It is the phrase that perhaps best sums up the situation for luxury and other brands in the all-important Japanese market, which continues to struggle economically. The Japanese love to shop, but the devastation to their national economy over the past decade has certainly put a damper on things — and the overall situation doesn’t appear to be getting much better any time soon.
The stock market hit a 19-year low last month, and rampant talk of bankruptcies, problem loans and sky-high debt is thwarting consumer confidence. Unemployment has been at 5.4 percent for over four months, and there are about 20,000 bankruptcies annually in Japan now. Government policy makers haven’t been able to arrest the slide as they argue over how to cope with the nation’s banking crisis, and analysts foresee more bankruptcies and higher unemployment rates in the months ahead.
The worst hit have been department stores and mass-appeal chains. Luxury brands, meanwhile, are taking advantage of depressed real estate prices to invest for the future. But even they aren’t having the smoothest ride, though brands such as Louis Vuitton, Gucci and Prada continue to report strong sales in Japan.
"It’s a severe time for the market in terms of the macroeconomy," said Kana Sasaki, analyst at UFJ Tsubasa Economic Research Center. "There is no encouraging sign of a pickup. This fall, winter and Christmas seasons will be difficult."
In the department store sector, total sales at the nation’s 291 stores slipped 1.2 percent to about $4.9 billion in September (the latest results available), recording their sixth consecutive decrease, compared with the same month last year. The drop was attributed to a slow start to fall selling and less consumption by major corporations, according to the Japan Department Stores Association. Apparel sales, which made up 41.4 percent of the total volume, fell 1.7 percent.
Total department store sales for August dropped 0.3 percent compared with a year earlier.
In September, according to the Japan Chain Stores Association, at 6,231 chain stores — which is 369 fewer units than the same month last year — total sales fell 8.9 percent and same-store sales dropped 1.3 percent versus a year ago. That follows a 9.4 percent drop in August from August 2001.Also, in September, apparel sales decreased 16.5 percent, or 0.1 percent on a same-store basis, compared with a year ago. That follows a drop of 17.5 percent for apparel sales posted in August. Apparel sales in the national chains have showed a continuous drop since March 1997 except for last March, when same-store sales indicated a 2.1 percent gain — although actual sales of apparel declined 17.7 percent compared with March 2001. Sales at Uniqlo, a Japanese equivalent to the Gap, fell 25 percent in September.
But travel appears to be picking up again — although at levels still below those of the booming Nineties — and the luxury sector seems to be holding its own. Luxury brands have been pleased with their sales in Japan, which generally come with higher profit margins compared with sales to Japanese tourists in Europe or Hawaii.
After Sept. 11 last year, the Japanese, who like to travel — more than 10 percent of the population travels abroad annually — didn’t go overseas during the holiday season and they spent money at home. Today, the travel situation is at last beginning to return to pre-Sept. 11 levels, meaning more money is going out of the country again. According to JTB, Japan’s biggest travel agency, about 16 million people travel from Japan each year, and there is no indication of a decline this year similar to last year’s.
"The condition of the travel market is not bad, even after the recent terrorism in Bali and the Philippines," said a JTB spokesman.
On the luxury front, Sasaki said: "Though the market as a whole is bad, we are talking about fashion here. If the makers and brands offer the right trends and retailers distribute them well, consumers will follow."
He added: "Economic conditions here are severe, especially for middle-age men, who face layoffs and decline in salaries. But these are not the main customers for luxury brands. Those would be women in their 20s and 30s, who are able to spend money as they like. Even a part-time job will do. If they have money, they’re buying Louis Vuitton."
"Young fashion-conscious women seek something different, new and prestigious," he noted. However, "We are not living in a time of affluence [where anything sells]. Merchandise has to be special and unique — not all luxury brands are doing so well. The best ones are ‘super’ brands that are extremely attractive."Ian Bickley, president and chief executive officer of Coach Japan Inc., which opened a shop in the Ginza district on March 29, concurred.
"Although the economic news is still not very good in Japan, purchasing power is very strong here," he said.
For example, four days before the opening last month of Louis Vuitton’s flagship in Omotesando, a line started forming. By the opening hour 1,400 people were waiting, and by the end of the day, 2,800 customers had visited the store. And according to Vuitton Japan, sales, including orders for the first day, topped $1 million (converted fromJapanese yen at the current exchange rate.)
Vuitton and Coach are not the only examples of local opening fever. In Ginza, where rents are as high as $300 to $350 a square foot, Agnona, Chaumet, Lancel and Longchamp christened shops this fall, and Hermès opened a flagship in the district last year.
Bulgari recently renovated its shop, Burberry is also on the street and Prada is coming within a few months. As reported, Prada ceo Patrizio Bertelli said the brand plans to open a freestanding store in a site vacated by Sephora.
"We will open the store in December this year or next January," he said.
The new store will be 10,700 square feet on three floors. All the Prada merchandise, including cosmetics, will be offered, said Bertelli.
Prada also plans to open a flagship in Aoyama, and Bertelli denied speculation of a delay or cancellation of that opening. According to Bertelli, business for all Prada Group brands has been good in this market. Sales of Helmut Lang in Japan from January to September increased 30 percent over the first nine months of 2001. Jil Sander sales were up 50 percent in the same period, while Prada generated a 6 percent sales hike, he said.
"Ginza is one of the most important markets in the world," added Bickley, noting that Coach expects to double sales in Japan within a few years.
Stores are opening in the Harajuku, Omotesando and Aoyama districts, too. In the first half of this year, Minami Aoyama has seen openings of Michael Kors, 10 Corso Como Comme des Garçons, Undercover, Marni, Nina Ricci, Hugo Boss, Anteprima, Strenesse, Zara and Lacoste.The recent shop-opening rush has been facilitated because troubled companies have been looking to unload real estate to decrease their debts. Many real-estate deals in Omotesando, Ginza and Marunouchi can be attributed to the recession, according to Michio Chimura, a professor at Sugino Fashion College here.
"It is very important for the luxury brands to have flagships in the major markets, even when the market is slow," added Sasaki.
"Even in a deflation-based economy, luxury brands have been rare examples of excellent performance. But the long-term economic turbulence coupled with the recent drop in the stock market has derailed their performance a bit," said Masayoshi Soutome, Research Director at Mitsubishi Research Institute.
Generally, according to Soutome, the traditional luxury brands, whose main customers are older and affluent, are facing a difficult time "while luxury brands like Vuitton and Christian Dior, that offer trendier items, are gaining popularity among the younger generation. Their strategy, which includes opening large freestanding shops and offering exclusive product, helps the brands maintain continuous growth.
"However, these brands cannot be too optimistic. Reaching a younger consumer might result in a loss of prestige and exclusivity in the market," Soutome pointed out. "Anyway, an economic pickup is not expected in the near term,and luxury brands will keep facing severe conditions."
Also, Sasaki pointed out, with the current deflation, low price is not always the main attraction. And that’s why some of the low-price leaders, including chain stores and Uniqlo, are facing difficult times.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
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Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast