Go-Go Ginza: The Story of a Flagship Frenzy

Over the past five years, Tokyo's Ginza district has undergone a spectacular revival. Once a decidedly fusty tract popular only among housewives and visiting businessmen, the district now boasts grand towers dedicated to conspicuous consumption.

The unveiling of impressive flagship stores by jewelers Swarovski and De Beers last month has capped off a rush of openings in the past six months. Louis Vuitton, Armani, Bulgari, Cartier, Dunhill and others have ploughed huge amounts into the area, attracted by Japan's sustained economic recovery, which has bolstered spending among the wealthy urban elite who constitute their most lucrative clientele.

Ginza has long been at the heart of Japan's trade and commerce, but it has also been destroyed wholesale no less than three times—by a massive fire in 1872, the great Kanto earthquake in 1923 and World War II. Each time, like a phoenix rising from the flames, the district was rebuilt and returned to glory.

Without the strictures of urban planning, Ginza has grown organically. Tiny art galleries and mom-and-pop kimono shops sit alongside modern architectural marvels housing jewelers and luxury boutiques, making for a public perception of Ginza as a mix of tradition and cutting-edge trends. Chairman of the Ginza Street Association and former president of Shiseido, Yoshiharu Fukuhara believes that such rich variety is vital to the district, noting, "From the first influx of Western culture right up to the present day, Ginza has always attracted the latest culture of the age. With its mix of old and new, it has a diverse charm."

The area's recent retail development is largely the result of the efforts of luxury brands. In 2002, Burberry, Hermès, Louis Vuitton, Bulgari, Cartier, Harry Winston and Tiffany established the Ginza International Luxury Committee to orchestrate joint marketing campaigns to enhance Ginza's reputation as a top shopping destination. However, the retail buildup in nearby districts has also boosted Ginza's high-end economy. "The new Ginza was revitalized with development of the surrounding areas," Kazaka Securities analyst Yasuo Takauji told WWD in a recent interview, referring to new shopping complexes including Marui and Marronnier Gate, which have created a new flow of younger customers. Whereas shoppers a few years ago tended to be in their 40s and 50s, now 20- and 30-somethings throng to shops in the area.

And some luxury brands are seeing strong returns not only on sales but also on real estate investments. Chanel bought property in Ginza six years ago, during a low market, and its building's value has risen 40% since. Brands that lease space, however, are now suffering painful rent increases as the market recovers. According to recent statistics from Japan's Ministry of Land, Infrastructure, Transport and Tourism, Ginza's property prices rose 27.5% to 39 million yen (nearly US $380,000) per square meter in 2007. Last year, Armani sank some $20 million into a 12-story, 6,000-square-meter flagship store in Ginza, representing the brand's largest-ever investment in a single store. The tower houses a spa and restaurant as well as retail spaces for prêt-à-porter and accessories.

Richard Collasse, head of Chanel in Japan, says that Ginza also serves as "a showroom for the rest of Asia," where sales of luxury goods are experiencing rapid growth. As Tokyo is increasingly seen as a fashion leader in the region, growing numbers of wealthy consumers from China and elsewhere are visiting to stock up on exclusive merchandise that luxury brands are hesitant to carry in their other Asian stores for fear of being pirated. Meanwhile, for the Japanese market, a stylish new flagship is seen as an advertising statement that's becoming increasingly important as a result of competing brand saturation in the market at large. Part of this strategy is filling the flagships with more than just frocks and baubles—hence the restaurants in the Bulgari, Gucci and Chanel stores, the barbershop and bar in the Dunhill flagship and the spa in the Armani tower.

Clearly, luxury labels have found that the best way to communicate their brand message is by making a grand statement on this world-renowned shopping strip, despite the astronomical real estate prices. The principal beneficiaries of this fierce competition for attention and loyalty are, of course, consumers, who are offered a rich and varied shopping experience unrivaled anywhere in the world.

—Martin Webb