Sunday, October 31, 2010

Why Do Japanese Retailers Like Louis Vuitton Rip Off Customers?

Brand named goods are outrageously expensive and over-priced in Japan. Many women go overseas to buy these goods which hurts business here.

The retailers here probably figure that only older people are going to buy this stuff locally (hence they won't be Internet savvy) but there are many people who are onto their game.

Long time Japan resident and expert Ira Hata writes in:

I went to Louis Vuitton last week and looked at some boots that were going for 138,600 yen.  Then, I went online to LV's home page (in France) and found the exact same boots going for 89,000 yen (at today's Euro exchange rate)!!

1)      With the Japanese economy hurting the way it is and, worse yet, the fashion industry dependent on sales during specific seasons (not to mention changes in trends every year), why wouldn't they adjust the pricing to attract more customers and sell out their inventory?

2)      With access to real time information worldwide, why would Japanese customers continue to visit local boutiques and purchase merchandise at "rip off" prices?

When I asked why LV Japan is selling the same boots (as their headquarters in Paris) for 50,000 yen more, the saleswoman gave a lame ass excuse saying "we (LV Japan) fix our exchange rate once a year and do not adjust until the following year".  The strange thing is that they've NEVER sold their products at less than headquarters so that's a bullshit line.  Worse yet, she didn't seem to care whether she made a sale or not.  What arrogance!

A few days later, I met a good salesman (notice it's not a female) who apologized and told me he'll try to report this to the "higher ups" (most likely oldsters who don't care about anything except for their salary increase) so they can consider it.  He agreed with me about the waste of potential business and loses due to dead stock.  He also told me that other luxury brands were screwing the customers even worse by charging close to double the retail price of their headquarters pricing.

No wonder the Chinese are only buying used branded products in Japan and going to Europe to buy the new stuff...

By the way, ¥50,000 is about $600 (USD). I always shop online anyway (not that I buy LV stuff), but it's no wonder you see closed up boutiques and brand goods shops everywhere in Tokyo nowadays. For ¥50,000 you can fly round trip to Korea and stay two nights at a good hotel!

Of course, the retailers are free to charge whatever they wish. It's just that the Internet and online sales are making competition and pricing all the better for the customers - and that's good. Traditional retailers need to pay more attention.

1 comment:

Ira Hata said...

My good friend is the founder of Japan's largest PC retail chain (until they were bought out by Bic Camera).

He told me he's given up on buying from retailers and purchasing "from Amazon"!!

Retailers better get with the program or they'll go by the wayside.

A great start-up idea is for someone to open up a huge showroom where customers can look at products they want to purchase. Then, they can either buy them online (in store) or go home and purchase from the store's website. In either case, the products are shipped to the buyer's home. That way, the overhead of [1] salespeople, [2] clerks, [3] stockers, and [4] security staff will go away, leaving larger margins for the online retailer. Customers can get the benefit of physically looking at what they want to buy and purchasing it cheaper than retail. Retailers can enjoy the benefit of lower overhead and distribution costs (they can simply ship from a central warehouse). It'll be a win-win structure that would revolutionize the market...