Designer Labels Are Losing Their Appeal in Japan

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Considered the world's leader in luxury goods, LVMH Moët Hennessy Louis Vuitton SA, canceled plans to rent a 10-story building in central Tokyo for a new flagship store. It shows how the global economic downturn has hit Japan, one of the most important markets for the luxury-goods industry.

What struck me is this:

Emerging markets make up about 15% of the luxury-goods sector's overall sales and had in some places been reporting double-digit growth. But as the global financial crisis has knocked down Chinese and Russian stock and property markets, wealthy consumers are under pressure to cut spending.
Japan, meanwhile, makes up 12% of the luxury sector's global sales of €175 billion ($240 billion), according to a Bain & Co. study released last month. But the Bain study said Japan's luxury sales are expected to decline 7% in 2008, after a 2% decline in 2007. LVMH reported that in the first nine months of 2008 Japan sales were down 7%, as its world-wide sales grew 4.5% in the period to €11.6 billion.

Who would think that emerging markets would be snatching up expensive luxury goods?

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