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Louis Vuitton Expands Ginza Flagship

The revamped Matsuya store underscores the brand's long-term commitment to the Japanese luxury market.

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TOKYO — Louis Vuitton will unveil its revamped and expanded Matsuya flagship in Ginza next week, underscoring its long-term commitment to the Japanese luxury market, which is showing signs of a rebound.

This story first appeared in the September 3, 2013 issue of WWD.  Subscribe Today.

“We’ve never ignored Japan, even with the rise of China. Japan has always been a top market,” Michael Burke, chairman and chief executive officer, told WWD Friday, a day after the French brand held an event at the Tokyo Station Hotel to celebrate the opening of its “Timeless Muses” exhibition honoring notable women such as Catherine Deneuve and Kate Moss.

“We always said we don’t think you can exist in the luxury world if you’re not successful in Japan,” added Burke.

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The Matsuya store, which will reopen Sept. 14, is the brand’s top-performing unit in its 58-store network in the country. Dating back to 2000, the store originally covered 16,146 square feet. It is gaining a third floor and will encompass an area of 20,451 square feet, carrying the same mix of leather goods, accessories and ready-to-wear but also the brand’s new Ecriture range of pens and stationery.

The revamp, which includes a new building facade, was several years in the making, Burke said.

The ceo said the company’s retail distribution network in Japan will remain largely unchanged in size for now, although Vuitton may relocate some stores to better positions. For example, the company is also preparing to open a new location in Tokyo’s Shinjuku district opposite Isetan to replace a sales point lost when Mitsukoshi closed to make way for Bicqlo, a hybrid Uniqlo/Bic Camera store.

The executive said Vuitton’s business in Japan started to pick up in a “significant” way at the tail end of last year, although he declined to quantify by how much or discuss sales figures. He said consumers here, like in the rest of the world, are responding to Vuitton’s shift in focus to high-priced leather handbags.

Perhaps more significantly, Burke noted that the profile of the Japanese consumer base and his or her spending patterns have changed over the years. Japan’s vast middle class of occasional and entry-level luxury consumers propelled luxury market growth in the past but that is not the case any longer, he explained. The “office lady” demographic of women who live at home with their parents and save up for months to buy a designer handbag is diminishing, he said.

Burke noted a growing class of “higher-end” consumers who are eager to spend the wealth they have amassed by working in fields like entertainment and software development, or at start-up companies. Often these customers are self-employed, he added.

“Twenty years ago, there was less of that. It was more dominated by the vast middle class working for large conglomerates, and Japan is becoming more diversified when it comes to that,” he said.

LVMH Moët Hennessy Louis Vuitton’s fashion and leather goods division saw first-half sales through June 30 grow to 4.71 billion euros, or $6.17 billion at average exchange rates for the period, from 4.66 billion euros, or $6.06 billion, the year before. Japan accounted for 13 percent of the total.

Burke’s optimism for the Japanese market is just part of the executive’s sanguine view for the luxury market on a global level. Not even the prospect of potential military action in Syria appears to damper his outlook.

“I think we’ll take into account what went wrong in the last two expeditions [in Afghanistan and Iraq] so I’m an optimist. I think the U.S. government has learned a few things. The Europeans also have learned, I believe…markets always overreact. These are opportunities,” he said.

Burke was particularly upbeat about the Chinese market. While he has acknowledged that sales growth there has slowed, in part due to a political crackdown on gift-giving, he said a correction is both normal and welcome.

“Well, there were some excesses…those excesses need to come to a halt. That’s a good thing. It’s a good thing what’s happening in China,” he said. “We want to have a direct contact with our ultimate client. We do not like to have to deal with intermediaries.”

The executive said it is “difficult to say” just how much the gift-giving crackdown has impacted Vuitton’s sales, particularly of men’s items. But Burke said he’s pleased with the growth he’s seeing within the brand’s largest customer base. Asia, excluding Japan, accounted for 32 percent of LVMH’s fashion and leather goods revenue in the first half of this year.

“There will be and there is a tremendous growth in the upper-middle classes of China. That will continue,” he said.

That said, Burke said Vuitton will be cautious about expanding its network of 50 stores in China and instead will focus more on updating its existing boutiques and possibly relocating some as malls come and go in terms of popularity and success.

The luxury landscape in China is becoming increasingly competitive as every brand, even niche players, move into the market and open stores. But Burke said he’s not fazed.

“It’s the vibrancy of a market,” he said, drawing a parallel to the rise of Italian fashion brands in the Sixties and the challenge they posed to more storied French labels. “New entrants coming in, new designers are popping up, that create interest in the industry.”

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