Luxury Brand “Versace” Closing Shop in Japan After 30 Years

After conducting almost thirty years of business in Japan, Giangiacomo Ferraris, the new chief executive officer of Versace has decided to shut down operations in the Land of the Rising Sun. Versace has closed all three of its major boutiques in Japan and is planning to shut down its regional head quarters in Tokyo by the end of October. The departure of Versace from Japan hints of the decrease of demand for luxury items in the Japanese market.

Gianni Versace, the founder of Versace

Japanese spending on high end luxury goods from brands such as Versace have seen major drops. Aside from Versace, other top luxury brands have seen decreases in spending on their products by the Japanese public. Another major brand with considerable market share in the luxury items industry, Moet Hennesy Louis Vuitton has experienced a decline in profits in Japan this past year. For the first half of 2009, Moet Hennesy Louis Vuitton experienced a twenty percent drop in sales. While sales of luxury items in Japan wavered, sales elsewhere in Asia increased by four percent collectively.

The slow sales this year have forced Moet Hennesy Louis Vuitton to cancel its opening of its new flagship store in Ginza, Tokyo. Furthermore, another luxury brand, Chanel close down one store in the southwestern area of the Kyushu prefecture.

In looking at Japan’s economy as a whole, it is noticeable that sales of imported brands have fallen. Last year, Japan’s sales of imported goods fell eleven percent down to 1,064 billion yen. Since 1996, Japan’s market for imported goods has shrunk down to 800 billion yen. Analysts predict that this trend will continue to affect Japan’s market for imported goods for the next few years.

Link to Financial Times article here.