Thursday, November 08, 2007

Ginza Makeover

After years of stagnation, Tokyo’s famed Ginza shopping area is undergoing an extraordinary renaissance. When I wrote my book on Tokyo ten years ago, the area seemed to be in danger of dying. The large department stores, such as the Mitsukoshi and Matsuzakaya, that used to define shopping elegance, were bleeding customers, especially younger customers, to trendier, with it spots such as Shibuya.

The closing of the historic flagship Mitsukoshi Department Store (technically in Nihonbashi, not the Ginza) seemed to signal the end of an era. Around the world, downtowns were stagnating. It was assumed that, as in other countries, Japanese would prefer to shop in newer suburban malls.

New stores opening in the Ginza were often discount emporiums, such as those of the low-end clothier Aoyama Trading Co., reflecting the trend toward frugality after the bursting of the Bubble Economy. The byword was “cheap”. The Ginza was in danger of losing its special cachet.

Today many of the big name department stores are still losing customers, but you don’t hear the word cheap much anymore. The Ginza undergoing an amazing facelift thanks mainly to an influx of major foreign luxury brands opening new stores. Even the Mitsukoshi in Nihonbashi has made a comeback in new facilities.

In some ways the foreign newcomers are pushing aside many Japanese companies. Chanel displaced Daiei, while Dior took over the space belonging to Kondo Shoten. Fergamano occupies the former UFJ Bank location, while Cartier took over from Daiwa Bank.

Of course, it is no secret that Japanese love brand names. It is said that more than 90 percent of women in their 20s living in Tokyo own a Louis Vuitton handbag. But previously they used to buy them in boutiques or tenants of other large stores. The trend in Tokyo today is for the major luxury houses to hire expensive architects to design and build their own free-standing buildings. That reflects the fact that the big names in luxury goods have evolved too, expanding into other lines besides clothes, shoes and accessories.

The new 12-story Armani Ginza Tower, which opened this month at a choice location in the heart of the Ginza, boasts an exclusive spa, restaurant and a whole floor devoted to its Armani Casa line of home furnishings. In a couple of years it plans to build its first Armani Brand Hotel in Tokyo, similar to the one it is building now in the Burj, the world’s tallest building, now under construction in Dubai.

The French designer of handbags, Hermes, started the trend when it opened its Ginza tower with its glass-cube motif in 2001. Last year Gucci opened its Ginza store, the company’s first architectural creation. “We wanted it to be the most luxurious Gucci store in the world,” said CEO Mark Lee.

A few blocks away workmen are putting the finishing touches on the Ginza Tower of another Italian fashion heavyweight. The Bulgari Ginza store will be the world’s largest store devoted to Italian jewelry when it formally opens November 30.

The proprietors are betting that Japanese are still in a mood to spend on luxury goods despite years of slow growth. Indeed, on the same day of the Armani opening the Financial Times published a fairly pessimistic report on Japan’s near-term growth prospects.

Giorgio Armani doesn’t have to look very far find the competition. Next door to his new building is one devoted to Dior. The Gucci tower is directly across the street, and the Hermes store is a block or so down the street.

At a press conference at the opening Armani was asked if there was enough business to justify the massive expenditure of building in the Ginza. His spokesman blathered on about the cake getting bigger for everyone, but Armani cut him short with a more hard-nosed appraisal. “Cake is a word that the English use. We’re here to be very competitive and to take market share from the other people in the district,” he said.

In fact, the “cake” is already pretty big. Even in stagnant economic times, Japan has consistently been the world’s biggest market for luxury goods. Fully 45 per cent of all luxury goods around the world are sold to Japanese – about \1 trillion worth.

More realistically, Armani said that while he naturally hoped that his new Tower will be profitable, he said it was really serving as a “lighthouse” for Armani. “It has an echo for Armani around the world.” That can be said of a lot of the enterprises in the Ginza. Their owners tolerate a certain amount of loss in order to have the prestige of their Ginza establishments rub off on their more prosaic, though more profitable establishments out of the chic downtown.

This is not to say that they aren’t trying to improve the bottom line. The Matsuzakaya Department store caused a huge controversy when it unveiled plans to tear down the Ginza store and replace it with a 160 meter-tall skyscraper which would include, in addition to the retail sales floors, apartments and a hotel.

The move violated the unwritten “Ginza Rule” which states that no building in the district should be taller than 56 meters and brought forth such a hue and cry from competitors that the Chuo Ward assembly passed an ordinance giving legal teeth to the height limitation.

But the Italian fashion giants aren’t the only ones opening new Ginza outlets. Apple Computer opened its first Asian store there in 2003. Barney’s New York took over three floors of the Kojun Building, site of Tokyo’s first social club, and Abercombrie & Fitch plans to open its first Asian store on the Ginza by 2009.

Not all of these companies plan to open their own free-standing stores, but it is significant that they are choosing to locate in Tokyo. China may be growing at breakneck speed and developing a taste for luxury. But it is still to Japan and specifically to the Ginza, not Nanjing Road in Shanghai, that the foreign companies open their first Asian stores.

But it it’s not just the big name foreign brands that are changing the Ginza look. Stroll down Chuo-dori on a crowded Sunday afternoon, and one sees numerous buildings shrouded in canvas, concealing major renovation work. The Echigoya, perhaps Japan’s most famous kimono store, moved to a temporary location while its main flagship is undergoing a years long renovation.

The landmark Wako building with its famous clock tower, the only major survivor among the pre-World War II buildings (it was used as a PX during the American Occupation), began a renovation last month, its first major overhaul since the building was erected in 1932.

The Ginza is also attracting new Japanese tenants too. Marui, an apparel retailer and Tokyu Hands, probably the most successful Japanese retail venture in recent years, have both opened Ginza outlets. They appeal to younger customers and will help give the Ginza, generally considered of more interest to older shoppers, more appeal to the young.


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