One of the first things that struck me when I went to Japan was how the Louis Vuitton symbol seemed to have beaten the Rising Sun as the nation’s emblem. Everywhere I went, women would carry designer handbags, many with the familiar LV logo.
I was not the only one to have noticed. For many years, the Japanese obsession with designer wear and accessories provided fodder for newspaper and magazine articles. Western journalists filed reports about the social impact of the designer cult. Apparently, young women — some of school going age — were turning to prostitution to finance the purchase of designer handbags.
American friends of mine who lived in Japan in the 80s and the early 90s complained about how the Japanese actually took the photo-pictorials in such magazines as Vogue and GQ seriously. Women would come dressed for parties in head-to-toe Chanel and the men would look as though they had stepped out of ads for Ralph Lauren.
My friends searched in vain for the trendy look popularised by such cutting-edge Japanese designers as Yohji Yamamoto and Issey Miyake. They found that this look flourished only at the fringes. The mainstream was still firmly wedded to Western designer wear.
My friends eventually gave up competing with the Japanese in terms of dress when they decided to take a weekend off for a break at a hill resort. Because they believed they were on holiday, my friends wore
T-shirts and jeans. To their horror, all the Japanese people seemed to have stepped out of The Sound of Music . The men even wore shorts and lederhosen!
Japan is more important than these anecdotes might suggest. While the Western press treated the designer boom as an excuse to file colour stories, the fashion business regarded Japan as the model for the growth of luxury in the rest of Asia.
The theory went something like this: The Japanese made their money before other Asians. They used designer goods as a way of announcing their newfound affluence. This path will be followed by other Asian economies. And to varying degrees, the theory has held.
I was in Indonesia last month and flipping through the society pages of the magazines, I was surprised to find that every second woman pictured was carrying either an Hermes Kelly or a Birkin.
Once China opened up, the fashion business regarded this as the test case. Would it follow the Japanese pattern? It did. And fashion companies have flocked to China regarding it as the new frontier for designer products. It’s not clear how India will behave but the fashion industry is betting on the assumption that it will follow the Asian pattern. But what happens when the Asian model yields results that the fashion companies do not like?
Over the last year, the Japanese market has kept fashion marketers tossing sleeplessly at nights. Younger Japanese seem to be turning their backs on designer goods and refusing to regard them as symbols of achievement or affluence.
All designer brands have reported drops in Japanese sales. Even Louis Vuitton whose fortune is based, in large part, on its Japanese empire, is worried about the future. It has cut back on expansion plans and is not sure how to cope with the drop in sales. Last week, Versace announced that it was shutting down its Japanese operations in its entirety. Sales had been in free fall for months and the management did not see any prospect of a reversal in its fortunes.
There are two ways of looking at the Japanese experience. You can argue that the global recession has affected Japan just as much as it has affected the rest of the world and that, therefore, the current slump in designer sales is merely a temporary phenomenon that will soon reverse itself once the economy improves. Or you can argue, as some observers do, that this is the beginning of the end for the global luxury market. They claim that the days when designer goods were seen as symbols of good taste and prosperity are over.
One effect of the recession is that consumers are now emphasizing value over snobbery. The designer boom of the 90s was led by the global prosperity of that decade. As more and more people earned larger and larger sums, they seized on designer goods as a way of announcing their affluence.
But now, fewer millionaires are going to be created by the global economy. The existing millionaires have already made it clear that they are rich and no longer need expensive handbags to draw attention to themselves. As they have grown in confidence, they have also developed their own tastes and prefer to buy something that they actually like over something that is branded.
There is some evidence for this view. Even in the West, the It Bag phenomenon is now over. For over a decade, fashion houses operated on the assumption that women would be willing to buy an infinite number of handbags because each year they would be told that the bag they bought the previous year was now out of fashion and they had to buy the season’s new It Bag.
As the production cost of these bags was only a fraction of the retail price, the It Bag phenomenon boosted the bottom lines of all designer brands and made Louis Vuitton the most profitable company in the fashion business. But just as the Japanese are moving away from designer goods, Western women are also unwilling to keep buying expensive handbags only because they are told that they must follow fashion trends.
If these portents are accurate, then the consequences for the global fashion
industry could be devastating. For the last decade, the fashion business has had two golden rules. One: Asia will see us through any recession. And two: accessories are a license to print money.
Now, both these rules are being questioned. And as fashion brands slash prices and announce sales (have you been to Delhi’s Emporio recently?), it is beginning to look as though the boom in luxury goods is over. There will always be space for true luxury. But I am beginning to doubt that there will be any room for branded goods masquerading as luxury products.