The world's largest luxury goods conglomerate has been stung by the global economic slowdown. LVMH Moët Hennessy Louis Vuitton SA has abandoned its plans for a Louis Vuitton flagship store in Tokyo's Ginza shopping district, proving that even the strongest international luxury brands can't weather the downturn. The store was due for completion in 2010, said an official for the developer, Hulic Co.
Growing up in the '80s, I remember Japan being the most concentrated source of revenue for luxury brands. Louis Vuitton. Gucci. Hermes. It's a country that's always been renowned for its thirst for luxury goods. Japan has been a major market area for LVMH, which has 56 stores in the country. So I'm surprised by the company's latest announcement.
But at the same time, I'm not.
Japanese consumers are increasingly forgoing luxury brands for smaller-ticket items and trading down for designerlike goods at chain stores such as H&M and Zara. According to a luxury study by Bain & Co., Japan's luxury market, which is 12 percent of the global total, is already in a luxury goods recession and is expected to decline by 7 percent this year, vs. a 2 percent decline in 2007.