Luxury Portable Consumer Electronics in Japan

PROSPECTS

Focus on functionality over luxury leads to slower growth

Wearable electronics were anticipated to create a phenomenon when they were first launched in 2014 in Japan, with luxury portable consumer electronics also expected to be impacted. However, after the initial excitement settled down, demand began to drop off rapidly with disappointing growth seen despite the initial high expectations.

Store-based retailing important to attracting inbound tourists

As local consumers search for functionality rather than luxury, spending from inbound tourists has become an important factor supporting the growth of luxury portable consumer electronics in Japan. Department stores and non-grocery specialists have become important channels for capturing sales from these inbound tourists.

No sales of luxury mobile phones in Japan

Sales of luxury mobile phones in Japan remained absent in 2017. This has been the case since Vertu, originally launched by Nokia, terminated its business in Japan in 2011.

COMPETITIVE LANDSCAPE

Lack of variety stifles growth

In 2017, luxury portable consumer electronics continued to cover only a small portion of overall sales of portable consumer electronics. There were only two major players present in luxury wearables in 2019, TAG Heuer from LVMH Moët Hennessy Louis Vuitton SA and Apple Hermès iWatch from Apple Japan Inc.

New product and new store provides boost to TAG Heuer

Despite Apple entering the category in 2016 TAG Heuer has maintained its dominance in luxury portable consumer electronics, with it even regaining share from Apple in 2017. This was partly thanks to the launch of its TAG Heuer Connected Modular 45 smartwatch in 2017, which was followed by the Modular 41 which was added to the range in 2018.

Non-luxury brands dominate wearables while traditional watches still preferred for luxury

Due to this lack of variety, it can be said that the true competition for these brands comes from non-luxury alternatives where much greater movement has been seen. Within overall wearables, Apple remains the leading company with additional functions that are unique to Japan such as compatibility with Suica, a local prepaid e-money system for transportation and shopping that was introduced.

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