After nearly three decades in Japan, Gianni Versace is pulling his stores out of the Japanese market due to the declining demand for luxury goods in the world’s second-largest economy. The Financial Times reported that the Italian fashion house closed all three of its directly owned shops because “it no longer represented the brand image.” It’s expected to shut down its Tokyo business office by the end of October to re- strategize their business plan after the arrival of Giangiacomo Ferraris as its new chief executive. “It was felt to be more advantageous for the company to close them and start with a clean slate in order to actively and aggressively pursue new locations and more suitable distribution channels,” a Versace spokeswoman added.
Aside from Versace, other luxury brands have also experienced major declines in profits from Japan this past year. Moet Hennesy Louis Vuitton had a 20 percent drop in sales in the first half of 2009. While luxury items sales struggled in Japan, elsewhere in Asia they increased by four percent collectively. These slow sales caused MHLV to forcibly cancel the opening of its new flagship store in Ginza, Tokyo. Chanel also had to close down one store in the southwestern area of the Kyushu prefecture.
As China, Singapore, and Hong Kong are creeping up the luxury scale by becoming vital financial centers, Japan may soon lose its slot on the list along with its luxury luster.