Japan is experiencing a notable surge in luxury sales. The weak yen is a significant factor, attracting international tourists who find it cheaper to buy high-end goods in Japan than in their home countries. An Australian financier shared an instance where his wife traveled to Tokyo from Melbourne solely to purchase luxury items, which came out cheaper even after accounting for travel costs.

The yen’s decline to its lowest level since 1986 against the US dollar has turned Japan into a shopping haven. Tourists from China, South Korea, the US, and other countries are capitalizing on favorable exchange rates, leading to a boom in duty-free sales. For example, the Japan Department Stores Association reported a record high in duty-free sales for the third consecutive month in May, with figures tripling year-on-year.

Domestic spending on luxury is also robust, particularly among wealthier Gen X consumers. Despite inflationary pressures, these consumers continue to spend on high-ticket items, contributing to the sales spike. Maiko Shibata, creative director at Restir, noted the trend of both tourists and locals spending on rare and limited-edition items, further driving the luxury boom.

Top brands are responding by expanding their operations. Hermès opened its second store in Ginza and has reported a 25% sales increase in Japan for the first quarter. Additionally, Balenciaga has opened a new flagship store, and emerging brands like Gemmyo and Ganni have entered the Japanese market.

Luxury department stores such as Takashimaya have benefited from this trend, with increased per-customer sales due to yen depreciation. In general, the Japanese luxury market is well-positioned for future growth, driven by solid demand from both local and international customers, despite potential challenges from a weakening macroeconomic environment. Luxury brands will need to innovate and stay culturally relevant to maintain this momentum.