ON HEARING I was going to Tokyo, a Taiwanese friend told me, “You have to go to Forever21.” Forever21, an affordable clothing line started by a Korean-American entrepreneur that is targeted at the younger set, had opened its first store in Tokyo in late April. The queues to get into the store were unbelievably long in its early days, judging by photos posted on the web.

 

So I walked into the store in Harajuku, epicentre of Tokyo’s street fashion scene. There were no queues but, once inside, I couldn’t even get near the clothes. Young Japanese wo men in knee-high boots and bleached hair were rifling through the merchandise and lining up to buy them as if there were a contest to see who could buy the most.

 

Next door to Forever21 was H&M, the mid-priced clothing retailer from Sweden. Although the crowds there were not as thick, it was also hard to do any real browsing. Shoppers were also out in force at Uniqlo, which has cemented its position as Japan’s leading retailer of casual clothing.

 

Tokyo-listed Fast Retailing Co Ltd, which owns Uniqlo, is seeing record numbers as a result of Japan’s shift towards the cheap and chic. For its fiscal year to August 2009, sales surged 16.8% to ¥685 billion ($10.5 billion) while operating income was up 24.2% to ¥108.6 billion.

 

Just a half kilometre up from Harajuku, all was quiet in tree-lined Omotesando, dubbed the Champs-Élysées of Tokyo. The swish boutiques, from Gucci and Prada to Dior, had plenty of beautiful stuff on display, but far fewer shoppers.

 

The week I was in Japan, Versace announced it was packing up and leaving that market. The Italian fashion house, whose sales in Japan have plunged 50% between 2004 and 2008, has closed all the three shops it directly owned in Japan.

 

The next day, Yohji Yamamoto Inc said it was filing for bankruptcy, triggering astonishment across the industry. Yamamoto is a fashion legend in Japan, along the lines of Issey Miyake. Even the mighty Louis Vuitton has not been spared. Having suffered a 20% drop in Japan sales in 1H2009, it has shelved plans for a new store in Tokyo’s upmarket Ginza district.

 

Japan is still the single-biggest market for luxury goods in the world. However, since 1996, demand for imported luxury brands in Japan has been heading south, shrinking by about US$9 billion ($12.6 billion), says market research firm Yano Research Institute. Over a decade of tepid growth, arrested wages and luxury fatigue among Japan’s younger consumers have blunted the Japanese yen for branded goods. 

 

That’s helped affordable local labels like Uniqlo forge ahead. The brand is now aggressively exporting itself. This year, it opened two stores in Singapore, at ION Orchard and Tampines. It also opened a global flagship store in Paris on Oct 1. And, to enhance brand appeal, it has hired German designer Jil Sander to create a new collection called +J.