Japan's Cooling Love For Luxury Opens Doors For Mid-Range Brands

Japan, once a haven for luxury brands where nearly every consumer had a designer purse, coat, or cell phone strap, is feeling the strain of the recession. The latest economic squeeze has Japanese people counting their yen and looking for cheap deals. According to the New York Times:

Retail analysts, economists and consumers all say that the change could be a permanent one. A new generation of Japanese fashionistas does not even aspire to luxury brands; they are happy to mix and match treasures found in a flurry of secondhand clothing stores that have sprung up across Japan.

Wal-Mart, under the Seiyu brand, is now posting profits after years of just barely breaking even in Japan. The Japanese are downscaling everything from food choices to clothing to beer, looking for the cheapest option. This marks a significant shift not just in the Japanese consumer, but for Japanese culture.

Prior to this past year's downturn, luxury goods were the way to fit in in Japanese society. You weren’t part of the group unless your sunglasses were Prada and your belt Versace. But the economic drop has scrambled feelings of identity and spending habits. Brands need to shift gear, and start linking their products with images of thrift and practicality.

Though luxury brands will have a hard time lowering prices or convincing anyone that they really need to spend 100,000 JPY on a Gucci handbag, there is new opportunity for mid-range brands to grab a larger hold on the market. Uniqlo, Japan’s answer to Gap, which sells generic, “basic” clothing, is seeing sales rise, and so are cheaper lunchboxes, or “bentos,” which are very popular. Smaller companies can now cater to a disillusioned market that doesn’t know exactly where to look.

If the Japanese luxury backlash continues, those brands may have to content with the image exclusivity—a problematic positioning in a country that values homogeneity.