Japan and the future of luxury



25th October 2022

~ 4 min read


In 2021 alone, the Japanese luxury goods market generated over $25.98bn in revenue. So considerable is the market’s scale and influence that almost a quarter of all LVMH’s physical stores across Asia are located on the island nation. Having witnessed a dramatic downturn between 2007 and 2012, and again during the pandemic, the market has since returned to strong growth.

But what lies ahead for Japan’s luxury sector in the years to come – and what’s changing? Here, we’ll discover some of the major trends at work, learn more about what Japan’s luxury consumers are coming to expect, and explore how luxury goods companies can make the most of the years ahead.

From word-of-mouth to online social commerce

Once, luxury labels in Japan were built on word-of-mouth exclusivity, finding favour among elite social circles. However, in today’s marketplace, online channels are more and more important for both brand discovery and purchases, considerably opening up a once cloistered market. To that end, not only can the right digital channels help build awareness of a new company’s offerings, but they can help aspirant brands tap into key influencer and buyer networks.

Social media is here to stay, too. According to McKinsey research, Japanese users will continue to be major social media users going forward, and more importantly, Japanese buyers also intend to purchase directly through social media sites. Curated collections have been a particular hit with Japanese luxury buyers and online pinboards rate highly for product research. Any luxury brand aiming to increase market share will need to take note. 

So, where to start? Shoppable, paid, and organic content on Instagram and YouTube can be a great first step. While China has the app Xiaohongshu (where high-end beauty brands do particularly well), Japan’s social platform with the largest daily use of high net worth audiences is LINE, an all-in-one app offering messaging, video, shopping, pay and more. Sites like LINE also offer easy social commerce setup – putting a great storefront easily within reach.

Streamlining the buying process: Click-and-collect 

Even with the rapid adoption of ecommerce, brick-and-mortar is set to remain the primary sales channel for luxury goods in Japan, with 74% of sales to be generated offline by 2025 according to Statista. However, digital still features strongly in this sphere, with more and more consumers looking to click-and-collect shopping to streamline their purchase process. 92% of consumers say they plan to continue to both shop online and pick up in store post pandemic according to McKinsey research, underscoring the importance of a well-curated and accessible digital shopping universe.

Japan’s young, affluent consumers are set to drive growth

Japanese Millennials and Gen Zs are set to become a significant force in luxury goods consumption. However, understanding what makes the different segments of younger Japanese consumers tick will play an important role in informing strategy for luxury brands operating in the Japanese market. 

For example, the so-called ‘Ikina-Rich’ value integrity, credibility and rationality when it comes to luxury goods shopping. They prefer to spend money on products that are either easy to update or replace, or which are long-lasting for the price. Meanwhile, Gen Z’ers, known in Japan as the ‘Satori Generation’, look for sustainability and nobler motives behind the brands they buy from.

Rising opportunities to establish direct-to-consumer channels

Despite Japanese buyers’ reliance on brick-and-mortar, for luxury brands looking to break into the Japanese market, building a direct-to-consumer channel can be a highly valuable approach. Japan has a relatively low barrier to new product entry into stores, meaning that many new brands opt for department stores or resellers, often without offering a localised Japanese website.

With the future looking bright for online sales and social ecommerce, building a direct relationship with Japanese consumers will help create a robust foundation for future growth.

In short, the Japanese luxury market has a bright future ahead of it. However brands must ensure they also provide correctly tailored, localised offerings if they hope to succeed and resonate with buyers. Want to learn more about luxury goods and digital journeys in Japan? Check out our full report here.

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