals much of the story. A Louis Vuitton medium-size Neverfull handbag in logoed canvas in Paris costs 455 euros, or $587 at current exchange. But here, a shopper needs to shell out 50 percent more and pay 77,700 yen, or $888.

(For comparison’s sake, the same bag retails for $700 in the U.S., or about 18 percent more than it does in France.)

Similarly, Prada’s rectangular zippered wallet in black leather sells for 330 euros, or $428, in Milan. Here, it goes for 61,950 yen, or $708. That’s a markup of about 65 percent. Meanwhile, a Diane von Furstenberg wrap dress in Japan sells for about 66,000 yen, or $754, while similar styles in the U.S. range from $325 to $375.

Obviously, those higher prices are justified if demand is robust, but by just about any indicator or observation, it’s not. Concerned with the economic future of their country and their own job security, Japanese consumers are spending less on clothing by heading to fast-fashion chains such as Hennes & Mauritz and Uniqlo. Some of the most commonly spotted handbags here are cheap canvas totes from Dean & DeLuca and a local label called Cher.

Researchers are tepid about Japan. The market seems to have hit bottom and started to stabilize, but nobody is expecting it to post exceptional growth anytime soon. Sales of imported clothing and accessories in Japan tumbled a record 15.9 percent in 2009 to 894.6 billion yen, or $9.57 billion at average exchange for the period, according to Yano Research Institute Ltd. Sales growth this year is expected to inch up less than one percentage point, it said.

Both Louis Vuitton and Gucci declined to comment for this story, but Prada and Chanel defended their pricing strategies.

“Our price policy in Japan versus Italy is in line with the average of the market, taking into consideration the general level of the prices and the price offerings in the luxury market in Japan,” said a Prada spokeswoman.

A Chanel Japan spokeswoman made a similar statement. “All our models are priced in euro and then a number of other parameters have to be taken into account,” she said. “These include exchange rates, tax rates, import duty, transport costs that can vary quite a lot from one market to another. This is why prices differ between countries and this is true for brands exporting.”

Japanese tariffs can be high. Certain shoes, depending on their material makeup, can carry a tariff of 60 percent or more. A Japan Customs spokesman said the elevated charge harks back to a protectionist move to safeguard the country’s own shoe-making industry. Duties on clothing and handbags tend to hover between 10 to 20 percent, depending on the item.

Currency also plays a role, as the yen’s foreign exchange rates can fluctuate significantly. The yen has strengthened about 17 percent against the euro and about 6 percent to the dollar over the last six months.

Kuwano said luxury brands are increasingly eager to unload their unsold merchandise in Japan through Gilt’s members-only site, which has seen membership grow to 400,000 individuals in Japan since the launch here last year.

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