Luxury goods from all over the world are flocking to Japan. As the yen’s value has fallen to its lowest level in 34 years, luxury goods can be purchased at a lower price than not only in the U.S. but also in Europe. Among travelers, there is a saying that “If you shop for expensive items such as bags and watches in Japan, you will get a flight price.” Thanks to the low yen, even the same product can be purchased at a much lower price in Japan.
Bloomberg reported that consumers from all over the world are flocking to Japan as luxury goods prices in Japan have become relatively cheaper due to the low yen. It is explained that premium brands have actually lowered their purchase prices as they do not reflect exchange rate fluctuations in product prices despite the falling yen. Some buyers also reported that they are reselling products purchased cheaply in Japan to other consumers.
The Tag Heuer Carrera Chronograph watch can be purchased for 785,000 yen at a 10 percent tax-free discount in Tokyo. The same product costs 6,450 dollars in New York. Compared to New York, it can be saved in Japan. In fact, LVMH, which operates the Tag Heuer, also benefited from increased demand in the Japanese luxury goods market. In the first quarter, sales in Japan of LVMH, the world’s largest luxury goods group, rose 32 percent year-on-year. Despite a 6 percent drop in Asian sales due to slowing Chinese consumer demand, the Japanese market did a good job.
“Japan’s consumption of luxury goods is on the rise due to the weak yen,” Bloomberg Intelligence luxury analyst Deborah Aitken pointed out. Currently, the yen is trading at around 154 yen against the dollar. It is the lowest level in 34 years. Compared to before COVID-19, it has lost about 45% of its value. Last month, the Bank of Japan (BOJ) raised interest rates for the first time in 17 years for the first time since 2007, but the possibility of an additional rate hike became unclear, further deepening the yen’s depreciation.
Some predicted that the Japanese luxury goods craze is just a temporary phenomenon caused by price cuts. “Luxury manufacturers generally try to equalize prices globally to prevent arbitrage,” said Milton Pedraza, CEO of the Luxury Institute.
If you wanted to buy luxury goods but couldn’t because they were expensive, now might be your chance. However, even if the price difference is large, luxury goods are only a part of luxury. Rather, resell could increase crime. Japan should not only see many tourists visiting now, but also prevent possible crimes.
SALLY LEE
US ASIA JOURNAL
