In the middle of the 1990s, beer alone made up something like 75% of the liquor market in Japan. No surprise, really: most everyone around the world loves a cold tall one no matter whether the occasion is celebrating a rise in mutual fund portfolio value or suppressing the despair of losing a white-collar job to restructuring. Despite the fact that Japanese beer is excellent across-the-board, Japanese consumers have recently abandoned it in droves for fake “beer-flavored” malt-beverage substitutes: happoshu and fake-happoshu “third-category beer.” These fake beers now command about 25% of the alcoholic beverage market.
This is taste deflation in action: consumer budgets go down and sales of inferior goods go up. Pure-and-simple. (This has now led to a market gap at the top exploited by Suntory Premium Malts, but we will leave that topic for a different day.)
Fashion, however, has been different. These are not items that you put in your body but represent your social status and hierarchical ranking to society at large. Thanks to rising consciousness about socio-economic strata, the major European superbrands — Louis Vuitton, Gucci, Burberry, Christian Dior, and Hermès — have dominated the Japanese fashion scene for the last decade. But instead of being able to go head-to-toe in one brand like the ’80s — or even mid-’90s — young women can only afford to go generic for the shirts and skirts and then “class it all up” with a $2000 bag. But whether the appeal of these brands is “rational” (dependable and classic!) or “aspirational” (Roppongi Hills/Paris Hilton plastic-fantastic!), paying $2000 or more for a bag has been the de facto standard for a very long time. Maybe this year it’s Chloé and not LV, but still: time to take out a loan.
But watch out super luxury: last week’s issue of Weekly Toyo Keizai featured a long feature on “The Coach Miracle.” Many members of what used to be called the “middle-class” are now happy to buy a $400-$500 bag instead of shelling out for a $2000 one. Although the accompanying pictures to the article illustrate a much less fashion-forward, less glamorous crowd, Coach’s growth in the Japanese bag market is unquestionably strong: currently a 9% share, above Gucci, Hermes, and Chanel (LV is still 25%, natch).
Important to note that Coach is not seen as a classic luxury brand, but an “accessible luxury” (アクセシブル・ラグジュリー). Much more Polo than Prada in terms of cachet, with prices to match. More America than Europe — which is almost never a good sign of things to come.
Surely there are strategic business decisions and changes in fashion/taste that explain Coach’s rise, but one cannot help but think back to simple economic realities: buying a $2000-$3000 bag is a bit of an extreme investment at this point in time for a large class of people who have moderate incomes and little chance at wage raises. “Accessible” means having a “nice” bag and money left over to live life with the bag you just bought. And since boys do not care about brand labels anyway, why bother?
If Japanese men can accept that their 21st century life will involve the daily imbibing of vile forms of fake beer, why can’t women come down from fantasy land and stay within the price ranges of their budget limitations? With the economy moving as it is, taste deflation for middle-mass fashion is bound to happen at some point. And since LV is now so overexposed, the time has never been better for going “one-rank” down. I doubt, however, that things will stop at the Coach level. Bape destroyed the fashion market for men by making “fashion” into t-shirts and jeans, which ultimately opened the market for Uniqlo. If Coach says that “dressing up” can be mid-level luxury, then there goes the neighborhood.
