Japanese luxury market evolves

9 April 2013

TOKYO: Retailers in Japan are exploring new formats and embracing digital marketing as the nation's luxury shoppers become more discerning, McKinsey has suggested.

The Luxury Goods in Japan report published by the consultancy identified four trends that marketers need to understand if they are to meet the changing expectations of these consumers.

According to the study, customers are no longer interested in "me-too buys", with younger shoppers, in particular, unlikely to choose a brand if everyone has it, instead looking for products that are unique and offer long-term value.

A luxury apparel executive told the report's authors that Japanese consumers "are less influenced by friends, trends and rumours, but are taking more time to evaluate what they see as the real value."

One way this can manifest itself is in the actual shopping experience. Exceptional service is being sought, meaning "the perception a customer has while shopping or otherwise interacting with a brand is on its way toward becoming more important than the product or brand itself."

Many consumers also often have a better knowledge of products than staff, McKinsey added. "Facebook sometimes has more information than a basic sales training course" is how one luxury executive put it.

He added that "pricing has become very transparent, meaning that the sales rep really has to be able to add value to the sale to make the sales wear well."

With the long-term decline of traffic through department stores, traditionally the home of luxury goods, sales representatives are also increasingly likely to be found in different branded retail venues.

These range from a spa, where customers can use products from the luxury skincare brand Cosme Decorte after their treatments, to stylish cafés in the showrooms of car brands like Mercedes-Benz and Cadillac.

These same pressures mean that luxury brands can no longer afford to do without a digital presence or to ignore social media, McKinsey said.

It also noted that luxury consumers are engaged online and expect their favourite brands to be as well. This will require a good online shopping experience, either through the brand's own website or sites hosted by others, and via smartphone apps. Social media will also have to become an effective part of media communication.

Data sourced from McKinsey; additional content by Warc staff