Weak Yen Fuels Luxury Shopping Spree

Many tourists line up to snap up luxury goods in Japan

The weak yen in Japan has led to a splurge in luxury shopping, not by local residents, but by mainland Chinese consumers.

They are flocking to the land of the rising sun to snap up designer goods that would cost more back home. That's because the yen hit a 38-year low against the US dollar last month, which has led to tourists in Asia coming to shop till they drop.

The Louis Vuitton Alma BB handbag

For example, Louis Vuitton's Alma BB handbag costs 14,800 yuan in China, or US$2,050. In Japan it currently goes for 279,400 yen, or US$1,875. Last month when the yen was even lower it could have been snapped up for US$1,725.

It's a problem LVMH, which owns Louis Vuitton and other brands like Dior and Fendi, does not want to have, as the conglomerate is taking in less profits; it cannot adjust prices quickly because of the volatility of the currency.

Tourists, not just Chinese, but also from Southeast Asia and the United States are taking advantage of the weak yen and not just buying designer luxury goods, but also jewellery, watches and spirits. 

In June, Japan had a record 3.1 million foreign visitors, and is projected to beat the annual record of almost 32 million foreign arrivals in 2019 before the Covid-19 pandemic.

Spending by tourists is anticipated to reach 8 trillion yen (US$54.74 billion) this year, according to the government, as tourism is keeping the economy afloat despite the aging population.