According to Nikkei Chinese website, due to the unchanged pillar strategy of the Bank of Japan, the selling of the Japanese yen against various currencies has not intensified. On April 29th, the Japanese yen further rose against the US dollar, falling below 160 yen per dollar for the first time since 1990. In terms of the euro, there is no situation where 1 euro is exchanged for 171 yen, which is the lowest point since the euro was pushed down by a single currency in 1999.
The continuous rise in exchange rates has made luxury goods in Japan cheaper.
Taking Louis Vuitton as an example, the price of a medium Carryall handbag in mainland China is 21500 yuan, while in France and Japan it is 2250 euros and 396000 yen respectively (approximately equivalent to 17444 yuan and 18415 yuan). But if combined with a tax refund rate of about 10% for Japanese tourists, the selling price of this handbag in Japan is about 16569 yuan.
The most welcomed ones are not top luxury brands such as Louis Vuitton, as they have a strong ability to balance prices in different global shopping malls. But for second tier brands like Miu Miu, their popular leather dress bags in recent years are priced at 29700 yuan and 462000 yen (about 21500 yuan) in China and Japan, and after tax refunds, they ultimately need to pay less than 20000 yuan in Japan.
It can be seen that nowadays in luxury brand dense commercial districts such as Ginza in Tokyo and Kousaibashi in Osaka, there are a large number of tourists at the forefront of luxury brand stores. But for Japanese people, the rise in the yen exchange rate has had a significant impact on their overseas purchasing power. According to the Nikkei Chinese News, due to the appreciation of the Japanese yen, Japanese people tend to avoid traveling to neighboring countries during the May Golden Week period, rather than going to Europe and America.
Due to the financial reporting season, multiple luxury brands have exaggerated the growth of Japanese luxury shopping malls in their performance reports.
LVMH Group, the parent company of Louis Vuitton and Dior, saw a 2% increase in sales in the first quarter, while Asia Pacific malls outside of Japan saw a 6% increase, while Japanese malls saw a 32% increase. Zheyun Group’s sales in Asia Pacific shopping malls, North American shopping malls, and Western European shopping malls that have been removed from Japan have increased by 19%, 11%, and 9%, respectively. The sales volume in Japanese shopping malls increased by 16%.
These brands did not mention in their financial reports that the increase in Japanese shopping malls is partly due to the rise in selling prices due to the appreciation of the currency, and on the other hand, a large number of tourists went to Japan to buy luxury goods due to the expansion of the price difference. Although the proportion of tourists from various countries consuming in Japan has not been disclosed, LVMH Group stated that the proportion of Chinese consumers consuming goods in the first quarter increased to 37%.
According to data from the Japan Travel Agency, the total consumption of tourists visiting Japan in the first quarter of 2024 reached 1.75 trillion yen (approximately RMB 81.9 billion), setting a new historical high for a single quarter. In March, the number of tourists visiting Japan exceeded 3 million for the first time, reaching the highest level in a single month’s history.
The wave of tourists going to Japan to buy luxury goods due to the spread caused by exchange rates has been ongoing for quite some time.
The Japanese yen exchange rate hit a new low in July 2022, and Japan officially resumed its domestic team tours on June 10, 2022 to avoid entry testing and cut-off. Group travelers from Hong Kong, China and the United States were the main consumers. After two years of silence due to the pandemic, many Japanese proxy buyers have once again become dull.
Due to the limited number of products in luxury brand specialty stores, many travelers choose to go to second-hand antique stores to buy goods. According to the CCTV Finance Channel, 30% to 40% of domestic visitors to second-hand jewelry stores in the Ueno commercial district. And merchants have a strong desire to buy second-hand jewelry, with generous discounts.
In response to the trend of booming luxury goods sales, many luxury brands have increased their presence in Japanese shopping malls in recent years.
Against the backdrop of the overall increase in store prices caused by the epidemic in Japan, individual luxury brands are taking advantage of their stores in key urban commercial districts such as Tokyo and Osaka. Louis Vuitton’s flagship stores in Ginza, Tokyo and Osaka were closed in 2021, while Balenciaga recently lost its first flagship store in Ginza.
And the marketing targeting Chinese tourists is also not forgotten. Ginza Six, a luxury shopping hub located in Ginza, Tokyo, has recently officially opened a popular Little Red Book account, with the first one receiving up to 400 criticisms and 1400 likes. Earlier, Zishutang no longer promoted a small French style called “Observing Japan” and announced Japanese civilization, snacks, and travel information to Chinese tourists.
