Luxury Goods in Japan

Luxury goods in 2025: The big picture

In 2025, luxury goods in Japan witnessed steady growth in retail current value sales, maintaining the positive trajectory established in the preceding three years, albeit at a more subdued pace. The return of affluent foreign visitors from key markets, coupled with sustained domestic consumption, continued to bolster growth. However, ongoing geopolitical uncertainties and moderate economic growth prevented more robust expansion. Macroeconomic conditions, including steady inflation and cautious consumer sentiment amid global economic volatility, moderated discretionary spending on personal luxury and premium and luxury cars, impacting the overall industry dynamics.

2025 key trends

In 2025, luxury goods in Japan was characterised by several key trends, most notably the growing importance of sustainability and personalisation. Luxury consumers continued to prioritise sustainability, with a heightened preference for brands that adopt eco-friendly practices and offer products with transparent and ethical sourcing. This trend was particularly evident in designer apparel and footwear, in which consumers increasingly sought bespoke items that reflected their individual tastes and identity. For example, Miu Miu is a popular brand in Japan, and its Upcycled Collection has been gaining awareness with each new annual launch. Meanwhile, the integration of AI technology enhanced customer engagement through personalised recommendations and streamlined shopping experiences, thereby reinforcing a more tailored and efficient purchasing process.

Competitive landscape

In 2024, luxury goods in Japan remained highly competitive and fragmented. Premium and luxury cars, characterised by high sales and consolidation, enabled the leaders Toyota Motor Corp, Daimler and Volkswagen to also hold the top three positions in the overall luxury goods landscape. Toyota's Lexus brand sustained its leading position, driven by the ongoing success of key models such as the NX, UX and RX, which achieved record domestic sales that surpassed those of major competitors, including Daimler's Mercedes-Benz. Toyota's emphasis on innovation, brand loyalty, and adapting to evolving consumer preferences, particularly through its expanded electrification strategy, allowed it to strengthen its lead in value terms in 2024. The company's strategic initiatives, including supply chain stabilisation, also enabled Lexus to effectively cater to increased consumer demand.

Retail developments

Despite the sales growth of retail e-commerce in 2025, physical retail channels continued to dominate the distribution of luxury goods in Japan. The in-store experience remained appealing due to its ability to deliver sensory engagement, personalised service, and a heightened sense of exclusivity that e-commerce platforms have not yet fully replicated. This preference was particularly pronounced among affluent consumers who valued the tactile interaction with luxury leather goods, luxury jewellery, and luxury timepieces, which require a nuanced appreciation of quality and craftsmanship. As a result, luxury department stores and flagship boutiques continued to prioritise maintaining a significant physical presence in upscale urban districts such as Ginza and Omotesando in Tokyo, aligning with the preferences of high-net-worth clients who sought curated and immersive shopping experiences. In 2025, offline retail channels accounted for 87% of sales in personal luxury, for instance, with this fairly stable from the previous year, underscoring the enduring importance of physical retail in the sale of luxury goods.

What next for luxury goods?

Retail current value sales of luxury goods in Japan are forecast to experience slow and stable growth from 2025 to 2030. This subdued growth trajectory is attributed to several converging factors, including persistent economic uncertainties and demographic challenges, such as a declining and ageing population, which will dampen local consumer demand. Nonetheless, sales will maintain their growth trajectory, buoyed by a steady increase in the number of HNWIs, UHNWIs, and affluent adults, as indicated by Euromonitor data. The incremental expansion of this affluent consumer base is expected to bolster demand for luxury goods, thereby offsetting some of the domestic challenges. Furthermore, inbound tourism is anticipated to maintain growth momentum, capitalising on Japan's global appeal and favourable exchange rates, which will contribute to value growth.