On Friday of last week, the yen exchange rate hit 88 to one USD. Every day, Japanese (and world) news reports on companies going out of business or laying off workers. Stock markets around the globe are in free fall. Times are tough. But, no matter how bad things got in Japan, we always had Louis Vuitton to make us smile. Until now!
Actually, it’s not that bad (yet). Japan still has Louis Vuitton – we just won’t have a long-planned shiny new LV Ginza flagship shop. The new store was supposed to open in 2010 inside of a really cool 10-12 story building, complete with an LV restaurant.
The reason for the cancellation of this very-expensive project is pretty obvious. We recently published an article about LV lowering prices in Japan, and there is already a big Louis Vuitton shop in Ginza, so it was purely an exercise in mega-branding to start with. Here is the official word from LVMH talking heads:
“We have not been able to reach an agreement with Hulic (the developer) on a store development project in Ginza,” said Yuri Matsueda of Burson-Marsteller, a public relations agent for Louis Vuitton Japan.
What did you expect her to say, “Sales are down, real estate prices are up, so we’re playing it safe!”? Probably not.
It’s not clear yet how the economic problems will play out in the Japanese fashion world.
Will the cheaper “real clothing” brands continue to grow in popularity as people have less pocket money? Will the luxury brands take a beating? Will the super-rich keep on shopping, even as the world burns around them? Will import luxury goods gain or lose favor with the strong yen? How crazy will the Yen/Dollas exchange rate have to get before Japanese fashionistas start making quick flights to Los Angeles so they can buy cheap high end fashion?
All of these questions — and more — shall be answered in the next few years…