3. Specifics of the Japanese fashion luxury market
The Japanese market is a very specific and selective market. According to luxury analysts, Japan is indeed the world’s largest market for luxury brands, accounting for anywhere between 12 and 40 per cent of global sales, depending on the market definition.
When it comes to competition, Japan is the world’s most concentrated source of revenue for luxury brands (refer to Exhibit 6 in the case). No other country in the world is such a concentrated source of revenue for so many luxury brands. The success of luxury firms in Japan can be explained by the demand by Japanese customers for quality products. But times have changed and new challenging brands such as H&M and Uniqlo are shaking up some segments of the luxury market in Japan by offering designer quality at competitive prices.
Japan has always been known for group-oriented culture in which the pressure to own iconic brands is huge. Successful brands such as Prada, Hermès and Louis Vuitton have been successful in formulating strategy based on the cultural norms of the Japanese luxury market. The Japanese way of consumption is different from that in the West. Indeed, the Japanese way of consuming luxury items seems more like a compulsory form of social expression, and the bandwagon effect is relatively more in Japan due to the influence of friends and relatives.