Japanese consumers shopping at U.S.-style outlet malls

Japan has long been known as the mecca for luxury goods, as evidenced from the huge stores -– and correspondingly huge price tags -– peppering the main streets in the country’s tony shopping districts.

But Japanese consumers — pinched by an economic downturn, shifting tastes and a super-strong yen — have started to eschew traditional flagship shops and department stores. Along with a surge in online shopping for luxury goods, an interesting development is taking root: shopping at U.S.-style outlet malls in Japan is soaring.

Premium outlets in Japan today account for 23 per cent to 29 per cent of purchase frequency in luxury fashion apparel and leather goods/accessories, according to a recent survey by McKinsey & Company. Steep cuts in highway tolls have helped fuel the boom. But mostly, it’s consumers who are tired of paying retail for goods that can be bought at a discount – even more so in today’s economic climate.

With the yen now hovering at 83.9 against the dollar, Japanese consumers are increasingly finding that it doesn’t make sense to shop at home and pay the “Japan premium” for goods that can be found cheaply online and overseas. Translation: they’re tired of getting ripped off, especially given that pricing across regions is now completely transparent, thanks to the web.

Some examples: a pair of fierce Jimmy Choo Feline elaphe snakeskin trim sandals cost 131,250 yen in Tokyo, or $1,572 at the current exchange rate. The same pair in the U.S. costs $1,095. Prada’s leather bow pumps are 73,500 yen in Japan, or $880, compared with $650 in the U.S. Abercrombie & Fitch’s men’s McLenathan Bay sweater sells for 25,000 yen, or $296.42 at the current exchange rate. In the U.S., the same sweater costs $170.

What to do, hard-pressed Japanese luxury buyer? Pack your bags, buy a ticket to the U.S., and shop your heart out.

SOURCE: The Wall Street Journal,  By Mariko Sanchanta, Sept 8, 2010