TOKYO: An emphasis on quality, service and marketing will be essential if the luxury sector is to regain its former position in Japan, a study by McKinsey has argued.
The consultancy questioned more than 1,300 consumers and over 25 senior executives to ascertain the potential impact of the recent natural disaster hitting the country on the industry.
Among the business leaders interviewed, 65% reported a sales contraction of at least 10% in March 2011, including 20% witnessing a slide surpassing 20%.
However, 60% anticipated 2011 would either mirror or improve the performance from 2010, easily beating the 10% expecting the situation to get "significantly worse", and 85% were optimistic for the longer term.
"The picture that emerges, while not definitive, is that the desire to own luxury goods has not waned in the wake of what has been called the nation's worst crisis since World War II," McKinsey said.
Exactly 49% of shoppers concurred that "showing off luxury goods was in bad taste" at present, measured against 24% during 2010 and 31% in 2009.
A further 15% felt "peer pressure" to save because of the contemporary environment, and 4% believed people should refrain from acquiring premium offerings given the current climate.
By contrast, 38% preferred that consumption habits continue as normal to bolster the domestic economy.
More broadly, 29% thought luxury manufacturers had an "obligation" to divert a percentage of corporate profits to aid the on-going relief efforts.
Upon being asked to describe buying patterns over the last 24 months, 13% of consumers in their twenties were making relevant purchases less frequently, but just 6% had boosted activity levels.
These figures stood at 20% and 1% for contributors in their thirties, while a fifth of shoppers between 40 and 49 years old had logged decreases, among which only 1% adopted the opposite strategy.
A 16% share of the sample aged 50 years old and over had pared back rates of outlay and a modest 2% supplied increases, McKinsey revealed.
Elsewhere, 11% of the panel had traded down to cheaper brands and 2% snapped up greater numbers of higher-end lines.
A quarter of respondents agreed non-luxury alternatives matched the style credentials of premium ranges, and 20% solely opted for exclusive products if they were discounted.
One of the main reasons behind buying luxury goods was as a treat, mentioned by 28%. Quality scored 20%, and durability, a trait reducing the perceived expensiveness, posted 41%.
Looking online, 67% of those polled were worried objects such as clothes and shoes obtained from the web may not fit, and 57% wished to "see and touch" an item first.
Another 54% displayed anxiety about receiving counterfeits, 45% expressed concern relating to after-sales support, and 26% named the "upscale service" provided by bricks and mortar chains as an important factor.
Some 62% of people found to have bought apparel and accessories in this way across the last two years were doing so more often, reaching 54% discussing leather goods, 49% regarding shoes and 39% for watches and jewellery.
In all, the study suggested established trend towards deals, a shift away from impulsive decisions, and the need for a compelling case to make purchases are still playing a key role, rather than marking a break with the past.
"With a continued focus on quality, service, and marketing, Japan's luxury market should recover to pre-March 11 levels," McKinsey concluded.
Warc subscribers can read further insights about changing consumer attitudes in Japan, from the Asia Marketing Effectiveness Festival, here.
Data sourced from McKinsey; additional content by Warc staff